Battery lease explained
Most used Renault and some Nissan electric vehicles have battery leases to keep the purchase price lower. This means you own the vehicle, but rent the battery pack.
While this method isn't too popular now with new car sales, it has served a good purpose in the early years when battery prices were much higher. It also kept the initial purchase price down, helping the transition to electric motoring.
When Nissan and Renault first launched electric cars in the UK in 2011/2012, there were plenty of scare stories in the press about how long battery packs will last and the cost of replacements. These all turned out to be complete rubbish, but to sell the new cars, Nissan and Renault took the battery pack out of the equation, so you purchased the car and leased the battery pack. That way they took responsibility of the battery pack and guaranteed it.
However, when looking at older used vehicles, the battery lease makes far more sense. Not only is the car significantly cheaper to purchase, but the older the car gets, the more attractive the battery lease idea gets, as you have no deteriorating battery to worry about. We're already seeing this now with the earliest Nissan Leaf cars with battery ownership and as the battery state of health drops, so does the value of the car. Yet with battery lease vehicles, they retain a higher value and in fact have risen considerably over the last 12 months.
When you rent the battery, the performance of the battery is guaranteed. The peace of mind of this, together with the roadside assistance package is a great benefit on older vehicles that are no longer covered by the original manufacturer's warranty.
- Price of vehicle is lower - typically around £5,000-£6,000 on used vehicles
- No matter how old or how many miles, the battery is guaranteed
- When battery efficiency drops to 75%, the batteries are repaired or replaced, free of charge
- Roadside assistance and recovery included in battery rental
- Unlimited recovery call outs
- Easily transferable between owners - If you sell your vehicle, your obligation will cease once the new owner takes over the agreement
Note: From October 2017, battery state of health guarantee on the 22kWh Kangoo ZE vans is 60%. All other models remain at 75%.
Battery rental prices
The Zoe & Kangoo pricing has now changed to a term-less scheme, where you simply pay based on mileage alone. All others are (currently) based on both mileage and term. As you can transfer the lease without penalty if you sell the vehicle, most owners signup to the longest term to keep the rates low.
All battery rentals include VAT, except the Kangoo ZE which are listed excluding VAT. The VAT is obviously reclaimable for a business. Other mileage terms are available.
Renault Kangoo ZE
from £25 per month
The new revised pricing from October 2017 shown, where the 22kWh battery guarantee changed to 60% state of health. The new 33kWh Kangoo remains at 75% state of health guarantee. See Renault website for more information.
from £77 per month
No information now available on Renault website for this model.
Battery hire makes good financial sense
Battery hire makes financial sense on used vehicles. The price of a car with battery hire is typically around £5,000-6,000 cheaper than the equivalent car with battery ownership.
It takes around 5 years to pay back this difference in battery hire fees.
Plus you get a guarantee on the battery and roadside breakdown cover.
Your budget can then go further and meaning you can buy a newer vehicle that is still under warranty and with lower mileage. If you're likely to change car within that 5 years, its cheaper to hire the batteries than to own them and you've got the money in your bank rather than tied up in the deprecating car.
Many compare the monthly battery hire fees to the cost of buying petrol or diesel. This is an unfair comparison. The cost of the battery hire should be compared to the cost of buying the equivalent battery owned EV (or the cost of the finance to achieve this).
The older EVs get, the more attractive hired batteries are, as you have no worries about the cost of a replacement battery pack.
When insuring your electric vehicle with a hired battery, you need to include the battery in the declared value of the vehicle. The insurance value of the battery is stated in your agreement, but it is typically around £6,500. If the car cost £6,500 and the battery value is £6,500, then you declare the vehicle value at £13,000 and make sure they note that it is a hired battery pack. While the hired battery arrangement did confuse insurance companies initially, most have now caught up and now fully understand the arrangement and it doesn't increase the price of your insurance. Companies like Aviva, Direct Line, LV and others are now charging low premiums for electric cars with hired batteries. One example in my own family is a Renault Zoe (with hire battery) has cost only £156 to insure, which was cheaper than the previous petrol Ford Focus.
