Opinions: Leasing Batteries

[Herm]

The legality issue can be fixed by Congress..

How about a 4th option?.. the battery lease covers the battery, EVSE installation, free street and home charging. How much are you willing to pay and how long is the lease term with guaranteed battery performance and capacity?

 

[surfingslovak]

now, its not all glass here. i know enough to know that there is a major disconnect between engineering, marketing and sales.

Great write-up!

 

[GRA]

The legality issue can be fixed by Congress..

But won't be by this or the next congress. AIUI, Nissan said that they couldn't lease batteries here because of the way the subsidy law was written; it stated that the Fed. subsidy was only for complete, drivable vehicles.

How about a 4th option?.. the battery lease covers the battery, EVSE installation, free street and home charging. How much are you willing to pay and how long is the lease term with guaranteed battery performance and capacity?

The period would need to be determined by the company leasing the batteries, but I would think at least 3 years would be required. Longer would drop the monthly payment, but that would depend on how much buffer is required to achieve the warranty capacity with the particular battery chemistry. However, if the company is planning on secondary use of the battery pack (to avoide demand charges for L3 EVSEs, say), they could afford to drop the prices for a shorter term to get more turnover.

The lease cost plus electricity cost has to be less than the cost of fuel over the same period. I don't believe we'll have enough infrastructure (from a single company) to allow unlimited charging any time soon.

 

[Herm]

The majority of the charging would be at home still, but the cost of the electricity would be covered by the lease.. I suggest this because many people worry about their electric bill increasing.

If the battery is $12k it will be expensive if Nissan fully plans to pay for the battery in the first 5 year 60k miles battery lease plan... unless the $7500 tax credit is assumed by Nissan and taken off the lease payment... then I could see a $150 monthly payment.

 

[JimSouCal]

I may be in the minority, but I bought the car and am sticking with it. After 18 months, I've lost just a few percent capacity, according to my GID meter, so I am satisfied. I plan on keeping the car for a long while and my driving needs will not stretch the range, so I think I'm good to go for many years.....We'll see.......

No GID meter, but I figured at 70% capacity of the battery, only a few trips a year exceed that range and for that I have my garage queen "sports car". Similar emotions here, but I am a coasty in Los Angeles, not baking Mr. LEAF out in the Valley....

 

[derkraut]

I may be in the minority, but I bought the car and am sticking with it. After 18 months, I've lost just a few percent capacity, according to my GID meter, so I am satisfied. I plan on keeping the car for a long while and my driving needs will not stretch the range, so I think I'm good to go for many years.....We'll see.......

+1----I would never buy a car, and then pay $$ monthly to "rent" a part of it. Of course, as far as battery life goes, I'm lucky to be living in an area that has no high/low temperatures, so that's easy for me to say. Knowing what we know now, if I lived in PHX, or a similarly hot summer temp area, I wouldn't buy or lease a LEAF at this stage of its development. The Prius would be my car over there. Hindsight, eh? :roll:

 

[JimSouCal]

...the success of the EV movement hinges on taking the cost of the battery out of the car equation, and move it into the energy equation. The battery cost needs to be treated as an expandable part of the fuel source, and not as a part of the car. Leasing enables this use model to be adopted more quickly with much less risk. And faster adoption means faster cost reduction, faster technology improvement, which leads to even faster adoption, spiraling into an ever increasing positive cycle.

...The public can afford to pay for the EV sans battery without any subsidy if it costs the same as an ICE counterpart, but the government can subsidize the cost of the battery lease to make sure that its total energy cost to operate is lower than the gasoline energy cost, thereby tipping the money scale so it becomes a no-brainer to switch to an EV financially.

Okay, your point makes lots of sense--more EV cars will model to the better market penetration of EV infrastructure; yet I just decided to handle those factors in my own $ account rather than in the collective accounts....

Likewise, if the externalities of using gasoline verses trending to renewables were factored in it would be a "no brainer".

 

[davewill]

The majority of the charging would be at home still, but the cost of the electricity would be covered by the lease.. I suggest this because many people worry about their electric bill increasing.

If the battery is $12k it will be expensive if Nissan fully plans to pay for the battery in the first 5 year 60k miles battery lease plan... unless the $7500 tax credit is assumed by Nissan and taken off the lease payment... then I could see a $150 monthly payment.

