Leased Electric Car Batteries Take a Big Step Forward

Last Updated Sep 16, 2009 6:07 AM EDT

Electric cars are too expensive for the average consumer -- if you buy the whole vehicle, anyway. Take out the batteries, and you've got something affordable.

That pretty much sums up the plans of Nissan and Renault, the two car companies run by Brazilian investor Carlos Ghosn. Renault alone is working on four electric concept vehicles, with a planned 2011 release date for Europe, while Nissan is gearing up for a big launch of its Leaf car in the United States next year.

Ghosn has been publicly chewing over his idea of a leased battery for several months, but has only now made it apparent that he does plan to go with a leasing model -- making his companies the first to do so.

There are a few key benefits to leasing. One is that the consumer won't have to worry about replacing the battery as it becomes weaker over time; and under some schemes, they won't have to pay the (relatively small) amounts required to charge it.

But ultimately, getting people to buy electric cars and lease the batteries will be about perception. Leasing a battery effectively just splits a monthly car payment in two. Ghosn wants to spin the second payment, for the leased battery, as an equivalent to the amount the driver of a regular car would pay for gasoline. But that's a cost that an electric car owner can avoid, whether they're paying a monthly lump sum or a car payment plus a battery leasing payment.

Ghosn has also been opining that the recession is over, which would make it a good time for his company to start gaining a competitive lead with electrics. If he's wrong, and consumers haven't yet regained their confidence, pushing electric cars could be disastrous.

The saving grace for Nissan and Renault may not be sales in the EU or United States. One of their partners, the startup Better Place, is saying that there's a market for 35,000 electric cars in Israel starting in 2011.

Israel is in the process of building out a charging network with Better Place that should make driving more convenient for electric car drivers. And since it's a small country, it might actually be able to pull it off within a couple years. It's not the only one; BNET Auto also reports that Iceland wants to fast-track a charging infrastructure.