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Is There a Business Case for Electric-Car Battery Lease or Swap?

 
1,681 views Dec 22, 2010

Renault Fluence ZE production electric sedan

Renault Fluence ZE production electric sedan

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As 2010 draws to a close, we now have shipments of the 2011 Nissan LEAF and the 2011 Chevy Volt to customers around the United States.  With the advent of these vehicles, is there still a business case for Better Place?

To refresh your memory, Better Place is the venture between Shai Agassi and Renault-Nissan that proposes to sell electric cars without batteries, then lease the batteries to consumers and allow replacement for longer journeys through regional infrastructures of battery quick-swap stations.

Nearly three years ago, Shai Agassi and Renault-Nissan announced their intent to launch Project Better Place, now known more simply as Better Place. 


The business case they made then, was that batteries were years, maybe decades, from being able to meet the targets of cost (gasoline equivalent car), energy / power density (range - 300+ miles), long-life (10 years, no degradation) and rapid-rechargeability (5 – 15 minutes), demanded by consumers well acclimated to using gasoline cars. 

By cheaply leasing batteries that could be quick-swapped within a regional base of battery swapping stations, all the shortcomings of existing battery technology would be mitigated for the customer, and managed by the lease holder.

2011 Nissan Leaf

2011 Nissan Leaf

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The 2011 Nissan LEAF SL has an MSRP of $33,720, before the federal tax credit of $7,500.  The EPA has given the Nissan LEAF an official range of 73 miles. 

Although Nissan provides an 8-year, 100,000 mile warranty on the LEAF’s drive-train, battery and charging systems, they estimate that the battery should still maintain 80% of its capacity after five years of use, but it is not guaranteed. 

As for charging, it takes about ~30 minutes to 80% at a 480 volt quick-charge station. Starting from a depleted battery, ~7 hours at 220/240V (depending on amperage), about 20 hours at 110/120V.  Nissan only offers 220 / 240V max for home units, so expect to charge most of the night to get your 73 miles of range.

2011 Chevrolet Volt outside Detroit-Hamtramck assembly plant

2011 Chevrolet Volt outside Detroit-Hamtramck assembly plant

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The 2011 Chevrolet Volt has a base MSRP of $40,280, before the federal tax credit of $7,500.  The EPA has given the Chevy Volt an official all electric range (AER) of 35 miles, but the gasoline range extender with 9.3 gallons fuel tank extends that range an additional 340 miles for a total of 375 miles of range. 

The Volt also comes with an 8-year, 100,000 mile warranty on the battery, but the Volt maintains its overall range through the use computer algorithms to increase the  percent of battery used as the overall charge capacity of the battery declines. 

As for charging, the Volt will be fully charged in about 10 hours at 120V, or in as little as 4 hours using a dedicated 240V line.

Against the Better Place criteria laid out three years ago, the Nissan LEAF has not achieved the thresholds of costs, energy / power density (range), long-life or rapid rechargeability.  While the Chevy Volt does meet the thresholds of energy / power density (range), long-life and rapid rechargeability, it does so by using a gasoline range-extender, raising its base price approximately $7,000 higher than the Nissan LEAF and $18,000 above an equivalent gasoline only car.

Although I expect major automakers to continuing offering and improving vehicles with respect to these targets, it appears that the LEAF and the Volt affirm Better Place’s business case, rather than threaten it.





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Comments (31)

  1. fb_1001015277 avatar John Briggs Posted: 12/22/2010 7:36am PST

    Too bad, I thought the author was going to shed some light on the Better Place business model, but that didn't happen this time.
    When comparing the LEAF to the Renault Fluence ZE/Better Place, shouldn't you talk about the lease price of the battery? What is the monthly lease price?
    Well according to Autoblog it is $110/month. But the car is $38,000 (Danish marketplace). Well let's see $110/month is $1320/year. That seems pretty steep, along with a car that more than the price of a LEAF. So I don't know that Better Place has achieved its goal.
    On the other hand, I am speaking from the American perspective where cars and fuel are cheaper than in Europe.
    Anyway, if there are any serious discussions about Better Place, please direct me toward them. Personally, I think the model does not make any sense, but I love the battery swapping technology.
     
