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Buy Model S, lease the battery pack?

Hello.

I just wonder if Tesla could do a bit like "lease Roadster, buy Model S" kind of deal with future better battery packs. I really would like to have Model S, but it doesn't have the range I need. However I believe in very close future you can have same (physical) size battery pack as 300 mile version that has 500 mile or bigger range. So I would not like to buy a expensive battery pack when I know I would need to replace it with better one soon and then pay same amount of money again, but I would like to have my EV ASAP.

So as solution for longer range trips I would need to use other methods of traveling, but I would have Model S for shorter trips at home and I could swap to better battery when it comes available by ending a lease of the battery pack and just installing a new one. If it has good enough range buy it instead of lease.

Car itself would be a bit cheaper, lease would be for battery pack (which needs to be replaced eventually anyway). Maybe even creating more market that way by lowering the initial cost of the car.

Does that make any sense?

Timo-
The cover story in the October WIRED magazine tells the story of Mr.Musk's narrow escape in funding the Model S startup and indeed the Roadster, too. Having the factory absorb the cost of the S battery could be more financial stress than Tesla needs. Plus, Nissan recently announced Leaf owners will own their battery, and they're feeling no pain. As I've read on this entertaining website, batteries in the future are almost certain to be better (500 miles, maybe) and cheaper (Moore's Law?). Hang in there, Timo. It just gets better from here.

That's why Timo whant's to lease the battery, the bigger, better and cheaper battery is only 2 years away. Hell the 300 Mile battery sounds really so much better than the 240 mile. So it would be cool to kinda 'rent' it till the bigger is here.

But like you said, that's kinda unlikely. Still some sort of an upgrade option might be kinda cool.

I totally agree with Timo. I think sales would go nuts if we could lease the battery. Tesla would need to build a few more plants to meet demand. Well, at least have an upgrade option. Battery technology is just going to get better quicker with today's technology. You should see the lithium chargers and lithium batteries my kids and i use for our "big boy toys". Did i mention the big boy toys use brushless motors that can crank out 60K rpms?

Cheng

BTW, i'd like the 1000 mile range version OR have the ablity to tow an extra 500 mile battery behind me in a solar powered or wind powered cargo trailer built for the spare pack. I can do a swap at the rest area then plug in the first pack to charge in the trailer. Now, you can really do road trips! 300 miles would not be road trip capacity.

Cheng

You and what team of gorillas are going to remove and replace that battery pack at a rest stop? Do you have any idea of the weight of one of those packs? Although Tesla has a technique for doing this and can probable do it in 5 minutes, this isn't like changing a tire on the ol' family sedan.

300 miles is not road trip capacity? That's like 6 hours in the car. Won't you want to stop for lunch or something? An L3 charger should be able to give you another 240 miles in an hour while you're eating.

More like five hours.

Problem is that there are no L3 chargers where I need them in possible routes I might use. Not yet anyway. In future probably yes, but that's pretty uncertain for near future. I believe that we get the 500 mile version before we get the chargers here. Even the standard is not yet rock solid for L3 chargers.

Well, the Model S is not available in the near future either, so I wouldn't worry about the near-term prospects for chargers.

It may well be different where you live, but in Washington state where I live, there will be 50 L3's put in over the next year. That will be more than enough to cover the state, and Oregon and California are doing the same thing.

You are correct that not everybody has agreed on the standard, but I don't think that matters. Once a bunch of Tepco L3 chargers get on the streets (and they are coming), automakers are going to make sure that their vehicles are compatible with them. It's a good standard and there's no license fee, so there's no reason to not go with it.

In my opinion, this is a "deal-breaker" topic for most potential EV buyers. 1. The current battery system cost $30k, that's more than half the entire vehicle! 2. As many of you have mentioned, the battery technology will only get better and cheaper in the near future so it doesn't make financial sense to own this piece of VERY expensive technology that WILL become obsolete way before the useful life expectancy of the vehicle itself. 3. By leasing the battery, there will be so much more demand for EV's that the added car sales should be enough to offset the money lost in battery lease program. The companies do this all the time. For example the video game industry where they LOSE money on the Console sales to gain market share then rely on Game Sales to offset the loss and make profit. I think the bean counters at Tesla should do some serious number crunching to make this work. This IS the new future of mass transportation and the first to command the biggest market share will win out. Tesla certainly have the technological edge and production capacity with NUMMI so they are in a perfect position to do this now before the competition start to heat up.

