By on June 22, 2010

After one year of ownership we would expect EV residual values to be above the segment average expressed in terms of pound values. But, if the battery is owned rather than leased, and lacks the appropriate extended warranty, the value of the typical EV will then fall dramatically until the vehicle is five years old, at which point the car will have a trade value little more than 10 per cent of the list price

So says Andy Carroll, managing director of the British car-buying bible, Glass’s Guide. He tells BusinessCar that Nissan and other firms launching EVs in Britain should take out the battery cost and lease it to customers with minimum monthly performance clauses. This, he says, would dispel concerns, drive sales, and transform the resale picture. It’s also what Project Better Place is doing, albeit in a complete regional package with battery-swap stations and charging infrastructure.

OEMs should take notice: almost everyone has had a bunk battery in a cell phone or laptop at one point or another. And losing performance or range in a car is a lot different than having to plug in your phone every 12 hours. Besides, BMW got 450 people to pay $850 per month for MINI E “test” leases (and yes, their range went down in the cold). When the earlier adopters will pay enough each month to lease a CRV, Odyssey, Insight and Fit only for an electric MINI with less room (sorry mate, need room for the batteries), why not keep leasing? The luxury market runs on leases, why wouldn’t the EV market?

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13 Comments on “EVs Are Great, Just Don’t Buy The Battery...”


  • avatar
    Facebook User

    having to plug in your phone every 12 hours? just 12 hours? I wish that was the case with my smartphone…

    great article, and lets hope the OEMs do take notice, it a huge hurtle.

  • avatar
    psarhjinian

    Two points:
    * Chrysler would be a much more viable company today, I think, if they had leased the automatic transmissions they supplied in many of their models.
    * This is actually a good idea, since used batteries are highly valued as recyclables. Hybrid manufacturers effectively do this now when they pay a bounty on packs.

    • 0 avatar
      educatordan

      * Chrysler would be a much more viable company today, I think, if they had leased the automatic transmissions they supplied in many of their models.

      LMAO

  • avatar
    ClutchCarGo

    I think that battery leasing for EVs is going to have to be an option for vehicle sales to take off. There are just too many unknowns with EVs for buyers to take the leap of faith on long term battery life. Either that or a long term transferrable warranty on the batteries.

  • avatar
    ttacfan

    My son was pestering us to buy a Prius as our next car. Until a battery in his MacBook Pro died 4 months out of warranty. And he paid for the replacement from his money, as opposed to ours.

  • avatar
    Steven02

    Does the Prius fall to a similar fate? I was thinking that they held their value better than that.

    • 0 avatar
      davejay

      If a prius’ battery capacity gets low, the engine just runs more often to compensate, and the mileage goes down. By comparison, an EV with low battery capacity can’t go very far. The latter is far more negatively impactful than the former when it comes to usefulness of the car (and so resale value.)

      Having said that: leasing the battery makes perfect sense in that context, and given the relative simplicity of EVs, it would also help to have clear, fixed pricing for battery testing and replacement — that would go far to remove the unknown future costs for original and future owners. Essentially an owner could get the car tested at the dealer for battery capacity for (say) $50, and show this to the potential buyer, along with a quote for how much it’d cost to replace the battery. The potential buyer knows their worst-case scenario, and the seller has the battery assessment to back up their claims of capacity (in a way that getting cylinder compression tested can back up claims of a healthy engine — but there’s no transmission equivalent, sadly.)

    • 0 avatar
      daga

      I agree with you Dave. We heard an awful lot of that ‘battery tech is zooming, these hybrids won’t hold their value” talk 8 years ago and it’s been flat wrong. davejay’s theory on it being a bit less mission- critical in hybrids is logical, but just wasn’t borne out in reality. I challenge anyone to show me the ‘battery anxiety’ correlation in hybrid residuals. I don’t smell a whiff of it.

  • avatar

    Hybrids don’t stop dead when the battery dies. And Toyota hybrids actually manage excellent lifetime out of their batteries due to intelligent battery management… not allowing the battery to exceed a certain percentage of charge or fall below a certain percentage of charge. (the current 3rd gen Prius will NEVER charge to 100%).

    Mobile devices don’t have intelligent charging schemes. They work until they’re almost completely dead, then their owners plug them in overnight, overcharging them as the charger cycles on-and-off as the battery fluctuates between 99% and 100%.

    Electrics will undoubtedly use similar battery management to the Prius, BUT: an electric doesn’t run on an ICE engine like the Prius does. It runs on the battery alone. Which means that the batteries will see deeper discharge cycles and more frequent charge cycles. And they’ll be under a lot of stress. It remains to be seen how long an EV battery pack will hold up in the real world.

  • avatar
    gslippy

    The premise here is that EV buyers will suffer from range anxiety. I’m not so sure about that.

    Motorcycle buyers who suffer from crash anxiety don’t buy motorcycles. The biker knows the risks of riding in a 2-wheeled open cockpit, and the EV buyer will understand the range limitations of owning an EV under various conditions of usage.

    Yes, some people – just like the motorcycle buyer – will be burned by their purchase. Some EV drivers will be stranded with flat batteries; some others will see their batteries fail after 5 years.

    But a century of motorcycling downsides hasn’t hurt that market. Similarly, I think the EV market will mature into a respectable niche for the right consumer.

    Leasing makes sense as a way to dampen the spikey cost of ownership, and will particularly help as energy densities improve. I’ve seen lithium ion energy densities nearly double in just the past 6 years, while prices remained stable. The EV owner would certainly like to take advantage of such improvements as they develop.

  • avatar
    daga

    I thought there were laws requiring hybrid makers, and presumably EV makers by extension, to warranty their batteries for 7 -10 years. At least I remember hearing that California had that law. This would make a 5 year old dead battery a cheap date.

  • avatar

    @gslippy,

    Motorcycles are a niche compared to cars, and, well, as you say, the EV market will mature into a niche. I am betting, though, that a number of buyers are going to have problems with batteries running out of juice. And the downside will be much worse than with running out of gas, since charging takes so long.

    I buy only Shell as of the last 4 years or so, because it’s the only top tier gasoline available in my area, and this sort of simulates what the situation will be like for EV drivers. Recently I ran out of gas for the first time in my 350,000-400,000 lifetime miles. Since then, I’ve taken to filling the tank when it’s about 1/4 full, where it has approximately the range of what I expect will be typical EVs (80-100 miles).

    • 0 avatar

      EV owners will have to learn how to think in terms of operating radius instead of range. If the Leaf has a nominal 100 range then you can only go something less than half the distance from home once you have factored in the reserve requirement for unexpected demands. A lot of early adapters are going to find themselves running out of juice on very hot or very cold days where they are either running air conditioning or heating. While high amperage fast chargers will eventually become available frequent use will result in very short battery life. Heat is the enemy of battery life and high voltage chargers are very inefficient for energy transfer.


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