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.

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