But the battery has a residual value at the end of the lease, plus the finance charges...so no reason to pay for the whole battery during the lease period. Also, including the home electric in the lease just complicates the EVSE install and billing. You would have to use Nissan's EVSE, it would need data connection at all times, and the Nissan would either have to arrange with a plethora of utilities to pay for the electricity, or send the customer reimbursement checks. Plus the fun of people cheating by charging their Volt AND their LEAF. Sure it could be done...

 

[DaveinOlyWA]

ya know we are all playing right into Better Place's hands. they dont have to build interest in their business model. they only need to sit back wait for us to come to them

 

[Volusiano]

ya know we are all playing right into Better Place's hands. they dont have to build interest in their business model. they only need to sit back wait for us to come to them

I think their business model makes a lot of sense, and we're beginning to find out why ourselves. Not necessarily the battery swapping station idea because those stations are too expensive. But just the fundamental idea that the battery should be separated out as part of the energy consumption equation and not part of the car price equation.

I think the US government is very short sighted in requiring that EV subsidies be applied to whole car sales only, instead of partial car sales and partial battery lease, especially when battery technology is still so evolving. I think they need to fundamentally change that rule to facilitate EV adoption further. That's why Better Place can't start out their business in the US and had to resort to Israel and European countries whose governments are more aggressive about wanting to accelerate EV adoption faster.

 

[TonyWilliams]

I (and am sure many others have too) speculated that the original plans for leasing the battery were why Nissan thought it'd be ok to under-engineer battery thermal management. Then, perhaps once they found the idea was illegal or wouldn't fly, they didn't want to have a big delay, so they decided launch anyway.

If I recall, you have to sell a "complete" crash test and approved car in the USA. Nissan also thought 90% would lease the car, and the reverse was true of early adopters.

 

[GRA]

The majority of the charging would be at home still, but the cost of the electricity would be covered by the lease.. I suggest this because many people worry about their electric bill increasing.

If the battery is $12k it will be expensive if Nissan fully plans to pay for the battery in the first 5 year 60k miles battery lease plan... unless the $7500 tax credit is assumed by Nissan and taken off the lease payment... then I could see a $150 monthly payment.

But the battery has a residual value at the end of the lease, plus the finance charges...so no reason to pay for the whole battery during the lease period. Also, including the home electric in the lease just complicates the EVSE install and billing. You would have to use Nissan's EVSE, it would need data connection at all times, and the Nissan would either have to arrange with a plethora of utilities to pay for the electricity, or send the customer reimbursement checks. Plus the fun of people cheating by charging their Volt AND their LEAF. Sure it could be done...

For the sake of argument, let's assume that the battery pack costs $12-$15,000 as Ford's CEO stated recently. To be conservative, let's use the high value of that, $15k, and you are allowed 15k miles a year for five years, with a 5 year guaranteed capacity of 80%. The residual value is 20% or $3,000 at the end of the lease (could be more or less), and the Government will kick in $5k (upfront instead of $7.5k as a credit). So, the battery cost to you will be $7,000 (ignoring financing etc.), $1,400/yr. or $117/month. Then, assume that you will drive the full 15k miles/yr., and that your wall-to-wheels usage works out to 3.5 miles/kWh (I'm assuming you're a normal driver, not a hypermiler or someone willing to do without heat/ac), so you use ~4,300 kWh/year. With no ToU metering, at a national average of $0.13/kWh you'll pay ~ $560 for the electricity, so your yearly total will be $1,960 for your energy and battery cost, or ~ $163/month. Obviously, with different assumptions the number will vary considerably.

Comparing that with a Prius for the same 15k miles, assume 44 mpg combined (I'm using Consumer Report's number rather than the EPA's), you use ~350 gal./year. At $4/gal. average that's $1400/year, at $5/gal. it's $1,750/yr., and at $6/gal. it's $2,100/year. So I'd say that the numbers could work out quite well, especially when you consider the likely higher maintenance costs for the Prius.

 

[TonyWilliams]

does this explain the 200,000 unit battery plant to supply a 150,000 unit car plant? maybe.

