Battery Leasing Catching On? India's Reva Says Would Help Cut EV Purchase Price

Battery Leasing Catching On? India's Reva Says Would Help Cut EV Purchase Price

By John O'Dell October 20, 2009

Nissan, Renault Also Planning to Lease Batteries for Their EVs in Most Markets

There are all sorts of hopes and plans for lowering the cost of electric cars - most hinging on government subsidies and increased sales volumes that will power component costs - but one that doesn't lean of outside help is the idea of leasing the batteries with the car rather than including them in the sales price.

We first heard the idea from Shai Agassi, founder and CEO of Better Place. He suggests looking at the batteries as the principal part of the fuel system and thinking of leasing in terms of how we pay for fuel in our gasoline cars.

We don't buy a lifetime's supply of gas when we buy a new car now, he says. We pay for it as we need it. Why not the same with batteries and electricity?

Pay a monthly fee for the batteries and the few pennies it costs to recharge them each day and if the lease price is figures properly your "fuel" costs are likely to be the same or less than if you were driving a car with an internal combustion engine.

Among other things leasing means the car makers, not you, are responsible for fixing problems and for providing updated batteries when improvements are introduced.

Now we know the analogy doesn't hold up all that well - the electrons are the fuel and the batteries more like the fuel tank - but the idea still sounds pretty good.

So good that Carlos Ghosn, Chairman and CEO of Nissan and Renault, says that's the plan for his companies as they begin global EV sales in 2012.

(Nissan's Leaf EV launches next year, but only in a few markets, and in the U.S. the battery will be part of the purchase price because Nissan doesn't think it is time yet to try to persuade possessive Americans that leasing's the way to go, we were told.)

The idea seems to be catching on as India's Reva says this week that it, too, will lease batteries for its cars rather than sell them.

"By doing this, we will be able to reduce the cost of an electric car by about 60,000 rupees," or $1,300, says Reva Deputy Chairman Chetan Maini.  

Reva sells small neighborhood vehicles mostly, so a $1,300 price reduction is a considerable savings, the equivalent of cutting $4,000 from the price of a $40,000 car.

We don't know what Nissan and Renault have in mind, but expect the reduction of the initial purchase price of one of their vehicles would be even greater because they will be using larger and more expensive battery packs.

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.