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  2. ev enthusiast Posted: 12/22/2010 9:14am PST

    not needed
     
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  3. ecogo Posted: 12/22/2010 10:00am PST

    I too was hoping for more information on Better Place--in particular, the estimated cost per car of the battery swapping technology and the robot swapping stations. There are 1100 Nissan dealerships in the United States. If battery swapping and fast recharge stations were installed in each of these, a better than rudimentary electric infrastructure could be developed almost overnight without a massive real estate bill which would afford extended ranges on an as needed basis. Nissan marketing officers would probably be pleased with the increased traffic at Nissan dealerships. Just a thought on the economics of battery swapping. Shai Agassi is no doubt an experienced, educated, and highly polished businessman. How many Agassi critics are as accomplished business-wise? I know I'm not really fit to imperially criticize unless I were to shift into some sort of weird Walter Mitty personality model in which the likes of Warren Buffet to George Soros regularly entreat me of my wisdom on money matters.
     
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  4. nebo333 avatar nebo333 Posted: 12/22/2010 10:53am PST

    I haven't seen it anywhere that their biz model is to create individual battery lease contracts.
    As an aside, does anyone know the energy efficiency of the Fluence i.e. average miles per kwH??
     
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  5. Jason M. Hendler Posted: 12/22/2010 10:57am PST

    #1, John, my article was intended to state that there is still an opportunity for buiness models in which batteries themselves could be leased and / or battery swap stations could still be an attractive alternative. Better Place has often stated that the electric car without a battery would sell for $10K - $20K in the US. Referencing car prices in Europe does not translate to car prices in the US, because many European countries often have very high taxes built into the price. While Better Place clearly still has a business case, it remains to be seen that their business model will support that case in most regions around the world.
     
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  6. Chris O Posted: 12/22/2010 11:10am PST

    The Better Place business model is brilliant in so far that it makes it possible to make the transition to electric motoring on a large scale without solving the problems of batteries. Of course, once these problems are solved Better Place would be redundant. I like Shai Agassi but I have never heard of a big, monopolistic and powerful corporation taking a very friendly attitude towards new technology that makes their business model obsolete, so may be it's not wise to create an entity that owns all of our car batteries.
     
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  7. nebo333 avatar nebo333 Posted: 12/22/2010 11:44am PST

    I should add...Bp biz model is to charge users for miles like cell companies charges users for minutes. They haven't splet out how their contracts will work i.e. pay as you go or monthly contracts etc. The success of their business seems to me to be determined by the relative cost of a EV mile to a gas car mile over time i.e. the EV mile shoudl get relatively cheaper while their margins get bigger as EV efficiency increases. they will have to absorb more costs up front, under advantageous tax laws to deal with their infra costs, battery buying costs etc.
    Anyway...still looking to find the av miles for KwH of the fluence. anyone?
     
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  8. Jason M. Hendler Posted: 12/22/2010 11:55am PST

    Just received an email from Mike Granoff, who works at Better Place. In their set-up, they maintain ownership of the batteries, and sell miles. He does confirm that Better Place will announce pricing for the Fluence in the spring with the federal tax credit factoring into the price.
     
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  9. Jason Posted: 12/22/2010 1:50pm PST

    The problem is that technology advances rapidly, and governments move slowly. By the time a full size infrastructure a la Better Place is built, battery technology will likely have the ability to meet the needs of the consumer, and in the same time it took to put the charge stations in place, they will become obsolete.
     
