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Lease plans and battery rental - solutions to the EV market uptake?

16 May 2013

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Electric vehicles have required OEMs to come up with new business models in order to increase sales. Battery rental, EV leasing or EVs available in multiple battery sizes, are some of the innovative schemes that have been launched to reduce the initial cost of the car, thus helping to raise consumer interest in Europe, and also in the US. summarises below the current and upcoming options available.

Battery rental schemes offered for buyers and lessees of electric vehicles is a new trend that is becoming more popular in Europe as well as in the USA. To increase sales of EVs, some electric car manufacturers such as Tesla and Mia Electric offers the option of choosing between different battery sizes, based on range needs. FIAT, has decided to follow another path and has launched an EV lease scheme in which the ICE version of the 500 and the 500e come at the same price.

Battery rental plans

Potential EV buyers in Europe as well as in the USA are often worried that the battery may give up before the car itself and that the costs of replacing it can be proportionally high. To abate these fears, Smart, Nissan and Renault have all started to offer battery rental schemes to their customers:
  • Smart ForTwo Electric Drive
Smart offers battery-leasing plan for its ForTwo Electric Drive. Since the autumn of 2012, when the scheme was launched, about 97% of European customers who bought or leased the car chose to rent the battery instead of buying it outright. As of May 2013 Smart is offering the same option for customers in the USA, who buy or lease the Smart ForTwo model. In Europe the monthly battery rental plans start from €65 ($84) and Smart will replace the battery if its capacity drops below 80%. In the USA the monthly battery rental is $80 (€62), plus taxes, and includes annual maintenance, replacement, if necessary, and a 10-year guarantee. With a price of $20,650 (€16,000) for the EV without the battery, and a lease plan costing $199 (€154) a month (including battery rental), Smart hopes to sell or lease around 2.000 ForTwo Electric Drives in the USA this year, a number partly limited by the demand in Europe.
  • Nissan 2013 Leaf
The new model of the Nissan Leaf, which will go on sale in June 2013 for the first time, will offer buyers the possibility to lease the battery pack or to purchase the car outright with an included battery. The battery lease payments vary between £70 (€83) and £129 (€152) per month, depending on the contract term and mileage. For example, a battery-leasing plan for 7.500 miles (12.070 km) for a 12 month period will cost £90 (€107), while for a contact term of 36 months+ the monthly payment will decrease to £70 (€83).
  • Renault Z.E.
Renault, aware of customers’ concerns about battery lifetime and upfront costs, has created a battery hire contract for its European customers. It allows buyers to spread the battery costs and thus make the EV more affordable; furthermore, the customers are given flexibility to choose the term and annual mileage of the contract. If the battery performance falls below 75%, Renault will repair or replace it. In the UK market the lease plan will be offered as of June 2013 and the monthly battery rental will start from £70 (€83). The basic battery contract is a three-year term with a mileage limit of 7,500 miles (12.070 km) year, but some flexibility is offered to the customers who expect to exceed the mileage.

Choose a battery that fits your needs

While battery rental is not yet an option for Tesla, it offers buyers of its Model S electric car the option of choosing between battery sizes – 60 kWh or 85kWh. The estimated range at 55 mph (89 km/h) with a 60 kWh battery is 230 miles (370 km), but 300 miles (482 km) with the 85 kWh battery.

French electric car manufacturer MIA Electric also offers two battery size options – 8kWh lithium iron phosphate battery with a range of 80 km and a more powerful 12kWh battery increasing the range to 125 km. While the standard battery can be charged in 3 hours, the 12kWh battery fully charges in 5 hours. Both battery sizes have a three-year or 50.000 km warranty.

Lease plans for Tesla Model S and Feat 500e

Battery rental might still be a new trend, but more and more electric car manufacturers seem ready to provide lease plans for their EVs. Two other electric carmakers have announced new lease plans for customers in the USA. Tesla has started to offer a 66-month lease programme for the Model S sedan. The lease plan includes the option to sell the car after 36 months at a price that is pegged to the residual value of the Mercedes S Class. The possibility to lease the car does not make it necessarily more affordable for the general public. Monthly payment for the Tesla Model S 85kWh edition is $1,199 (€930) per month. Once tax benefits are taken into account, a person leasing the Model S is expected to pay between $732 (€567) and $940 (€728) a month.

Fiat announced in April 2013 that its new model Fiat 500e will be offered for lease, initially only in California. A 36-month lease plan will cost $199 (€154) per month, plus tax and a $999 (€775) down payment. Interestingly that the same price scheme is offered for leasing a regular Fiat 500 with standard gasoline engine, thus removing the initial price difference between conventional and electric vehicle.


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