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Leasing And Swapping Electric-Car Batteries: Will It Happen?

 
1,177 views Jan 24, 2011

Think City electric vehicle

Think City electric vehicle

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New-car buyers are already faced with a barrage of service contract offers, including extra-cost extended maintenance guarantees.

In the future, proposes Charles Gassenheimer, chairman and CEO of battery manufacturer Ener1, electric-vehicle battery leasing should be added to the options.

“We can come up with a creative lease finance model that more appropriately allocates [the cost of] battery use,” he said.

Gassenheimer was one of several executives taking part in an Electric Drive Transportation Association media teleconference on batteries last week. Others included Andrew Chu, vice president of marketing and communications for battery manufacturer A123 Systems, and Mark Wagner, vice president of government relations at Johnson Controls.

Currently, the battery represents up to 45 percent of the cost of an electric vehicle. Getting that cost down will be crucial to widespread consumer acceptance of plug-in vehicles, according to virtually all reports.

Tesla Motors - Model S lithium-ion battery pack

Tesla Motors - Model S lithium-ion battery pack

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As Wagner pointed out, increased demand for electric vehicles—and thus for batteries—is critical to reducing costs. But if consumers aren’t willing to pay the premium represented by the current price of an EV, and government subsidies don't make up the difference, it will be hard to grow demand.

Wagner also said consumers need to analyze the total cost of ownership of an electric car, including reduced fuel consumption and maintenance costs.  Increased use of electric cars in fleets will help gather that information, he said. Fleets can collect the data needed to calculate cost of ownership.

Historically, unlike fleet buyers, retail car buyers have overvalued initial purchase price and undervalued the total cost of ownership, including maintenance and fueling costs--whether grid power or gasoline.

Andrew Chu focused on the total usable energy in a battery pack. Automakers generally consider a battery at end of life when it has depleted by a set percentage. But batteries can also be used by utilities for energy storage, which don’t face the same end-of-life issues, he pointed out.

If consumers are only going to use some percent of the battery, he asked, why should they pay for the whole thing?

Renault Fluence ZE production electric sedan

Renault Fluence ZE production electric sedan

Enlarge Photo

Gassenheimer suggested that consumers could buy a service agreement under which they pay $100 to $150 a month to use the battery. Every three to five years, the battery could be swapped out. It wouldn’t go to that great battery farm in the sky, however. It could still be used for storage. 

Ener1 supplies lithium-ion battery packs  to Norwegian EV producer Think as well as for Volvo's C30 electric car. It also provides storage systems to the Russian National Power Grid. Expanding the use of lithium batteries as energy storage devices can also help drive the cost down by boosting demand.

Of course, battery swapping isn’t a new idea. Shah Agassi, founder and CEO of Better Place in Palo Alto, CA, has been peddling the idea for several years. Better Place already has a pilot program in Israel. A123 supplies the swappable battery packs, which will be used in Renault Fluence ZE vehicles.

Thus far, only the Fluence ZE and the upcoming 2012 Tesla Model S are confirmed to offer the ability to swap out battery packs. Standardization of pack size, design, and mounting hardware will not come in the short term, if at all--meaning any swap station would have to stock a supply of packs for many different electric vehicles.

Getting more battery manufacturers behind the idea could give battery swapping more legs. Consumers will just need to get used to think about paying for their car very differently.

Do you think battery leasing and swapping will arrive for electric cars globally? Leave us your thoughts in the Comments below.





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Comments (15)

  1. By cdfile Posted: 1/24/2011 9:11am PST

    Probably the only way to get these vehicles to take hold.
     
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  2. By  Efried Posted: 1/24/2011 9:12am PST

    I wonder why the 45% price tag for the battery is not reduced by allowing to buy n-battery packs according to the estimated range demand and the option for upgrading if necessary...
     
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  3. fb_695240567 avatar Jean-Charles Jacquemin Posted: 1/24/2011 9:42am PST

    For me the question is very simple, my next car will be electric for sure and, second ,it will have a swappable battery.
    It is nonsense knowing the rapid evolution of both performance and price of batteries to buy a car where you will be faced by the economic depreciation of the battery.
    I bought personal computers and laptops at times when the day you had them, there were obsolete.
    I do not want to pay to play the same game again.
    JC
     
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  4. By Eletruk Posted: 1/24/2011 9:43am PST

    There really is little maintenance with an EV. So essentially the cost of the vehicle, and the electricity is your total operating cost. So for instance, a Nissan Leaf is $25000 after tax credit, and assuming 100K miles with electricity @ .11/KWh, total operating cost is about $27875 (or $.28 /mile), yes that’s right total energy cost for 100K miles is $2875. So let’s compare that to a Prius that starts at $28000. Gas cost for 100K miles at 50MPG is $6000 at $3 a gallon for gas. Plus oil changes every 3000 miles ($30 x 33) = $1000. Prius has been pretty reliable, so let’s assume no major repairs other than scheduled maintenance ($250 x 4). That brings the operating cost of the Prius to $36000, or $.36/mile. Other gas vehicle will be more since they don’t get the mileage a Prius does.
    So even when compared against the fuel sipping Prius, the Nissan Leaf can save you money, even for the first 100K miles under which most ICE repairs are covered. Even if you compare the Leaf to a mid-market car like the Toyota Corolla - $20,000 + $2000 (maintenance) + $9,000 (gas) you come out ahead. So there you go, EVs don’t just save the air, they save you money.
    Note that even after the 100K miles, the battery doesn't stop working or need replacing, just the range will be diminished. So worrying about the cost of replacing the battery is moot. Focus on the TOTAL cost of the car (car + fuel + maintenace) and it's very easy to see the EV is still cheaper.
     
