Published on June 27th, 2013 | by Important Media Cross-Post11
Smart Battery Leasing Option Is Working Well
There are several ways auto companies can deal with the high upfront cost of batteries (e.g. fuel for electric cars) — from battery swapping, to putting fewer batteries in the car and pushing cars with a lower range, to leasing the batteries. Leasing the batteries seems to be doing well for smart/Daimler, as this Gas2 repost points out.
Battery leasing for electric cars is all the rage in Europe, shaving thousands of dollars off of the asking price in exchange for a small monthly lease payment. Smart has deployed this strategy in the US market, and almost 90% of ForTwo Electric Drive buyers opted to lease the battery for $5,000 off the asking price.
As the single most expensive (and heavy) component of electric vehicles, battery packs have proven a significant drag on EV sales so far. But rather than selling batteries with EVs, why not drop some money off of the MSRP and lease the battery to buyers instead? I originally railed against this idea, but I’ve since had a change of heart. Seeing EV sales struggle will change a man’s mind.
According to Smart general manager Mark Webster, as of two weeks ago, about 53 of the 60 Smart ForTwo Electric Drive buyers opted for the Battery Assurance Program. This knocks $5,000 off of the Smart’s $24,995 MSRP, and that is before the $7,500 Federal Tax Credit, meaning theoretically you could buy a Smart ForTwo Electric for $12,500. Someone get back to me on if this is possible, or if I am missing something here.
Would you rather lease than buy? Smart will lease you a ForTwo with the battery for $199 a month, or $119 a month plus a $80 battery leasing fee. The advantage is that if there are any problems with the battery, it is Smart’s problem, not yours.
Nissan has yet to offer a battery leasing program, though its French ally Renault already does. Instead, Nissan offers a $100-a-month battery replacement program. With so many people leasing EVs, though, the battery leasing program doesn’t seem to off much of an advantage right now. But down the road, could this be a deal breaker for cost-conscious car buyers? Absolutely, and then Smart might really start seeing the benefits of battery leasing.