EV Battery Leasing Could Become Norm in Europe

By · April 11, 2012

Renault Fluence Z.E.

Renault Fluence Z.E.

The German EV scene is buzzing around Rudolf Krebs. He's the Elektroauto-Chef at Volkswagen's and he said last week that the company may think about leasing batteries on its forthcoming EVs. It sounds crazy to many people, like buying a gas car without buying its engine. But it's quickly becoming the norm in Europe. Renault is the biggest player here, and it decided to set its own rules. To get the price of an EV close to that of a gas car, the company chose not to sell any electric car with the battery. Customers have no choice. If they want to buy an electric car from Renault, they must lease the battery. Renault says this makes the buyer feel secure, because he won't experience any battery problems during the car's lifetime. The driver doesn't own the battery. Renault owns it and the manufacturer will replace it at its cost, if something goes wrong.

Mia Electric

Mia Electric

But the main idea is to make EVs cheaper. There are now five electric cars available with a battery lease in Europe (though not in all countries). The monthly rent is supposed to be the price of filling up a gas car, but it varies with the contract's length and the planned mileage. The shorter the contract, the more expensive the rent, and the smallest mileage will command the cheapest fee.

Here are 5 examples: The Renault Fluence ZE costs €25,690 to buy and €82 each month for the battery. The Renault Kangoo ZE (5-seater model), €22,000 and €72, the Smart electric, €19,000 and €70, the Mia electric, €20,828 and €49, the Citroen C-Zero (a Mitsubishi-twin) finally, costs €21,300 to buy and €80 each month.

Note that it's also possible to buy that last car with the battery at a price of €29,500. Those prices may seem expensive to Americans, they are all with tax included, and tax in Europe commands a higher percentage than in the U.S. A Toyota Prius costs €27,800 (US $36,000-plus) here, and a Nissan LEAF €36,990 (US $48,000-plus). The price will seem even higher with the addition of several years of the monthly lease, but that would be a wrong calculation.

Citroen C-Zero

Citroen C-Zero

A five-year old Nissan LEAF would have a much-used battery, whereas a Renault Fluence would probably have its battery replaced at that time. Well, maybe that would be after six years, or only four. Nobody knows precisely. The batteries from Nissan are said to be very robust and long-lasting, especially compared to the "consumer-cells" Tesla uses.

Then there's a rumor that the German Evonik cells are even stronger, but actually, we lack data. Nobody can tell for sure. That's where leasing the battery may make drivers more confident. The monthly lease comes with the warranty that the battery will always be functioning properly, or be replaced. The downside is that the car's owner will have to pay forever. Contracts will have to be indefinitely renewed, as long as the car is on the road.

What happens if a payment is missed? Everybody has heard horror stories about repo men, but that won't happen here. The repo man has gone high-tech, with the same technology GM has on its cars fitted with Onstar. These wireless services can remotely "brick" a car. It cannot be moved anymore. Maybe it can be hacked? But I've been told that this feature will probably never be used. Car companies will use diplomacy instead (mails and phone calls), and that should be enough.

The last word should be that battery-leasing schemes will not last. They make some sense now that batteries cost more than $10,000, but they will be meaningless when batteries' prices fall below $3K.

Comments

· Fernando M (not verified) · 2 years ago

Smart ED 19.000 € + 60 €
Renault Zoe 20.700 € + 79 €

· · 2 years ago

All good and well, but people are still avert of the EV1 effect, so batteries on lease OK, but they should be available as a sale as well. Leave people the choice to decide is the motto.

· Londo Bell (not verified) · 2 years ago

I personally believe that battery leasing is the way to go - for now at least. As Carlos Ghosn and various have said repeatedly, many times too, the most expensive component of any EV currently is the battery.

Lease it, and the price of EV will drop substantially, and leasers will no longer have to worry anythg 'bou degradation or capacity loss. In addition, this may even allow forward compatibility when newer, better energy storage (in the form of battery) has come out. I'm speaking of the Renault/Better Place battery swapping model, of course, but not that of a Nissan LEAF.

Besides, think of it as an empty lithium ion tank (a placeholder for the battery), just like an empty gas tank on any hybrid / ICE vehicle.

· · 2 years ago

I like the idea of leasing the battery initially but think the option to buy it should also be included as the idea of trying to sell on a car in a few years time to someone who then also has to pay to rent the battery is a concern. I also think if there was an option to buy the battery separately then it would give people a better idea as to whether or not the lease was a good deal. Im looking forward to seeing what the lease costs of the battery on the Renault Zoe are.

· · 2 years ago

Interesting approach. I don't know if the Fluence is really the equivalent of the LEAF but, if so, the difference in price, €11,300, would pay for 11½ years of battery rental. That's BIG. And I would figure on the rental price dropping over time along with battery prices, although that isn't a given since it may be factored into the current lease price.

Does the battery lease come with mileage limits?

· · 2 years ago

I resisted the idea of battery renting for quite some time. But, after giving it more thought, it does seem to make sense. One would think, several years down the road, that any given replacement battery will only be more efficient and cheaper per kiloWatt than the one that came with the car the day it left the dealer's lot.

As with most everyone else here, though, I do think that an option to eventually buy the battery is something that should also be available. This should especially be the case once the vehicle is paid off. Also . . . if the OEMs don't offer them for sale, it's conceivable that aftermarket manufacturers will step up to the plate and offer batteries specific to these cars.

I sent an email to Renault the other day regarding their Zoe. Not inquiring about their battery leasing, I was more interested to know if they'll be sharing the basic Zoe template with Nissan and if a vehicle like this can be expected to be sold here in the US eventually.

