Battery leasing could help ease anxiety about hybrids
DETROIT -- Greener cars that rely more on electricity than gasoline may also generate more consumer concern about the longevity of their costly, high-tech battery packs.
Industry executives believe one way to quell such worries — and lower the initial price for such vehicles — may be to lease their batteries to buyers.
Two companies are working on battery lease plans. Think Car USA plans to lease the batteries for its City electric car to go on sale next year. Project Better Place, a start-up with $200 million in funding from partners, is trying to create a system for consumers to "subscribe" to a service that offers recharging stations and battery exchange. "You would own the car. We would own the battery," says Joe Paluska, chief marketing officer for Better Place.
Such business models could be how plug-in and even standard hybrids are marketed in coming years.
Nissan is considering leasing batteries when their plug-in hybrid vehicles go on sale in 2012, says Larry Dominique, vice president of product planning. "To consumers, it becomes less of a worry" if they know they're not responsible for replacement costs if the battery fails.
The strategy is being considered after consulting with Automotive Lease Guide, one of the major services that predicts used car values, about the potential resale value of a plug-in electric vehicle. Lithium-ion batteries — the only type now compact and powerful enough for coming plug-in hybrids — cost more and have more reliability concerns than current batteries. They build up more heat and even have caused fires in laptops and cellphones.
Until plug-ins are on the road for 10 years or so, automakers may be happier leasing batteries to consumers, says Mary Ann Wright, CEO of Johnson Controls-Saft, and vice president of Johnson Controls' hybrid battery business, which develops these batteries. "Until we know how these things are going to behave on the road, and how much these things are going to cost, it would make sense to lease them."
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