Nissan’s EV rental strategy aims to keep rare earth minerals in Japan
Nissan now prefers to rent out its EVs in Japan rather than selling them. The OEM hopes this will help keep EV batteries in-country. It’s a novel approach to the ongoing rare mineral shortage, which already has cost Nissan dearly.
The Japanese manufacturer is an EV pioneer. Introducing the Leaf (pictured) in 2010, which proved an outstanding success on the still-budding EV market – having sold a total of half a million units in the 10 years after its launch.
With that much experience in the bank, Nissan’s actions in electric mobility might be where others will soon follow. The current issue is the recent and urgent shortage of rare earth minerals, which are essential to make EV batteries.
Record annual loss
That shortage compounded Nissan’s problems last year, when the auto giant announced a record annual loss of 150.65 billion yen ($1.1 billion) for the fiscal year ending March 31. The company’s worst performance in 12 years was blamed on the pandemic and the global semiconductor shortage.
The rare earth minerals shortage certainly was a contributing factor. It forced many automakers, including Nissan, to cut production, including Nissan. The shortage has inspired the automaker to adopt a rare approach. The emphasis will shift from selling EVs to renting them out. The thinking is that this approach will help keep these valuable metals, used in EV batteries, inside Japan, the Financial Times reports.
How will the scheme work? Nissan customers will be able to rent cars on a monthly basis – although the manufacturer hopes they will do so for several years on end. In this manner, Nissan hopes to reduce the outflow of second-hand EVs (and EV batteries) from Japan to other markets.
While innovative, the move is not exactly a surprise, as it reflects a concern shared by all EV manufacturers – although most use other methods to safeguard a sufficient supply of rare earth minerals. A more standard approach is to step up efforts to recycle EV batteries, with a focus on gathering them in sufficient mass, allowing them to be processed to retrieve up to 95% of the rare earth minerals they contain.
548 GWh by 2028
The supply (or lack thereof) of rare earth minerals has become much more than an OEM problem. It’s a vital issue for governments as well, as access to those rare earth minerals represents critical leverage for the future of the auto industry as such, but also for global trade and even for international politics.
Or as Sanshiro Fukao of the Itochu Research Institute was quoted by the FT: “The fate of the automotive industry depends on strategic items such as batteries and chips.”
4R Energy, a Nissan subsidiary established around the time the company introduced the Leaf, collects used EV batteries and retrofits them for a second use, bringing back a significant amount of minerals to Japan from the foreign companies where the second-hand Leafs were sold.
One study shows that retrofitting a 24-kW Nissan Leaf battery means it retains 80% of its initial storage capacity, equal to 19.2% KWh. A report published in IEEE Access, the journal of the Institute of Electrical and Electronics Engineers, predicts that by 2028, a total of 548 GWh of battery capacity will be available globally, of which 240 GWh in China.
700 years’ reserves
Will a combination of recycling and preservation (via EV rental rather than sale) help Nissan (and Japan) reach sufficiency in terms of EV battery capacity? Time will tell.
That being said, Japan did have a rare earth windfall in 2018, when a vast deposit of 17 rare earth minerals was found in the country’s waters. According to a study in Nature, the reserves are enough to satisfy global demand for the next 700 years.
The problem? The treasure trove is in the middle of the Pacific, about 1,850 km from the Japanese mainland, and 6.1 km below the sea’s surface. Experts believe it may take decades before Japan manages to find a way to mine the minerals.