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Dr. Herbert Diess, Chairman of the Board of Management of the Volkswagen Group. Image courtesy Volkswagen AG.

Batteries

Volkswagen Says It Will Lease Used EVs To Maintain Control Over Its Batteries

Volkswagen says it will begin leasing used EVs.

At the Munich auto show this week, Volkswagen Group CEO Herbert Diess told the press his company plans to offer leases on its used EVs as a way to maintain control over the batteries that power them. The anti-EV lunatics are up in arms about battery recycling, with some who are clearly under the influence of mind altering drugs (or a certain former US president) claiming EV owners will simply drive their cars into rivers and lakes when the batteries stop working, endangering the world’s water supply.

Automotive News Europe reports Diess told the audience that Volkswagen will offer used-vehicle leases on its ID family of electric vehicles, including those in North America, as a strategy to keep control over their valuable batteries. Diess said the secondary leases would allow the company to recycle the valuable battery packs into new uses, including home power centers and fast chargers.

“In Europe, we are trying to get a second lease and even a third lease, and keep the car in our hands,” Diess said. “Battery life we think today is about 1,000 charging cycles and around 350,000 kilometers [about 215,000 miles], something like that. So, the battery would probably live longer than the car, and we want to get hold of the battery. We don’t want to give the battery away.”

He added that the value of a battery survives after the value of the car surrounding it depreciates over time. That value could help keep residual values high which in turn would make secondary leases more affordable. “There already is an indication that residuals for electric cars might be higher than for [internal combustion] cars because, even if the car is totally worthless, still there is a battery,” that may have 70 or 80% of its original energy storage capacity, Diess said.

“The task for our organization is to really try to keep hold of the batteries and probably get into a second or third lease cycle for the car and then reuse the batteries. In the regions, it has to be worked out, it has to be agreed with the dealers, but we would like to keep every one of the batteries forever,” Diess explained.

Scott Keogh, CEO of VW Group of America, chimed in to say that since the ID. 4 began arriving in the US in March, about 80% of the 6,230 VW ID.4s sold in the US have been leased. “We will have the second lease product. We’ve preplanned it already,” Keogh said, adding that the preset residual values would keep EVs in customers’ hands for up to 8 years, at which time they would be returned, their batteries stripped out, and the vehicle recycled back into raw materials.

Other Volkswagen News From Munich

Ralf Brandstaetter, the head of the Volkswagen brand, also addressed the press in Munich and said the US is expected to eventually receive a third EV model, a fastback sedan called the ID Aero. Built on the ubiquitous MEB electric car platform, the more aerodynamic design should help the Aero to have a longer range on a single charge.

Both Keogh and Brandstaetter said that the US market would also eventually see an Atlas-sized 3-row EV crossover, though its timing and exact size remain under discussion. Keogh added that Volkswagen turned a profit from North American sales in 2020 for the first time in over a decade. It represented a $700 million turnaround from the division’s rather dismal performance in 2019. He credited the strong performance of the Atlas and Atlas Cross Sport, two gargantuan SUVs that Americans can’t get enough of. Both reap large profits for the company and those profits can be used to finance Volkswagen’s electric car push. That’s the silver lining in an otherwise dark cloud.

The Takeaway

How interesting that EV battery packs may be more valuable than the cars they power. Who’da thunk that, huh? At the beginning of the modern EV era, most people worried the batteries might not last more than a few years. How things can change in just a few years.

And I don’t know about you, but if I were the head of a global automaker, I probably wouldn’t be telling the world my cars have little more than scrap value after just 215,000 miles. Yes, in the ’60s, any car with more than 50,000 miles on the odometer was considered ready for the junkyard, but today there are Civics and Corollas on the road that are 30 years old with more than a half a million or more miles on them — sometimes much more.

Lastly, why would Volkswagen bring a fastback sedan to America, a place where pickups trucks with the aerodynamic profile of a barn door are selling for sticker price and manufacturers can’t make enough of them to meet the demand? If it’s not pickemups, it’s behemoths like the Atlas, the Ford Expedition, the Chevy Suburban, and the Hyundai Palisade that are the vehicles of choice. The Chevy Impala is a fine sedan with a fastback shape. GM can’t give them away.  What is Volkswagen thinking? It won’t give us the ID.3 because Americans don’t like hatchbacks, but it will give us a sedan? Madness.

As always, your mileage may vary. See dealer for details.

 
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