RENAULT tried it. And it failed. But there is something to be said for Battery-as-a-Service, where the battery is leased separately from the car.
Renault originally introduced the option of purchasing its electric cars without a battery which you leased separately. Part of the idea was that it lowered the cost of entry into electric vehicles.
Unfortunately, the residual value setters became rather grumpy at the idea of estimating the future value of a vehicle if it didn’t have a battery, and Renault quietly dropped the programme, particularly as the cost of EVs started to lower.
But that doesn’t mean the idea has gone away.
In China, electric car brand NIO is actively expanding its Battery-as-a-Service (BaaS) operation (main picture). Drivers effectively subscribe to a battery for their requirements. So if most of their driving is around town, they subscribe to a smaller battery with less range; however if they then want to visit relatives further away, they can change their subscription to a larger battery with a greater range.
The best part of all, is that drivers pop into a local NIO battery swap station and get a new fully charged battery in the same timeframe as it takes to fuel a conventional petrol or diesel car.
What this does provide is brilliant flexibility. Will other car makers follow?
That’s a good question. Until now it looked like NIO was on its own in that respect – and to date there is no indication if the Chinese firm will provide a similar offering in Europe, although Chinese rival BAIC Motor Corporation does use swappable battery technology but only for fleet taxi buyers. However, South Korean firm Hyundai has recently signed a Memorandum of Understanding (MOU) to provide a large scale EV ecosystem, which suggests BaaS has some groundwork beneath it.
Hyundai Signs MOU To Support Leasing Batteries With Taxi Firm
According to a Hyundai statement, Hyundai’s MOU is with South Korea’s Ministry of Trade, Industry and Energy as well as Hyundai Glovis, LG Energy Solution and KST Mobility with the idea of exploring innovative business models combining electric vehicle purchase with battery lease and battery reuse.
Under the agreement, Hyundai says that a taxi operator, KST Mobility, will sell the ownership of batteries in newly purchased EVs to Hyundai Glovis, the battery lessor. KST Mobility then pays a monthly fee for battery usage. As a result, KST Mobility can lower its initial investment for EV purchases.
When the batteries are swapped after extensive usage, the batteries removed from the taxis are reused as an energy storage system (ESS), drawing cheaper energy during the night, then fast-charging EV taxis during the day when electricity would be more expensive through traditional outlets.
While not the NIO battery swap idea, it does demonstrate that innovative ideas are at work in the EV world, and that what we consider normal – the regular charging of batteries either at home or at a public charger – might not be the only solution to driving EVs.
The View From GlobalData On Battery Leasing
We asked Senior Automotive Consulting Analyst at GlobalData, Bakar Sadik Agwan, for his views on the Hyundai agreement. He said:
The MoU has potential to support the EV growth in South Korea and will be a use case for OEMs across the world. The cost of acquisition along with the availability of charging infrastructure and concerns related to battery-life are key factors that affect the large-scale uptake of electric vehicles. OEMs across the globe have been exploring opportunities to increase the uptake of electric vehicles through innovative business models, battery-as-a-service being one of them.
“An EV without a battery reduces the upfront cost of a vehicle by 30-40% and the battery can be rented out or leased separately, dividing the cost of owning and maintaining over a vehicle’s lifetime. According to GlobalData estimates, a customer can lease an EV battery over eight years at a price that is equivalent to the purchase cost of an EV battery. Leasing is a better option for customers, who do not clock a high number of miles every year.
“Renting or leasing out batteries offers additional benefits such as timely inspection of battery residual values by the service provider, free/warranted replacements and assistance by service providers in the event of a breakdown. Shared mobility, logistics and delivery companies with large fleets will gain significant cost-benefits with such a leasing model covering repair, service and replacement of batteries.
Some OEMs and governments in key markets such as China and Europe already have an active battery renting or leasing business model. However, it has not reached the required rate of commercialisation globally. Hyundai’s implementation of the EV ecosystem with the battery being rented or leased out can be a good example for other OEMs, government and stakeholders such as energy companies and mobility players across various countries to replicate the model to boost the uptake of electric vehicles.
In the UK, the focus is very much on improving the charging infrastructure and increasing charging times. For example, the new Hyundai IONIQ 5 supports both 400-V and 800-V charging infrastructures (ie fast charging and really fast charging). With a 350-kW charger, IONIQ 5 can charge from 10% to 80% in just 18 minutes. But users only need to charge the vehicle for five minutes to get 62 miles of range, which could be enough to get them to their destination.
The UK seems fairly steady in its path along traditional ways of charging EVs. But the opportunity to create sustainable EV ecosystems should not be overlooked either.