I'm a POTENTIAL buyer of Model S but what's holding me back is the idea of owning the battery. If I have the option of buying just the car and lease the battery, Model S WILL BE MY NEXT CAR TO OWN. Otherwise, I probably won't consider buying an EV for another 5 to 10 years. Aside from your usual "Early Adapters" I'm sure most of us "average" consumers feel the same way.

Different people, different strokes. I'm not getting an EV from a manufacturer that will only lease the battery, not sell it, like Renault. I'm buying both the car and the battery, or none of them. Leasing always works out more expensive. Especially if you are like me and usually keep cars for 7-10 years.

Problem with your approach is that you are stuck with that battery you get now, when battery tech is advancing _fast_. I would like to be able to swap to better battery when that becomes available without need to buy first this battery and then that new one.

There are already batteries in prototype stage that are approx double the current batteries (400Wh/kg, 1000+Wh/L), but it looks like early adopters are stuck with current generation batteries. If those batteries are available in 2014-2015 or so and give me 500-600 mile range instead of 300 I _really_ would like to have them. After the 600 mile range has been achieved it doesn't matter to me anymore if it gets bigger. After that it is only miniaturization of batteries and getting better performance from them.

I understand that different people have their own preferences therefore, battery lease program should be available as an OPTION for those who like Timo and I don't want to be stuck with inferior battery. I won't mind paying a bit more upfront to be able to upgrade in a couple of years. The car itself is fine and relative to battery, I don't think the future models will be all that better. On the other hand, the battery is an entirely different beast.

Yes, if you need more range I agree it can be tempting. I don't need more than ~240 ideal miles, so the 300-mile pack would probably work for quite a few years before it's down to 80% capacity.

All you really need is a program to recycle the battery. Then you can turn in your old one for a credit on a newer battery with more range, etc. Won't be a 1 to 1 swap, but with the credit you get it'll help with the price of the battery change.

I pray that this is one of those under promise and over deliver deals, that Tesla will say we can only do this or this will cost this much as we are in the research and prototyping stages. Once the Model S comes to market, imagine how happy we all would be to see they are delivering something better then what was promised and maybe a replacement for less the previously expected?

I don't think it is likey that Tesla can under promise and over deliver. I remember Tesla use to promise 260+ mile driving range on their Roadster but when everything was said and done, it was only 220 miles and that's probably a "lab" range and not even a real-world, practical range. As for Model S at $50k, I'm doubtful how they can produce mostly aluminum body car for $20k with battery itself will cost $30k and still make profit. I'm sure compromises have to be made and some corners being cut. I like the recycling credit idea by Vawlkus. Like some parts supplers offering core exchange credit on major components such as transmission, differentials, etc., I'm sure raw materials even on used battery should worth something.

IIRC they promised 250 miles. They have delivered 245 miles. Real world range depends pretty much of how you drive. Current record is over 300 miles. Tesla battery is actually quite cheap. IIRC Roadster battery cost is about $20k, not $30k, and Model S released price is for 160 mile version which will have quite a bit smaller battery.

Everyone asking for a leasing arrangement on the battery is forgetting one VERY important thing. That original battery MUST be paid for by someone. Once a lease is up, the leasing company OWNS that piece of equipment. Well, what company would LEASE a battery like this in this day and age when they KNEW when they got it back it would be out of date and barely worth pennies on the dollar? The reason OTHER car companies are leasing their battery is to make their car LOOK more financially attractive than it is. They are also probably absorbing some of the loss on the battery and padding it by financial profits from other (non-EV) leases just in order to get these out in the market.

If you look at history, one EV car was a "lease only" deal years ago and they FORCED people to hand them back so they could destroy them even though no one wanted to give them up.

I figure I'll get a Model S and live with it until such a time as either the original battery doesn't work for me anymore or that a replacement battery is reasonably enough priced and extends the range a sufficient amount for me to justify it. It will be interesting to see what the additional up charges are for the 230 and 300 mile battery over the 160 mile standard battery.

But, at the end of the day, I only commute about 15 miles each way - 30 total a day. Add in some side trips and I'm almost always under 50. That means that, theoretically, I could last 3 days with NO charging. I wouldn't do that. What I probably will do is just charge it off of 110 and save the ridiculous price they want for the L2 station (I once heard something like $2200).

I'm going to KEEP my gas SUV for the few times when I need to a) Tow something, b) carry some big/heavy stuff, c) use 4wd, like in the deep, deep snow or d) need a longer range. I expect that the number of times I drive my truck every year will be VERY VERY few, but I will not sell it, it's just not worth enough and will pay for itself over time in convenience and allowing me to decide at the last minute that I need to use a gas vehicle. I COULD just switch with my wife, but... I really DO like my truck!