The reason why you must make sure the battery pack is insured is if you had a serious accident and the car was written off and the battery pack wasn't recoverable, RCI would want the replacement value for their battery and you'd want to be released from the hire agreement.
Selling the vehicle
When you sell a vehicle with a leased battery, you simply transfer the battery hire to the new owner, but that owner starts a new agreement based on their expected mileage. The process is a very simple and if its all done via email, it can be completed within a few hours.
- a proposal form with the new owners details is sent to RCI
- the new owner will receive a new agreement document for signature
- once this has been received by RCI, the process is completed and the vehicle can be released
Your commitment and payments stops as soon as this happens.
Exporting a vehicle with a hired battery
The battery agreement for both Renault and Nissan vehicles is with RCI Financial Services, part of RCI Bank UK. Vehicles cannot be exported to other countries, unless permission is sought first from RCI and only if RCI have a presence in that country. A cross country transfer process is available to the following countries/territories:
Ireland (except Nissan Leaf & e-NV200)
Poland (except Nissan Leaf & e-NV200)
Portugal (except Nissan Leaf & e-NV200)
Slovenia (except Renault Fluence, Nissan Leaf & e-NV200)
Spain (except Ceuta and Melila)
Sweden (except Renault Fluence, Nissan Leaf & e-NV200)
Exports to Malta were possible by transferring contracts to RCI Italy, but this process is currently on hold due to problems setting up the agreements. A new solution is being sought and transfers may be possible in the future.
When hiring your battery, it has a guaranteed state of health, which is typically 75%. In my view, its quite likely by the time cars get to the age when they are needing a replacement battery under this guarantee, the battery sizes would have increased and a swap out may be for the newer larger battery. For example, the new Renault Zoe currently has a 41kWh battery pack, which is in the same enclosure as the previous 22kWh battery. Battery density is improving and at the same time prices are falling. The new 41kWh battery pack now costs the same or less than the 22kWh battery did. Therefore, its likely Renault will only be supplying the 41kWh battery (or whatever is the current capacity in the same enclosure) in the future, resulting in giving the car a new lease of life and a doubling in range. In the same way, the Renault Kangoo ZE battery is currently 33kWh on the new models and is in the same enclosure as the older 22kWh.
Owners can also soon purchase a battery upgrade, even if they hire their battery, and benefit from the increased battery capacity and improved range. See battery upgrades in the Zoe guide for more information.
Buy out of the lease
While the hire agreement documentation states that it is not possible for an owner of a vehicle to own the battery, an RCI representative has told me that it is possible to buy the battery pack and end the lease. The price of this depends on the age of the battery and mileage and this has to be via a Renault dealer by the existing hirer.
I suspect that this has never happened yet and I would assume as there's no published formula for this, RCI would base the figure on the insured value, which is probably too high to make a buyout a viable option.
Word of warning when buying a vehicle elsewhere
I've heard of many instances where people are buying a battery lease vehicle from other dealers, including main Renault dealers, where they are expected to sign the battery hire agreement before seeing the car. This is because the dealer hasn't yet got in the car and are purchasing it to order. Do NOT do this, if the dealer hasn't taken on the battery agreement themselves first. If the car turns out to not be in the condition you were expecting, you cannot walk away from the purchase as you have committed yourself to the battery hire. You're then taking all the risk, whereas the motor dealer should be doing this.
When a dealer buys in the car, they have take on the battery hire themselves while they have the car in stock. This is why many motor dealers, including Renault dealers, don't deal with second-hand battery leased vehicles. In these circumstances above, the dealer is trying to miss out the step of taking on the battery hire themselves, by registering the battery hire straight to the customer. The trouble is that you've committed yourself to a vehicle that neither you or even your supplying dealer hasn't yet seen!
It goes without saying, this isn't the case with vehicles from Go Green Autos. We take on the battery hire for all vehicles purchased.
You're welcome to contact me if you have questions regarding battery leases. All Renault & Nissan agreements are with RCI Financial Services Ltd, based in Maple Cross. You can contact the Electric Vehicle Team directly on firstname.lastname@example.org or tel 0330 3310 220. RCI look after all of Renault, Dacia, Nissan & Infinity finance and are a subsidiary of RCI Banque based in Paris.