Electric car battery leasing: should I lease or buy the batteries?

Heart set on a Renault Zoe, Nissan Leaf or Smart Fortwo EQ? If so, should you buy or lease the batteries? Keep reading for the pros and cons

James Wilson
Jun 30, 2021

When you finance or buy a petrol or diesel car it's pretty simple; the car will be fitted with an engine, which is included in the price. However, with some electric cars you have the choice to finance or buy the whole car, or to pay for the car and lease the batteries separately.

This might sound like a hassle, but the reasoning behond it could end up saving you more hassle down the line. It's due to fears that old electric car batteries will fall in capacity dramatically as they get older - rather like how an old phone that used to last two days only lasts one day after a couple of years - and the original 100-mile range may end up being reduced to 50 miles or less.

If you were leasing the batteries and that happened, however, the manufacturer would replace them for you, without you having to shell out for a new set, as would be the case if you purchased the car and batteries. That could save you a substantial amount of hassle and lots of money.

Electric car battery leasing is the option to hire batteries instead of buying them with your car. As a result, the purchase price of a new electric vehicle (EV) is significantly reduced. However, motorists will need to factor in monthly battery leasing costs into their total motoring expenditure.

While there are many benefits to leasing batteries, not all manufacturers offer this as an option. In fact, if you are looking for an electric car which is relatively new with an option to lease its batteries, an electrified Renault is one of your only options. This isn’t the end of the world though, as the Renault Zoe is one of the best everyday electric cars on the market.

Whether battery leasing is the best option for you will depend on several factors, but the sections below will help guide you to the answer. Let's start with how battery leasing actually works.

How electric vehicle (EV) battery leasing works

Battery leasing involves making a monthly payment for electric car batteries rather than owning them outright (if you paid cash for the car) or financing them as part of the whole cost of the car. This means when you purchase an EV you pay a cash price or monthly figure for the car and then an additional monthly fee for the batteries.

If you are financing the car it is important to remember that battery leasing isn’t a finance package where you eventually own what you are paying for - they are never yours. And when it's time to change car, you simply stop paying the monthly fee and it is up to the next owner to start paying.

Once more, the leasing cost does not change over time, i.e. whether you get a new or used car, the monthly cost will be the same. What does change the amount, however, is how many miles you plan to cover each year. After all, the more miles you do, the greater wear and tear the battery pack will endure and the sooner it will need replacing.

On the subject of wear and tear, one of the key aspects of battery leasing is that it tends to cover battery condition and capacity. This means that should your battery pack become faulty or its performance drop below a certain level (such as no longer being able to store enough energy to get within a certain percentage of the claimed range) the manufacturer should replace it free of charge.

Which electric cars come with battery leasing?

As mentioned previously, Renault currently has a monopoly on new electric car battery leasing. This means your options are limited to either a Zoe or a Renault Twizy. You will need to be more than a touch eccentric to drive a two-seat Twizy every day, though it is striking and fun.

If you are less fussy about age, older EVs in the form of the first-generation Nissan Leaf and first-generation Smart ForTwo were available with battery leasing options, so these offer rock bottom purchase prices second-hand with the reassurance of batteries that offer a specified range or free replacements if you go down the battery leasing route. But, and this is a big one, these earlier models came with relatively small ranges - limiting how far they can travel per charge - which could make them unsuitable if you're after the greatest range per charge.

Renault used to denote Zoes which came with batteries included in the price with a letter ‘i’ in their model name. Sadly, this appears to have ceased for newer models, so you'll want to double-check whether any specific models you're considering come with batteries or not, whether you're purchasing new or used.

Renault Zoe and Twizy battery lease cost

The typical monthly cost of leasing batteries for the Renault Zoe and Twizy are as follows.

ModelMileage
Less than 4,5006,0007,5009,00010,500Unlimited
Zoe Z.E.40£59£69£79£89£99£110
Twizy£55£59£63£67

Electric car battery leasing advantages

The advantages of electric car battery leasing are mainly a lower initial cost and the peace of mind that if the batteries deteriorate significantly they will be replaced for you, without you having to pay a big lump sum yourself. Starting with money, purchasing a new Renault Zoe but leasing the battery pack knocks around £6,500 off the list price new, which regardless of whether you are financing the car or paying cash, is a sizeable reduction.

There is the matter of your monthly lease, but assuming you buy a Renault Zoe R110 Z.E.40 and travel 10,000 miles a year, you will be able to drive it for six-and-a-bit years before leasing becomes more costly than bundling in the batteries.

Plus, knowing you are covered in case your batteries give up the ghost or start underperforming offers the kind of peace of mind many drivers may be happy to pay for. The reason being, batteries are one of the most expensive parts of an electric car to replace - and they don’t last forever.

Even with the most modern battery packs, there is a question mark as to how long they will actually function at full capacity for - possibly due to the stigma caused by problems many drivers have experienced with other battery-operated tech, such as smartphones.

It makes sense then for some drivers, both in terms of running costs and residual values, that not having a potential financial ticking time bomb under the cabin is a good thing. As you will see below, though, this is only half the story.

Electric car battery leasing disadvantages

The disadvantages of leasing car batteries are largely financial. While initially leasing the batteries helps make an electric car more affordable, as a new car loses value this slowly changes this. Purchase an inexpensive used electric car and the cost of battery lease payments could surpass the monthly cost of the car.

At the same time, some drivers do not want the hassle of multiple payments for their car. This also affects cash buyers when it comes time to sell as it means the pool of buyers is potentially reduced. On the flip side, there is an argument for the reverse, as some buyers will prefer the peace of mind leased batteries bring with older models.

One final note, by leasing batteries you are limiting how many miles you can do annually (excluding, of course, those who pay for unlimited miles). There are fines for surpassing your annual limit, which is normally rated at somewhere around 8p a mile. Plan carefully though and you shouldn't face any surprise fines.

 

 

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