I suspect that besides warranty and replacements, that battery factory would supply the Spanish built NV-2000, among others.

 

[DaveinOlyWA]

does this explain the 200,000 unit battery plant to supply a 150,000 unit car plant? maybe.

I suspect that besides warranty and replacements, that battery factory would supply the Spanish built NV-2000, among others.

there is not a battery plant already planned for Europe? doesnt make sense to build it here to ship it there

 

[davewill]

...So I'd say that the numbers could work out quite well, especially when you consider the likely higher maintenance costs for the Prius.

Especially since the car, sans battery, will only cost $23k, using your $15,000 figure.

 

[DaveinOlyWA]

...So I'd say that the numbers could work out quite well, especially when you consider the likely higher maintenance costs for the Prius.

Especially since the car, sans battery, will only cost $23k, using your $15,000 figure.

i think LEAF battery costs will "plummet" since we dont know what the pack replacement cost is anyway but i see under $10,000

 

[GRA]

...So I'd say that the numbers could work out quite well, especially when you consider the likely higher maintenance costs for the Prius.

Especially since the car, sans battery, will only cost $23k, using your $15,000 figure.

Might be less. The Ford Focus Titanium, the comparable ICE trim level, lists for $22,300 vs. $39,200 for the FFE, so that's $16,900 difference including the TMS. For the majority of customers who don't do TCO calcs, we need to get the MSRP down to a level they're familiar and comfortable with as well as end anxiety about early degradation, and leasing is the only way to do it at the moment. Of course, we've still got to convince them to buy a car with a 70-odd mile EPA range, but hopefully it would be an easier sell than one priced at $35k+.

 

[DaveinOlyWA]

...So I'd say that the numbers could work out quite well, especially when you consider the likely higher maintenance costs for the Prius.

Especially since the car, sans battery, will only cost $23k, using your $15,000 figure.

Might be less. The Ford Focus Titanium, the comparable ICE trim level, lists for $22,300 vs. $39,200 for the FFE, so that's $16,900 difference including the TMS. For the majority of customers who don't do TCO calcs, we need to get the MSRP down to a level they're familiar and comfortable with as well as end anxiety about early degradation, and leasing is the only way to do it at the moment. Of course, we've still got to convince them to buy a car with a 70-odd mile EPA range, but hopefully it would be an easier sell than one priced at $35k+.

that doesnt equate because you are removing a lot from the Titanium that has value

 

[ydnas7]

I don't see why they can't offer all 3 options:

1. Buy the car and buy the battery ($37,250 for SL and $35,200 for SV).
2. Lease the car and lease the battery (whatever the current lease term is).
3. Buy the car and lease the battery (MSRP - $15K = $22,250 for SL and $20,200 for SV, and whatever lease term for battery based on $15K MSRP for battery, assuming that the battery costs $15K).

......

It makes more sense to treat it as part of the overall energy consumption cost and compare it that way against the gas consumption cost.

As much as i like this. I think the question of depreciation would just get more difficult.
2 cars identical, 1st for $35k 2nd for $20k when new
after 3 years they both sell for a similar amount, ie the cheaper car would drag drown the value of the more expensive car. Its why Buicks are not given Chevy badges.

 

[edatoakrun]

...So I'd say that the numbers could work out quite well, especially when you consider the likely higher maintenance costs for the Prius.

Especially since the car, sans battery, will only cost $23k, using your $15,000 figure.

i think LEAF battery costs will "plummet" since we dont know what the pack replacement cost is anyway but i see under $10,000

Nissan LEAF plans unique among BEV and PHEV manufactures, in terms of the very large planned vehicle production numbers. If Nissan's BEV plans succeed, it probably will have a very significant cost advantage over all other manufactures, who outsource their battery production to lower-volume suppliers, in the next few years, which could make the subject of this thread (as well as the active thermal management question-see the link) largely moot.

...There’s another reason why Nissan developed its own battery – cost. Nissan Leaf is intended as a production vehicle for the general consumer, so it needs to be sold at a price affordable for most drivers. Cutting the cost of the battery is key to reducing the overall costs of the car...

http://www.nissan-global.com/EN/TECHNOLOGY/MAGAZINE/ev_battery.html" onclick="window.open(this.href);return false;