If you’ve been looking for an electric car and there’s mention of a ‘battery lease’ in the advert, you’ll need to go into any negotiations having done your homework as it’s a pretty baffling arrangement. Get it wrong and you’ll picture yourself being a moaner leaser.
It's less common now, but there are still cars for sale which could have leases, especially Renault, Nissan Leaf and some smart models.
A battery lease scheme means that you buy most of the electric car as normal, but have to rent the battery. This remains the property of the car maker and you pay a monthly fee to rent it, depending on how many miles you think you’ll cover and the length of time you sign up for. Typically it’s between £50 and £100, which might be about the same as you’d pay in fuel for a conventional car.
Using this sort of scheme brings down the overall price you’ll pay for the car and crucially gives a guarantee about the condition of the power pack. The maker will replace it if there’s a malfunction or it degrades below a certain level, which is usually about 60-75% of the original capacity. Most will also include breakdown recovery insurance too as part of the package, saving you about £100 per year.
The biggest user of battery leases is Renault and it’s still the only way of buying a Twizy microcar. It was originally used on the Zoe hatchback and Kangoo electric van too, until Renault started offering the choice of battery lease or outright purchase. Now the lease has been phased out on new Zoes to avoid confusing everyone. Nissan also used it on its Leaf for a while and called the models ‘Flex’, and some early smart fortwo EVs were also sold this way.
Why are battery leases not popular now?
These schemes have now fallen out of favour as they were introduced mainly to counter the consumer worries about battery life, when the technology was new and buyers were worried that they would degrade in just a few years, like they do in phones and laptops. Since these fears have proven unfounded and electric car technology is more familiar, buyers no longer feel they need the safety net of the guarantee.
There are some pretty big disadvantages to having a battery lease too, besides having to pay out a fee every month for as long as you own the car. Unlike road tax or insurance, you can’t stop the payments when you aren’t using the car and they don’t go down over time. It means that buyers are very wary of talking on an eternal monthly payment and, as the seller, it is up to you to ensure the liability for the finance is passed over when you move the car along to new owner.
As a result of this, some dealers are very nervous about taking on the paperwork and responsibility and tend to either refuse to take a battery lease car or will value it much lower. Specialists and the official dealers should know the score, but the lack of general understanding keeps prices lower.
How do I know if the battery is leased?
In general, the seller will be very keen to tell you as they will end up paying for the lease if you don't agree to take on the paperwork or buy the finance company out. But there could be some sneakiness going on, so if you are buying privately or from a less established dealer we would always advise that you do a proper data check (such as a HPI query) on any used car to make sure it has not been written off and isn’t subject to finance, but it’s especially important with a car which may have a battery lease.
Without the lease payments the battery will still belong to the finance company and you might be liable for any instalments which have been missed. Instead of sending in the bailiffs, the bank might even be able to simply disable the battery remotely through the car’s telematics system until you pay up.
Can I get out of the agreement?
There is good news if you find yourself with a lease you don’t want. Both Renault and Nissan will allow you to ‘buy out’ the finance on the Leaf and Zoe, and most are now ‘converted’ to ‘battery owned’ status when they change owners to help simplify the used market. There’s now an option for Twizy owners too.
When looking for a used Zoe or Leaf, check if it is a ‘battery owned’ model, as not every dealer will mention it in the advert, hoping that buyers will be attracted by the low purchase price. If you are prepared to take on the lease, make sure you are confident around the costs involved, have a good idea of how many miles you’ll be doing and the length of time you’ll be keeping the car. Also bear in mind that you’ll be subjected to a credit check. If you’re buying a Twizy you’ll have to agree to take over the lease, so make sure you are only paying from the time when you actually own the car.
Finally, have a look at the website of the manufacturer involved and maybe even call and speak to the customer services so you can get an accurate cost for a lease which fits your needs. If that all sounds like a lot of hassle, you’re right. It’s the reason lease schemes are dying out. On the plus side, it could make your electric car a little more affordable if the numbers work for you.