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  5. By Bert Posted: 1/24/2011 11:44am PST

    You're not including a 220V EVSE for the EV which cost albout $2000.
    You don't have to change the oil every 3000 miles. Today's modern oils can go a minimum 5000 miles. So that's $600, not $1000.
    You're also assuming everyone will get the full $7500 tax credit which many will not. It may be $5000, $3000, $6500 or something else.
    A Nissan Versa SL costs about $17,000 and it's just about as big inside. At 28 mpg, it's $10,714 for fuel costs. Add another $600 for oil changes. That's $28,314 for the Versa.
    So, with the EVSE installed for the Leaf, the Versa is now less in total operating costs for 100,000 miles than the Leaf.
    The Versa can go on vacation, take the kids to a tournament 80 miles away, a day trip into a National Park, and across town and back without waiting HOURS to recharge. And it can go 70 mph for hundreds of miles. At a sustained 70 mph, the Leaf will come to a standstill in about 65 miles.
    You can't take the Leaf on a vacation, or even a modestly longer drive. Want to drive up the coast for a few hours? Can't do it in a Leaf. You got 40 miles before you have to turn around. That's a severe penalty. Forget about driving to any remote areas, say, if you're a photographer, hiker, bicyclists or adventurer. Or just want to get away somewhere for the day.
     
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  6. Canucnik avatar Canucnik Posted: 1/24/2011 11:45am PST

    "Range anxiety!"...how about "Fear of change" and big Oil's propaganda...they (Exxon) still have that good battery from the EV1.
    Shai's "Swap" will take hold in Israel, China, Norway maybe even Japan but North America will be the laggard.
    Those who have changed the universe have never done it by changing the "Officials" but by "Inspiring the people!" And the average person, male or female, that I've spoken to are "Super" stuck in the past...as General Honoré usta say "Don't get stuck on stupid...stupid!" We got a long way to go buying into "Battery Swaps" is a start! I feel like the "Lone Crusader" up here!
     
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  7. fb_536959111 avatar Paul E.Appleton Posted: 1/24/2011 3:59pm PST

    Leasing And Swapping Electric-Car Batteries: Will It Happen?......It is such a dynamic and disruptive proposition, most people will be stunned...the uptake will make the rise of google's stock or the mass adoption of the iPhone, look like slow motion events. And for our ( and any ) country....increased energy freedom and decentralization is death to the petrodictators out there.
     
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  8. By Bert Posted: 1/24/2011 4:00pm PST

    No fear of change. The same typical evil oil talking points just aren't going to work with anyone else except early adopters.
    $10,000 more for a car with 1/4 the range and 4-8 hours to charge after going 80 miles?
    Less for more. So gullible.
     
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  9. By RGDanon Posted: 1/25/2011 1:11am PST

    Cash buyers will likely be fleet, early geeks and wealthy fashion followers, the public will jump on board on the basis of leasing and swapping particularly if those leasing/swapping companies price themselves competitively for the long haul. I suspect that many of the manufacturers may offer leasing programs to entice the first time buyers.Other incentives such as tax deductible payments can also accelerate take off. The winds of wellcome disruptive change.
     
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  10. fb_503647030 avatar Bob Averill Posted: 1/25/2011 4:39am PST

    Bert: $10,000 more for a car with more range than I ever use in a day, 30 minutes to fast charge from 0 to 80% and 4 total moving parts in the drivetrain as opposed to over 300 in a gasoline vehicle? A smoother, quieter ride in a vehicle fit for the 21st century with drastically less maintinence to boot?
    Sign me up. Luddites are welcome to their oil burning horseless carriages, the rest of us will be zipping around in our sleek, silent cars of the future.
     
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  11. By allen gilmer Posted: 1/25/2011 5:23am PST

    I don't think most people make decisions solely on up front or total cost. Easy monthly payments will go a long way. I don't think it an "either/or". Most families have multiple vehicles. Making one an "in town" car seems minor, from a behavioral point of view. Also, remember that, except for some parts of California, your electric car will be predominantly coal powered. The whole energy mix thing. Unfortunately there hasn't been any breakthroughs in the smug-generated electricity sector.
     
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  12. By Dwayne Posted: 1/25/2011 11:00am PST

    Here's 8 things you don't know about the Nissan Leaf: http://www.energyinyourlife.com/article.php?t=100000076
     
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  13. By TylerBlue Posted: 1/25/2011 4:17pm PST

    Meet the first family to own a Nissan Leaf in Texas: http://fb.me/NudpgXCz
     
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  14. By ffinder Posted: 1/26/2011 3:28am PST

    2 questions of this article.
    Standardization of batteries for Better Place:
    The only requirement.. the battery must be able to be removed from under the car.
    http://blog.betterplace.com/2010/12/myth-buster-can-our-switch-stations-accommodate-different-battery-types/
    supply of packs for many different electric vehicles:
    A Better Place battery switch station using only 15 batteries has the ability to swap batteries for 2,500 EV's
    http://www.msnbc.msn.com/id/3036789/#40471407
    more info:
    http://en.wikipedia.org/wiki/Better_Place
    ff
     
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  15. By Bob Posted: 1/26/2011 9:16pm PST

    I've been thinking this battery exchanging is the best idea for a year or so now. We already have gas stations where the batteries could be stored and exchanged, and I'm sure it wouldn't be that difficult to come up with an exchange rate taking into consideration the batteries won't all be the same age with the same life left in them. So then it becomes a matter of just paying the exchange station for the cost of recharging a battery plus some life expectancy rate and overhead, and you're on your way. Sounds as simple as exchanging a propane tank. Really need to encourage battery standardization!
     
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