Lots of supposition and guesswork below. I have no insider information...

My guess is that Google is just absolutely desperate to bust up the current carrier-subsidy business model. Steve Jobs made a similar observation, back in the day. Apple managed to negotiate very effectively with its carriers. Google presumably found it had very little leverage with the original Android business model, so this new Nexus-branded project is presumably their attempt to try something else.

Long term, the real consumer cost, with all the usual middleman profits, will fall below Google's current subsidized profit, and Google may then choose to terminate their program if its objectives (presumably giving Google more direct control over user devices) have been achieved.