Quick follow up to an earlier post on the electric car movement: it turns out that the battery lease model has a second (intended) entrant. As reminder of the first:
“Interestingly, …upstart Think, out of Norway, aims to manufacture electric cars with a sales model geared to sell the car itself, but lease the battery, and sell services (such as WiFi) that utilize the car as platform. A definitively new model.”
On October 29, the Wall Street Journal covered former SAP executive Shai Agassi’s unnamed startup for which he’s raised $200 million to tackle electric car manufacturing. Like Think, he expects to lease the battery and sell subscription services:
“He says his company would buy and own the batteries. It would charge consumers a monthly subscription fee to recharge the batteries, and set up a network of charging sites and service centers, akin to gas stations, that pull out depleted batteries and plug in new ones to allow users to continue driving. The subscription rate would depend on a few factors, including how much customers drive, but overall, Mr. Agassi says he expects the cost of owning and operating a car under his system to be less than that of gasoline-based cars.”
And it turns out GM might take up the leasing model as well:
“General Motors is also looking into the idea of leasing batteries for its Chevrolet Volt plug-in hybrid electric vehicle, says Tony Posawatz, vehicle line director for the Volt.”
I’m still curious about how incumbent automakers will navigate what looks from an inexpert view to be a serious distribution issue. Electric cars need much less maintenance than traditional gasoline ones and dealerships rely on maintenance as a significant part of their revenue (e.g. more than new car sales at a large set of dealerships in Louisville). As I wrote in a comment to my prior post, if electric cars do usher in a lower maintenance era, dealerships are in trouble and automakers will have to rethink their partnerships.
Part I: Concerned Citizen’s Take on “Who Killed the Electric Car?”
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Photo credit: Electric Car in Florence, originally uploaded by Bill Liao
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I’m amazed that anyone would take the Agassi scheme seriously. It solves nothing, and is a simple con - all-electrics are not economically viable, and leasing a bttery pack rather than carrying essentially the same (or lower) costs on the auto loan rather than a lease agreement makes even less economic sense. Battery swapping has been rejected as impractical by more than one battery expert, but not matter -
with the advent of plug-ins that can accomplish 95% of what all-electrics can, and with unlimited driving ranges, the idea that we need to stop and swap out a 500 pound
battery every couple of hours is laughable. Agassi doesn’t even realize the economics of what he’s dealing with, nor the obvious reality that his scheme is attempting to solve a problem made totally moot by plug-in technology. And when batteries are cheap enough to make all-electrics possibe, they will also be fast recharging, making battery swapping meaningless once gain. Agassi is one very rich, very stupid, would-be hero.
Kent - Let’s see. Put an internal combustion engine and all the cost and maintenance that requires in a car ALONG WITH an electric motor, or just put the less expensive, lighter, easier to maintain electric motor, with an infrastructure outside the car which provides charging services, and yes, swap stations for the occasional longer-range trip. It is you who doesn’t understand the economics here. But you will learn…
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