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  10. Dan Posted: 12/22/2010 2:27pm PST

    Not specifically Better Place, but I think battery lease does have a future. Professionals may be able to condition and monitor batteries better, or substitute in different styles. (Flooded lead-acid is really common in the hobbyist market, but is harder to maintain.)
    I don't even want to use the swap often, but if I can just drop it off once a month or so and get a fresh one, that's one less thing to worry about. A per-mile bill is fine, even for miles I charged up myself.
    If you can change the battery from a large up-front cost to a per-mile cost, pure electric vehicles ought to be cheaper to purchase than ICE cars.
     
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  11. Kevin Sharpe Posted: 12/22/2010 3:16pm PST

    I think battery swapping will never happen in the mass market. Battery technology will quickly extend range and decrease charge time to the point where battery swapping stations are simply not required. And that's without curve balls like super capacitors.
    I think the money would be much better spent on deploying ultra low cost charge points everywhere and DC fast charge at key interstate locations. Imagine how many $500 Level 2 charge points we could install for the cost of one battery swapping station.
     
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  12. ffinder Posted: 12/22/2010 3:32pm PST

    BPlace is currently the ONLY way that electric cars will finally replace gasoline cars all over the world:
    - (1) - Price: BPlace will sell their electric cars at least $5,000 less than the average price of gasoline cars that are sold in the US. - (2) - Range: BPlace electric cars will have an unlimited driving range where BSStations with 59.1 seconds battery swap are deployed. All of California will be covered with BSStations, goto betterplace.com to see the map. 7 days of the cost of oil in the US can cover all of the US with BSStations. - (3) - Battery : BPlace customers do not own the battery in the car, transferring concern over battery life, maintenance, capital cost, quality, technology, and warranty issues to BPlace. - (4) - Billing: BPlace customers will only have one monthly bill covering batteries, BSS swaps, charge spots, navigator to BSS's/chargers, and 24/7 support.
     
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  13. ffinder Posted: 12/22/2010 3:33pm PST

    .. DC fast chargers take 1/2 hour for 80 miles charge.. who would buy a car like that? and even if DC fast chargers could give you 300 miles in 15 minutes (currently impossible, maybe in 6 years?) electric cars with a price higher than gasoline cars will only be bought by 1% of car drivers worldwide. Also as batteries improve in range and get cheaper every 2 years this will only result with BPlace selling EV's cheaper and cheaper over time to reach the prices of used cars. The Renault Fluence Z.E. is a very beautiful car, hopefully BPlace will be selling that one in California. It will be sold by this time next year in Israel and if successful other EV makers will join BPlace as their BBS's can serve any kind of battery swappable cars, btw a BSS with only 15 batteries has the ability to swap batteries for 2,500 EV's, also they use the same technology to swap batteries that F-16 jet fighter aircraft use to load their bombs.. interesting.
    FF
     
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  14. ecogo Posted: 12/23/2010 2:57am PST

    I wouldn't mind using BP swapping for extended range trips, but I'd prefer to own my own batteries as I share concerns expressed about monopolistic pricing. I can't imagine 15 batteries being a sufficient number to service 2500 EVs, so I look forward to visiting BP site and learning more.
     
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  15. fb_1001015277 avatar John Briggs Posted: 12/23/2010 4:32am PST

    @Jason M. Hendler
    Youf added points are helpful and are part of what I was looking for in this article (or anywhere).
    The key points of discussion are
    1) Better Place has always claimed that the price of operating a BP EV will be comparable with gasoline and if you drive a lot, cheaper than gasoline. Now that European prices have been announced, is it true?
    2) Better Place has pretty much said that their model does not work in the USA due to the low price of gasoline.
    3) Is the model financially viable for Better Place? They have to pay for the batteries, the extra batteries at the swap stations, the swap stations, the charging stations, and the electricity. Not clear they can do that without government subsidy. So the BP model may be a fiction only possible with government tricks. If equal government support was given to non-swappable EVs, they would probably be even more viable.
    Also you can see the problems in the discussion with @ffinder's comments. @ffinder does not even bother to put in the numbers to see if his argument makes sense. He just states as fact that things will be cheaper. Now that prices are available, are the actually cheaper?
    Thanks
    John C. Briggs
     