· · 2 years ago

I would only do this if this was a rent to own type of situation. This is worse than leasing. At least with a lease I have an option to buy. This is like paying for cable tv. You just keep paying for it, the cost will never go down and if you discontinue it you have nothing to show for years of payment. Meanwhile the "owner" of the battery will just lease it to someone else or have a secondary use for it. This is a win/win for the company leasing the battery and unless the cost of leasing if very cheap, not so good for the one leasing.

I guarantee the cost of the lease will ensure the leaser pays for the entire cost of the pack over the lease period to insure the owner doesn't lose any money if the packs have a shorter than expected life.

· · 2 years ago

It would seem obvious that leasing a battery pack can not reduce the cost of an EV any more than leasing any vehicle lowers it's actual costs. If you have concerns about battery technology then just lease the entire vehicle, which you can then turn in at the end of the lease, and get a new vehicle.
The cost of batteries must be paid for, be they leased or owned. That cost will always be passed on to the customer.

· · 2 years ago

I'm sure glad that I didn't purchase my EV1 but lease the battery. Then, when GM decided to get rid of the EV1, all they would have had to do was pull the batteries. I'd have bought the car with no way to run it.
No thank you. I'm not leasing the critical part of any car that I buy. Either lease the whole thing or nothing.

· · 2 years ago

Well, the other side of this coin, ex-EV1, is that if you did purchase the car outright but rented just the battery back then (if such an option existed) and GM decided to take back just the rented battery, you could look at it as simply a short term loss. While you had to pay a monthly fee for that battery, you would have been paying for gasoline in your ICE vehicle all that time anyway.

Now, assuming your battery-less EV-1 was well taken care of, you'd be one of the lucky few to have an example of this car in your possession. Any lithium battery you are going to find today will have superior energy density to the NiMH or SLA that came with the car back then.

I dunno . . . if I had a dedicated vehicle designed from the ground up for electric power - in good shape, paid for, with motor/drivetrain and sitting in my driveway - but minus the 15 year old battery, I'd look at it as a glass half full, not half empty.

· SVL (not verified) · 2 years ago

I like idea of leasing the battery, but I also feel like you should have the choice to buy, if you like.

· Carlos N (not verified) · 2 years ago

Laurent, the Smart ED doest have the price confirmed, the Mercedes boos say "Mutch less than 16.000 euros and the battery rent under 60 euros"
And the Citroën C-Zero with battery cost 23.5550, and in France, where you can rent this element, cost 16.300 euros.

http://www.turbo.fr/actualite-automobile/474784-citroen-zero-tarifs-bais...

· anonimus (not verified) · 2 years ago

I like the rent option, but we have to remenber what this come with a kilometers limit, and a Renault Fluence ZE, after six years, only could make 60.000 km, the half of the battery (full capacity) life.

· · 2 years ago

My prices are right. When Smart first talked about the idea, last September, they said you could either buy the car with the battery for €25,000 or without the battery for €19,000 and €60 a month but when I checked before writing this article, it's up to €70 per month, and they don't talk anymore about selling the car with the battery. There is a state incentive for EVs in France, my prices are without that.

So only Citroen and Mia give the customer a real choice of buying the car with or without the battery. I hope I'll get data about it, how many buyers choose to buy or rent.

· · 2 years ago

@Benjamin Nead,
Without access to the battery management software, the car is useless without access to the exact battery pack it was designed for. Included in the original battery pack design is not just the cells but the cooling system and all temperature, voltage, and current sensors.
Those who own RAV4EVs from the late '90's are facing the dilemma today of what to do when their batteries finally die. Fortunately, for them, the batteries last a long time and there is a supply of them available at least for a while.

· · 2 years ago

I know there are challenges but I also know that there are ways to adapt other battery chemistries to an existing system, even if you need to spoof signals to fool the electronics. If there were a complete EV1, or RAV4EV, in need of a pack, there are ways to adapt it to lithium.

· Londo Bell (not verified) · 2 years ago

The mentality of leasing is very different from owning, as some of you long time plugincars folks seem to have suggested (that owning is the only choice - for you).

There's nothing wrong with owning a battery; there's nothing wrong with leasing either. In the old days when I work at a dealership, the only way to sell lots of expensive cars wasn't through "selling;" it was through leasing. Even in today's world, leasing plays a large part in "selling" expensive vehicles (relatively speaking, talking about brands like MB, BMW, Lexus, Infiniti, Audi, etc.). In fact, I'm willing to bet that ~1/2 or more of most 40K+ vehicles go into the market through leasing.

Anyhow, my point is, upfront cost is what stopping most consumers to get an expensive vehicle. EVs are still expensive upfront. Anything that can help lower cost will help EV to tap into the mass consumer market. When batteries are less expensive, then leasing is no longer necessary when acquiring an EV.

I remember the days when RAC was having TV ads on leasing those big screen LCD TVs 2-3 yrs ago, which I no longer see anymore as you can get one at less than $300 nowadays. That's the same idea.

· · 2 years ago

Leasing the whole vehicle is already an option. How does leasing only the battery improve anything?

· Londo Bell (not verified) · 2 years ago

@JRP3,

Think beyond the LEAF. In fact, use the European Renault EV models as a base.

If you lease the vehicle, then of course, you'll be leasing the battery too. That's not a concern.

OTOH, you can BUY the vehicle and lease the battery. No worry on battery condition. No big upfront payment (including various sales taxes). All in all, making EV more acceptable and affordable to everyone, not just the semi-wealthy or early adopters of technology (who are willing to bear various losses).

When EV prices have come down so much that, say, EVs are available from the $18K-25K range prior to incentives, then leasing the battery will have little sense at that point.

· · 2 years ago

If upfront costs are a concern then leasing the whole vehicle is even better.

· JACOB (not verified) · 1 year ago

i used the fuel cost calculator to check the free truck rate
and it gave me the exact rate details.so you guys can check it..

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