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Nissan Blows it. Say Goodbye to Leaf and Hello to Tesla Model 3

Tesla Motors Inc (TSLA) Model 3

Tesla Motors can expect an increase in pre-orders for its mass market Model 3 EV after Nissan made a move that could irk as much as 3700 potential Nissan Leaf buyers. Tesla’s Model 3 and Nissan’s LEAF are the major EVs designed for the mass market now. Both Nissan and Tesla have been engaged in a war of words, marketing, and hype to take the biggest market share for mass market EVs.  Breaking news suggests that Nissan has made a marketing mistake that might push potential LEAF buyers out to buy a Model 3.

The economics of a group buy doesn’t make sense for Nissan

In the first week of August, a group of EV lovers in Montreal, Canada set up a group-buy effort for the Nissan LEAF. About 2,500 people initially signed up for the group-buy deal and the number of interested buyers had climbed up to 3,700 by the time their proposal reached the Nissan’s corporate HQ in Canada. The main idea of the group buy was to use the strength of numbers (almost 4000 orders) as a leverage to get massive discount on the sticker price of the car.

Tesla Motors TSLA Model 3

The Nissan LEAF has a sticker price of $31,998 (CAD) for the S Trim. The members in the group-buy deal were hoping that they could get Nissan to sell the car at a $20,000 CAD each. However, in an “understandable” turn of events,   Nissan Canada’s president has rejected the group buy offer and effectively shut down the plan.

If Nissan had agreed to the proposal, the firm would have sold each of the cars at a 37.5% discount to the sticker price. The original $31,988 sticker price of the Nissan leaf is about $13,000 CAD or 29% cheaper than sticker price of Tesla ‘s Model 3, which sells for $45,200 CAD. It is common knowledge in the auto market that Nissan is trying to compete with Tesla on the price front in the EV market.

What Nissan lacks in the premium branding/premium tech of Tesla, it hopes to make up by making its cars significantly cheaper. Hence, it is doubtful that Nissan has much of a margin left on the LEAF at its $32,000 sticker price. Without much ado, Nissan cannot afford to agree to the proposals for the group-buy but the buyers think Nissan is not serious about selling its cars to them.

Bye bye Leaf, Hi Tesla Model 3

Nissan could have recorded its biggest auto sale for the LEAF and probably set a sales record that other automakers might never beat for a very long time. However, the fact that the firm has refused to slash its prices for bulk order is sending those Nissan LEAF buyers into the waiting arms of Tesla Motors.

Roulezelectrique, a Canadian blog that broke the news about Nissan’s refusal has an official video and statement from Nissan to the effect. Yet, it is doubtful that Tesla Motors will give any significant discount on its cars because it already has a backlog of 400K preorders.

Interestingly, many of those who have signed up for the group buy have expressed their displeasure with Nissan. One of the buyers said,” Nissan has lost some sales including mine … We’ll wait Tesla3! So long Nissan! “Another reader said, “I own a 2011 Nissan Leaf and dreamed of a 2016 or 2017 with the purchase group, but let me tell you that I now look for the Cheverolet Bolt or Tesla 3. Bye bye Nissan!!!”

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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