Nissan plans budget variant Leaf EV for 2013

Nissan will roll out a budget variant Leaf when they start US production later this year.

The entry trim level would be positioned below the two higher-specification grades currently offered.

The lower-cost variant will be added as part of a 2013 model face-lift. It is expected to hit U.S. showrooms before March.

Nissan is redoubling its focus on cost reduction and affordability as it struggles to boost Leaf sales. Nissan sold 5,212 Leafs in the United States through September, down from 7,199 in the first nine months of the year before. That is far off the annual pace of 20,000 Nissan wants in the fiscal year.

Meanwhile, the Leaf is being outsold by hybrid rivals that have backup gasoline engines to take over after the electric charge runs out: the Chevrolet Volt and the Toyota Prius Plug-in.

Pricing is one hurdle.

The Leaf, which went on sale in December 2010 as a low-volume import from Japan, retails for $36,050, including shipping, and is eligible for a $7,500 U.S. tax credit. Its base price is below the Volt's but above the Prius Plug-in's. It is unclear what the price of the new base trim level will be.

Moving to Tennessee

For the past two years, Nissan has indicated that it intends to use the shift in Leaf production to Tennessee to bring costs down.

Switching from a Japanese factory line to an American one will allow the Leaf to escape the high costs of Japanese exports resulting from the strong yen.

In addition, Nissan is also bringing the production of the car's costly lithium ion battery modules, which represents a large portion of the Leaf's sticker price, in-house.

Nissan is days away from starting battery production in Smyrna, with a new $1.4 billion plant that has capacity to produce 200,000 battery modules a year.

Nissan has never clarified what other products those batteries might go into, including whether or not it might use Smyrna batteries to power an upcoming electric Infiniti sedan.

Supply side

In addition, Nissan is asking suppliers to target cost reductions as high as 50 percent. Some of the streamlining will involve removing content for the entry-level model. Other strategies will include re-engineering portions of the car to cut costs by combining components.

For example, some electric drivetrain components now in the back of the car will be integrated with powertrain systems in the forward engine bay, one person said.

As part of the decontenting, the entry grade is also expected to skimp on the more advanced features offered in the Leaf's current navigation system.

And the entry Leaf will get traditional -- and lower-cost -- high-intensity discharge headlamps, not the high-tech, high-cost light-emitting diode lamps that now come standard.

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