Now, if Tesla would offer to do auto refits with electric drive trains, I would SERIOUSLY consider having my truck reworked or, more preferably, buying a retrofit kit and doing it myself, as an electric vehicle, but, being realistic, there is no way I would pay tons more than the truck is worth to do that either.

Perhaps Tesla could work out a deal with Better Place to handle battery leasing and/or switching.

Better place has to prove it's concept first, which I am personally dubious of them being able to do.

Leasing:

What you guys apparently don't understand about how a lease is calculated:

3 yr lease is typical for vehicles, so let's think about this, $50k car for example... Total lease cost is about half, because they figure this car will be worth $25k at the end of the 3 yrs. If car is worth more at the end of lease, you will pay more to keep. If car is worth less, you can walk away "lucky"

The problem with battery technology lease is this: they will say "in 3 yrs, this battery will be worth how much?". The answer, unfortunately is probably remarkably close to $0. This means that a 3 yr battery lease will have to be figured for a final value of $0. This means a 3 yr loan for battery. With 4% interest, this is $884/mo battery lease. If you just roll into 5 yr loan, it will be $552/mo.

The problem is these are figured not by tesla, but by some financial person trying to "break even" with lease compared to loan... And "final value" of battery is UNPREDICTABLE, and therefore for safety must be calculated at $0.

I have an early reservation for a Tesla and my only barrier is my concern about the battery. By the time my nuber is up they should have long term battery capacity charts that give me a better idea of how much capacity I can expect to lose over time. I usually keep cars til the end of their useful lifespan. If I am going to be ssaddled with a $20,000 battery pack replacement cost in 5-7 years it will be very difficult to make the argument for purchase as the residual value of the car at 5 years will be about 30% of it's purchase price. I think a 10 year or lifetime warranty on the battery pack will be required to make the car a practical purchase. I am hoping Tesla will come up with something to allay my fear of getting "electric shock" halfway through the cars useful lifespan.

On another forum, someone who knows someone working at Tesla (yeah I know) said the battery will be leased. At least here in Belgium.

Hope that's not an european thing, battery leasing would be a total deal breaker for me.

Elon has always been cold to the battery lease idea when asked in interviews.

I can guess why.

Battery survival depends not only on the battery management system, but how badly it may have been abused by the user. e.g., leaving the battery in a discharged state for an extended period of time, and even using range mode way too many times.

Apparently such actions would be recorded, but it certainly wouldn't be good publicity for a leased battery to fail, and the user to be told "You broke it, you buy it."

From my own point of view, I probably wouldn't trust leased batteries that hadn't been made by Tesla Motors.

Jeremy, I think you're overestimating the battery degredation after 5-7 years. It's not going to just give up the ghost, it will just lose some of it's capacity. And if battery tech has evolved as much as we think it will between now and then, if you chose to replace it, the equivalent range would cost you far less than the $20k you bought it for.

I agree with Mittar. I've read that this battery will have approx. 70% of initial range after 7 years. So a 230 mi battery will get you about 160 miles after 7 years (or so). Anyway, with most (ICE) cars, you'd be lucky to get 30% of original price after 7 years. If you decided to replace the 230mi battery after 7 years, it would not be more expensive than maybe $6K to $10K. It would probably take your resale value to 50% of original price. Even without doing that, you could maybe get 35% of original price after 7 years. Hmmm.

Lease the whole car. That makes sense for many people at this stage - value buyers both wealthy and middle class. Tesla will need a partner in teh USA for that with deep pockets and ability to take some risk... Issues are:

- The battery is warranted for 8 years - with Tesla themselves saying that after 7 years the battery is at about 70% max, e.g., losing 30% of its initial power/range which is based on 55 mph - if you drive the freeway at normal speeds with the AC at full tilt, likely less.

- If they lease the car for 3 years, they have 4-5 years left on warranty, on likely less battery backup power. How do you calculate that and will leasing cost more for a EV than a equivalient gas vehicle? If so, do you actually see any savings over gas powered, as you are paying for the partial cost of replacing the battery.

Interesting dilema. I really like the Tesla Model S... very well made and engineered car... and made in the USA. But early adapters are taking on a lot of risk as indicated by all the blog messages... and if that risk is transfered to the leasing company... that will be interesting to see how they price that risk... that is the bottom line and will show the real value.


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