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  16. fb_1001015277 avatar John Briggs Posted: 12/23/2010 4:52am PST

    One last thing. BP's claim is that the leasing model will be cheaper for the customer. Leasing is always more expensive then buying, at least in the longer run. So leasing a battery will be more expensive then building (e.g. a Leaf car and battery).
    Now, there are other benefits to leasing which is the reason people do it. But lower cost is not a reason.
    Later
    John C. Briggs
     
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  17. nebo333 avatar nebo333 Posted: 12/23/2010 6:28am PST

    I think everyone would agree gas will only get more expensive over time and at a faster rate than car fuel efficiency will increase.
    Most would also agree that clean elec will get cheaper over time while car efficiency will only increase also. so the relative cost of EV driving to gas driving will get better and batter. thats regardless of whether BP is around or not.
    IF battery technology does suddenly lead to quick charge fucntionality ie under say 3-5 minutes, there's still the cost of the battery, the infra to make it convenient and the grid capacity to deal with it. all not in place.
    The BP model will work (and is revolutionary as it commoditizes personal transport) but it's market share will depend on the speed on those other factors for quick charge etc.
    The other big variable is alt fuel sources e.g. synthetic ethanol. a whole other discussion.
     
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  18. Jason M. Hendler Posted: 12/23/2010 7:34am PST

    #17, nebo333, I don't think it is a given that electricity will stay cheap. 1) Coal is our cheapest fuel for electricity and regulations will eventually eliminate coal as fuel for generating electricity. 2) As we move from fossil fuels to renewable energy, governments will shift taxes from fossil fuels to renewable energy sources to makeup the shortfall. 3) With only a few notable exceptions, states aren't moving to renewable energy sources fast enough, so I believe energy prices are going to rise with demand.
     
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  19. nebo333 avatar nebo333 Posted: 12/23/2010 9:44am PST

    I think your point 2 is one of the major political gambles and therefore in play/questionable while 3 is definitely very true. Increased taxes on coal are necessary to push investment in clean energy (prob including nuclear) and make it relatively more competitive to non-clean sources. The economic rent of coal is high due to it's high pollution and therefore higher taxes more justifiable. whether the gov does this or not is a big "if" i agree.
    even if clean elec goes up, then the quesiton is whether it will do so relatively slower to gas prices which would seem highly probable.
    there's definitely no certainty however the BP model seems poised to take advantage of those macro trends while dependent on some micro policy issues.
    their whoel model depends on the relative cost of the EV mile to the gas mile. I'm betting they have it right.
     
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  20. Bannor99 Posted: 12/24/2010 12:18am PST

    Morning Joe (MSNBC Dec 2nd, 2010)
    $1 billion daily spent on oil (US)
    EV, with current incentives, cheaper by $5000 over equivalent ICE
    15 batteries in one station will support 2500 cars
    7 days gasoline cost would be enough to build infrastructure
    ($150 million for Israel;
     
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  21. ffinder Posted: 12/25/2010 12:26pm PST

    Mr. Briggs
    1)the Fluence Z.E. should start at a base price of 205,000 Danish Kroner.. It's actually CHEAPER than a Honda Civic @ 219 400 and very close to a Honda Jazz so its like you pay for a small bubble car and you get a big sedan.
    2)BPlace is already deploying 4 BSS's in San Fransisco.. if they didn't believe it's going to work they woudn't bother with US at all
    http://www.betterplace.com/global-progress-north-america-california
    3)no gov help:
    http://alexdc.org/2010/12/live-blogging-leweb-shai-agassi-of-better-place-interviewed-by-loic-le-meur.html
    4) The monthly fees, Agassi insists, would be no more than (and likely less than) the cost of buying gasoline to travel the same number of miles. (includes battery leasing, swaps, charging) so you are already paying/leasing the gasoline you supply to your petrol car at about the same price a BPlace customer will be leasing etc. with BPlace.
    http://www.edmunds.com/fuel-economy/better-places-battery-exchange-charges-ahead.html
    more info on BPlace:
    http://en.wikipedia.org/wiki/Better_Place
    ff
     
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  22. anon Posted: 12/25/2010 3:20pm PST

    I'm waiting for Better Place vehicle (in the U.S.). Even if there are no stations available, we will still be able to plug them in like the leaf.
     
