Battery leasing models are becoming the backbone for used e

Dec 22, 2023

Today no one wants to buy a used EV because of battery performance uncertainty and the cost of procuring a new battery exceeding twice the market price of the old vehicle. Jeenit Mehta, Co-founder of RedE EV Mobility Pvt Ltd. shares his take on this price disparity and how battery leasing models can help support the secondary market of electric 2Ws and 3Ws.

As the dialogue from Govind Namdev (Veeran) in the Hindi movie Sarfarosh goes, “Goli ke bina yeh laakhon-karodoki bandook patthar hai patthar” (“Without the bullets, these guns are just stone”).

The same way, the value of electric vehicles without the costly batteries is nothing.

The scrap value of electric 2-wheelers with an end-of-life lithium-ion battery is typically between Rs 3,000 to Rs 5,000. This is equivalent to around Rs 30 to Rs 50 per kg for the vehicle, which is roughly 4% to 6% of the ex-showroom price of a new vehicle.

For the low-speed 3W, we are seeing a different story. Unlike most electric 2Ws, electric three-wheelers are commercial vehicles. Companies like Battery Smart and Sun Mobility are providing batteries on lease for three-wheelers. For an investment of Rs 8,000 to Rs 10,000, lithium-ion batteries with a capacity of more than 80Ah can be leased for life time.

As a result the electric 3W body (without the battery) still commands a good resale value.

With most battery leasing done at 48V, many used electric 2Ws that work on 32V get excluded from availing of the battery leasing service.

With more OEMs getting into the 48V system and the booming number of riders for the gig economy, a rise in the leasing of batteries for the used as well as new electric 2Ws is expected.

Till the time lithium-ion battery costs get reduced drastically, the battery leasing model will continue to create value in used electric 2W space and has already demonstrated it for the low-speed three-wheelers. With more new 2-wheelers and high-speed 3-wheelers penetrating the market, we expect to see similar value creation for used vehicles through the battery leasing model.

Also Read: Battery swapping – The new ‘gig’ in town, which is here to stay

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