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Have you ever wondered why some cars have owned batteries, and others have leased ones? Suppose you are approaching the world of electric vehicles. In that case, you might be familiar with the idea that the battery represents one of the fundamental parts of a car and somehow the main point of distinction from an ICE (high combustion engine) vehicle. A lithium-ion (or Li-ion) is a modern and prevalent battery used in many different fields, capable of producing energy without waste, unlike how petrol cars do. And in an EV, it is the electric side of the efficient lithium battery that entices customers - while probably still confusing them during the purchase evaluation process.

 

Various car manufacturers have put on the market a peculiar set of alternative options regarding EV batteries, which mainly comes down to one final choice: the difference between the purchase and the lease of batteries for electric vehicles. 

 

If you decide to buy a car with a leased battery, you will be able to leave the battery out of the contract, an option that has allowed customers to rent the battery while owning the car. This has indeed represented a moderately valuable opportunity for the past ten years. It has given the advantage of removing all the worries related to the battery - from replacements, damages, depreciation, and - consequently - all the costs associated with the vehicle's maintenance. The idea behind this entirely removed the fear related to battery ownership. A driver could focus on the privilege related to owning an EV - forgetting the apprehension caused by the propagation of numerous urban legends where battery ownership was a costly, dangerous affair.

 

Are you thinking of investing in an EV with a leased battery? Check out the Karfu guide to know all the necessary information to make the right decision and not feel trapped in a long-term battery leasing contract.

 

Battery leasing - a bit of history 

 

In 2010, the first electric vehicle hit the UK market: the Mitsubishi i-MiEV, the first fully electric car manufactured by the Japanese brand and the first modern highway-capable mass-production electric car. Before this model, its precedents were all about conversion vehicles - petrol vehicles converted to electric by third party companies. Thanks to this turning point, the first real EV was released on the market, with a driver-owned battery of diminutive capacity and an original launch price of £38,699. The sum represented a considerable amount of money for the average buyer at the time (as it may well do today); moreover, scepticism surrounding this new generation vehicle's performance and maintenance costs increased the doubts held by many consumers. 

 

Newspapers were filled with news and features that narrated the downfall of electric batteries in baffling detail - the high costs involved in owning a battery pack and the myths surrounding its life, which had a fictitious length of four to five years, flooded the news. The uncertainty regarding the durability and performance put people off the purchase quickly, making EVs look far more unaffordable. That's primarily why the car overprices seemed doubly unattainable. Today, we know that these stories are not realistic: but in 2011, it was enough for Nissan and Renault to launch their first electric cars having taken the battery pack out of the sale equation to advertise their new vehicles. 

 

Producing an idea of the electric car that could be accessible and contemporary - simply by removing the concept of battery ownership - led both brands to launch the scheme that allowed the customer to purchase a vehicle with a separate lease for the battery. The advantages seemed pretty straightforward: excluding the battery from a sale made the car a competitively priced prospect, eliminating the responsibility of paying for a product that would (in theory) become unaffordable in the long run.

 

The plan worked: models like Renault Fluence and Kangoo, Renault Zoe and Nissan Leaf became the new competition. Other brands like Mercedes followed the flow, launching new battery lease vehicles with advantageous price reductions.

 

These manufacturers guaranteed their responsibility for the battery pack for the entire vehicle's lifetime. A car with a battery lease is significantly cheaper to purchase, and it can quickly become the most simple solution if you are looking for an EV without breaking the bank. Still, the older the vehicle gets, the more attractive this option becomes, as you won't have any deteriorating batteries to worry about, while cars with battery ownership suffer the drop in the vehicle's value as the battery loses effectiveness itself. Yet with battery lease vehicles, they retain a higher value.

 

Today the market of EVs is primarily associated with cars that include the ownership of a battery, a significant development that has evolved over the years: this is consistent with the evolution of batteries, as they have become cheaper, halving the initial price but doubling in capacity. People's awareness is also a significant factor: as we know, the information revolving around the world of mobility has widened the horizon, leading to considerable increases of awareness in the average customer, who is more receptive to the market and technologies. A battery lasts in power for many years, usually the entire car's lifecycle. As the worry extinguished itself, manufacturers have stopped releasing battery lease packs - and from 2020, many have entirely stopped producing this solution as an alternative option - although today, you can still buy a car with a battery lease if manufactured before 2020.

 

So what does a battery lease entail exactly?

 

In the UK, only two specific brands offer battery leases - either Nissan or Renault, with the French RCI Financial Services, part of RCI Bank, working as a conduit between the manufacturers and the customer as well as managing the finance agreements. The contract allows the potential customer to pay a monthly rental fee to rent the battery pack, bringing peace of mind through a lifetime battery warranty. A level of charge is guaranteed: on most vehicles, it is 75% - once the health state of the battery decreases to 25% capacity, your vehicle will get the battery replaced with a new pack. These were the initial conditions; more recently, the battery health level has dropped to 60%, with an associated increase in recovery assistance and breakdown cover. 

