GM Considering Leasing Batteries for Volt

According to an article in Drive by Richard Blackbuon of The Sydney Morning Herald on September 5, GM is considering leasing batteries to customers, rather than asking a prohibitive price for the new technology. The leasing plan would result in customers paying a weekly rental, offset by the huge fuel savings.

"It looks as if it is going to cost a lot more to buy a car like this, however the fuel economy is enormous," Nick Reilly, the president of General Motors Asia Pacific, said.

"People won't buy a full car. They will buy a car and rent or lease the battery and the cost of leasing the battery will be the same as, or less than, the cost they're paying today for petrol. So the motoring costs of an electric vehicle don't necessarily have to be much higher than the cost of today's vehicles," he said.

Mr Reilly said the leasing approach could speed up the adoption of hybrid vehicles. "Before we were saying it will be an awfully long time before we can get the costs down so people can afford it, but actually if you offset the fuel costs, people can afford it," he said.

This certainly sounds like the way that GM could get the Volt to market the soonest, without having to worry as much about the life of the battery.

Comments

[5wheeler]

A GMAC Smartlease for batteries? Of course GM doesn't control GMAC anymore, so they will have to get Cerebrus to go along with it.

Innovative, but risky for the leaseholder of the batteries. What is the value of a dead battery?

[donb]

This certainly sounds like the way that GM could get the Volt to market the soonest, without having to worry as much about the life of the battery.

Leasing really only makes sense if the battery lasts longer than owner wants to keep the car. If the battery is still good, it has residual value just like the rest of the car.

If the battery is at end of life when the owner gets rid of the car, it would have been just as good if not better to have included the cost in the financing.

For those who keep their cars for a long time (like I do), leasing (generally) makes no sense at all.

[BCC]

My take is that this is about perceptions.

Consumers that may balk at financing a new entry-level vehicle @30k may not do so for a 20k plus battery lease vehicle, even though (presumably) the monthly payments would more or less come out the same.

Sound dumb? Try this: Would you go to someone offering oil changes at $5? How about a $25 change where you get a $20 gas card?

What's the difference?

Perception of quality.

It's not rational, but who said humans were truly rational?

[Harvey D]

A battery-less Volt (or other similar vehicle) should cost about the same or less than an equivalent standard ICE vehicle.

Assuming that one can save $20 to $40 a week in gas with such vehicle, renting the battery pack at $30/week or $1560/year would be fair and most users would break even.

Since a 40-mile PHEV battery pack will (should) last at least 8 years (eventually 10 to 15) and cost about $15K to $20K ($5K to $6K if built in China) a rental company would have to use imported units to ensure acceptable benefit margins of 15% to 20% per year.

Renting imported battery packs may very well be the best way to ensure faster PHEV market penetration and lower battery price with worldwide competition.

[Greg Woulf]

Leasing the battery has good points and bad. It allows GM to underprice the car so that the sticker shock doesn't scare people off is the biggest I see.

The other one that I think is very important is the battery material is controlled. If GM owns it, then it'll get recycled.

That's important because we're going to see a crunch in supply lines if GM produces 60,000+ cars, and then ramps up.

[Johnny V.]

If someone else owns the battery bank, you can bet that he will keep his butt covered via the leasing charge just like auto dealers stay covered with cars they lease. That means the lease charge will be exorbitant. That once again puts someone else in command of the cost of the energy supply so that he can exploit the user much like gasoline companies do now with exorbitant charges. Buy the batteries with the car! It's either pay now or pay later anyway. Why can't people just be responsible for their own actions and not have to have guilt edged securities in order to retain ownership of something?

[donb]

Why can't people just be responsible for their own actions and not have to have guilt edged securities in order to retain ownership of something?

Because some people don't want to retain ownership. These people presently lease cars. They are more concerned about the monthly payment than with the original price of the car. Rather than financing the whole cost of the car, the lease allows them to finance the the difference between the up front cost and the discounted residual value of the car, yielding lower payments (in theory).

This is not to say that leasing is always a good idea, or that there might be other ways of working a better deal.

On the other hand, I still have a problem understanding why someone would want to lease the battery and not lease the car. It only begins to make sense if the rest of the car loses value much faster than the battery.

[Crusty007]

It's very simple...GM is using the same tactics it did before with all-electric cars:
Don't sell it but lease it, so when politics change you can force a recall and trash it and build SUV's instead. Even if it makes sense for buyers financially, they should realise GM has them by the short and curlies and has a precedent in place for tearing them off at a moment of their convenience. They prefer to dictate the market any time as opposed to following the market, because that would require a brain, while dictating a market simply requires no conscience.
I leave it to the reader to conclude whether this is supposed to help the buyer or to entrap him.

[averagejoe]

"Don't sell it but lease it, so when politics change you can force a recall and trash it and build SUV's instead."

GM might find that a bit more difficult this time. The mere presence of PHEV's in the marketplace will force other car companies to come out with their own versions. I'm guessing that there will be room for several major battery suppliers. Even if GM pulls a fast one down the road, car owners should be able to get aftermarket battery packs by that time. The newer packs will probably be cheaper too. Who knows, maybe Firefly will be selling to the public by then...

[Greg Woulf]

Don't fall into the trap of blaming GM for the EV-1. That was just a movie. They did more, and spent more than any other car company in the EV field.

The motors that power the Tesla, AC Propulsion, Tzero and others descends from the squirrel cage AC electric motor developed at GM.

The controls as well got their start and GM, and enough reclamation braking technology and other support systems to impress most.

If any smart business man had the same choice in the same environment they would do what GM did.

The liability is why they crushed them, the lack in viability is why they didn't produce them. No large company is in the business to sell 10,000 cars, production starts at 60,000. Toyota came out with a hybrid, that's why they won, not an electric car.

If people hold onto the false prejudice against GM and don't buy a Volt then you're only hurting the EV development.

[BD]

"Why can't people just be responsible for their own actions and not have to have guilt edged securities in order to retain ownership of something?"

Leasing a new car seems to make more and more sense these days. Why would you want to own a new car longer than the warranty period? With all the navigation and associated electronics that are integrated in new cars now, and the fact that they are being constantly updated and reconfigured each new model year, the replacement/repair costs would be huge on a car that dates older than 5 years. That’s not taking into consideration the huge hit on depreciation that goes with this.

The garage is the shoe box, the cars are the shoes.

Planned obsolescence in the making.

[Truck Lease]

Leasing batteries would still be much cheaper than paying for fuel. I think it's a great idea!

[Equipment Leasing]

There is almost no point in buying a car anyway these days. By the time you sell it, you lose way more than if you just leased and got a new one every 3 years!

[Eco Eagles]

I am apart of Embry Riddle's Eco Eagles club. We are Embry Riddle's branch of the EcoCar challenge. We work to design, build and integrate solutions into an existing production vehicle. Solutions such as hybrid, plug-in hybrid and fuel cell drive train technologies will be explored. For further information visit www.ecoeagles.org

[krk realty]

In this way a single kothi can be converted into many apartments.