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  23. Roy H Posted: 12/26/2010 3:15pm PST

    I just don't understand this focus on fast charge or battery swap. This is just habit from going to gas stations. People will charge their EVs at home, at shopping malls, at restaurants, hotels, motels etc. They will not stand around for 30 minutes waiting for their car to be charged.
    The only case for fast charge or swapping is for working trucks and people driving on highways, in a real hurry. These markets are not reasonable now, and will come in several years after EVs are common place in cities.
    Cost and range are big factors, charge time is not. BP will cost the customer significantly more, and within 5 years range will be about 300 miles and cost 1/2. At that point BP will be obsolete. BP is a short term solution for a problem that will go away.
     
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  24. Roy H Posted: 12/26/2010 3:28pm PST

    I just thought of something else. Re-sale of the car.
    Nobody would want to buy an 8 year old car with a dying battery that costs more to replace than the car is worth. This is one place where the BP model might be attractive. On the other hand, if batteries are cheap enough or last 10 to 20 years, then this may not be an issue. I think Chevy is counting on the long life, with the 35 miles still available at end of 8 year warranty. Nissan has stated that all LEAFs that come off the 3 year lease will be outfitted with new batteries before they are sold.
     
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  25. Dan Posted: 12/28/2010 8:14am PST

    Battery technology is not rapidly improving. It is climbing, yes, but very slowly. There's nothing like Moore's law at work here. And don't forget that as batteries get better, so do ICEs.
    Pure EVs are cheaper than pure ICEVs because the ICE is expensive. The ICE should count as a wonder of the world, but wonders are expensive. While the electric motor is very cheap and very efficient.
    By leasing the battery, it's easy for the consumer to see that
    1. the upfront car is cheaper
    2. the maintenance costs are lower
    3. the per-mile costs are lower.
    I understand how point 3 is debatable, but BP is willing to put their money on the line to prove it.
     
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  26. David Holland Posted: 12/28/2010 11:42pm PST

    The future of electric is inductive charging while on the freeway & smaller batteries.
     
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  27. David Holland Posted: 12/28/2010 11:44pm PST

    The future of electric is inductive charging while on the freeway & smaller batteries.
     
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  28. Kevin Sharpe Posted: 12/29/2010 3:19pm PST

    #26, Dan, my Tesla Roadster has a range of 200+ miles. If it used the latest 18650 cells it would have a range of 300+ miles today. I don't consider that to be slow progress given the car is only a couple of years old.
     
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  29. fb_1834695949 avatar Orlin Pettit Posted: 11/20/2012 11:17pm PST

    A 1909 Johnson Empress Touring Car could go 200 miles if you only carried two people and loaded the car down with extra batteries... sort of like the Tesla Roadster. Johnson is still in business by the way... Johnson Controls Corp. Maybe they should start building the Empress again...much more elegant than the cookie cutter designs out now and the lead-acid batteries are so much easier to recycle.
     
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  30. John Pinke Posted: 1/1/2011 3:09pm PST

    An Israeli and an Arab with a French/Japanese electric car taking their idea to a Better Place in China...Canada/America left behind...only this time it's really going to hurt!
     
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  31. ffinder Posted: 1/11/2011 2:45am PST

    Kevin Sharpe, your roadster costs $110,000 for a range of 240 miles and model S $50,000 for a range of 300 miles. At that price only 1% of the world's drivers will buy them. Maybe in 8 years tesla will sell an EV for $10,000 and 400 mile range? BPlace will be selling EV cheaper than petrol cars in 12 months..
    ff
     
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