 

The real carrot of this type of contract is, of course, linked to the blatant decrease in the vehicle's selling price. When you are presented with buying an EV with a battery pack lease, you will have a discounted difference on the final purchase price of around £5000, a considerable amount that can become even more interesting today if you buy a second-hand vehicle that offers a battery lease. You will be able to save a lot on the car while spending the difference on a monthly payment for the battery, with a buffer of around five years that will help you cover the expenses in a brief period compared to buying a new electric vehicle. 

 

Nowadays, purchasing a new EV with battery ownership has become a desirable option as most people now want to own the vehicle outright. Hence, they prefer a battery held in the car, so the world is going rapidly that way. However, if you want to save money, these old-school models can still make a difference to your wallet. 


 

Battery life and urban legends

 

The developments in this industry segment were undoubtedly influenced by the presence of many urban legends concerning the battery's actual capacity and its unquestionable performance in terms of longevity and conversion efficiency. We all know that a battery is vulnerable to several factors that gradually modify its effectiveness. Renault and Nissan were probably well aware of this a decade ago - they certainly understood that it would take at least ten years for a battery to run out of capacity. That's why the idea of leasing met with the success it deserved - giving consumers precisely ten years to get used to the fact that an electric vehicle is a practical concept and that the battery is an intrinsic part of the vehicle with remarkable features. 

 

Today we know that a battery lasts as long as your vehicle, losing about 1% of its efficiency without affecting performance, but only 1% of autonomy. There are other factors to take into consideration, and they mainly concern the driver and the series of precautions he decides to give to his vehicle while driving: the distances undertaken, the speed, the type of acceleration, and the external temperature when the heating is on. These are factors that can change the performance in more significant percentages and should be taken into account when considering the degradation conditions of a battery. In addition, there are batteries of different brands that slightly change lifespan.

 

 

How do you start a lease for your battery?

 

Starting a battery lease should be pretty simple in itself: you will easily find a dedicated page on the manufacturers' website explaining the dynamics related to the lease, the prices and costs associated with the different models, and contracts you can analyse before deciding if signing up is what you are looking for. The contract will include a monthly rental agreement that will last for the entire time you'll own the car. A battery lease contract allows you to purchase an electric car as usual but requires you to rent the battery. This remains the property of the carmaker, and you pay a monthly fee to rent it, depending on the miles you'll think you'll cover - typically, it's about 50 and 100 pounds per month - which can be accounted for as the price you would pay if you stuck to petrol to buy your daily fuel.  

 

Selling the vehicle will also necessitate a pass of the contract to the new owner.

 

Conclusion

 

So is a leased battery an enticing solution for you? Maybe. 

 

It all depends on your situation. Your mileage and driving patterns can help you understand what type of vehicle you should be buying. When it comes to battery leasing, though, getting as much information as possible could be revealing - a permanent contract can be an overwhelming solution if you haven't considered all the pros and cons effectively and in-depth. 

 

We noted a few points to bear in mind if you decide to go for a leased battery EV. Firstly, it's essential to keep in mind that the type of contract you will sign allows for a monthly option only: payment must be exclusively completed every month - and they never change. You'll never be able to stop or freeze it - even if you decide that you want to keep your vehicle in the garage for a week, a month, or a year. You won't get a discount if your battery ages or if the efficiency decreases with time. That also means that if your financial situation takes a sinister turn, you will be unable to pay your bills on time. You might have your battery remotely disabled and kept disconnected until you are up to date with your payments again - the battery still belongs to the finance company, so it will be easy to disable usage if any payment is missed. Remember that you will be subject to a credit check before the start of your contract. 

 

Also, remember that if you are selling the vehicle, you will be responsible for ensuring that fees are passed over to the new owner - and if you are not familiar with this process, it could quickly turn into a painfully tricky road. And given the recurring costs associated with the challenge of passing it along, some buyers feel this is not the right choice for them.

 

And if you still want to go through the hassle, bear in mind that not all private or less established dealers are honest. Running a proper data check - an HPI query could help in the long run. Websites can often be misleading. If you've found a contract you're happy with, check with the customer service department of the rental agency you've approached to get an accurate cost and ensure it's exactly what you're looking for. And if you're looking for a used car, remember to check that it's a battery-powered model. This detail could be omitted to increase a prospective buyer's curiosity about a knock-down price - which doesn't consider the actual value of a battery-powered car.   

 

All of these details and information needed to start a contract may seem redundant. Indeed, in today's market, the concerns solved by lease agreements are superfluous, so the average buyer has now decided to move away from leasing and focus on buying a car more affordably and quickly. But if your primary goal is to save money, perhaps your leased battery-electric vehicle will still represent a cheap solution for the next few years.

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Silvia Iacovcich 23/06/22