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. Also Smart ForTwo Electric Drive vehicles had the option to lease the battery pack, but these agreements were different to the Renault & Nissan arrangement detailed below.
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, 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 few years.
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 on used vehicles
- No matter how old or how many miles, the battery is guaranteed for the lifetime of the vehicle
- 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, even if simply run out of energy
- 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. Having a fixed term agreement is completely pointless as you only pay for the battery while you own the vehicle and your obligations end when you sell the vehicle and transfer the battery lease.
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.
Renault Fluence ZE
from £77 per month
No information now available on Renault website for this model, as the Fluence ZE ceased production in 2013.
Important update Feb 2020: It has become apparent that Renault can now longer replace or repair the Fluence battery pack, due to lack of parts availability. Customers who take their vehicles in to Renault for battery repairs or replacement are being offered the option to purchase the battery. One customer, who had a battery at 73% SOH, was given the option to purchase the battery for £1,750. This seems unfair that the battery rental agreement is continuing on all existing Fluence vehicles when Renault can't honour their side of the battery lease agreement!
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%. The rental agreement requires the battery to be repaired or replaced. Renault have now opened a battery centre in Wolverhampton so batteries no longer need to be returned to France for repair or refurbishment. This centre is now replacing individual cells in battery packs, so its good news that this work is being done in the UK. If a vehicle requires battery work, your local Renault dealership will transport the whole vehicle to battery centre, as it is easier to transport the whole vehicle, than just an individual battery pack.
Many people ask if you can get a battery upgrade - i.e. replace a 22kWh battery with a 40kWh battery. While yes it is technically possible to upgrade the batteries in vehicles (as long as the battery is contained within the same enclosure), it is unlikely to happen in hired battery vehicles now. Renault were doing 22kWh to 40kWh Zoe battery upgrades in late 2017 in some European countries and was muted to be available in the UK in early 2018. However, it never has materialised in the UK. In early July 2018, at the Oxford EV Summit, I spoke to the Renault ZE Range Manager for Renault North Territory (i.e. head of electric vehicles) and he confirmed that the upgrade facility will not be available in the UK and has now been withdrawn across Europe too. This is a great shame, but I guess understandable, as Renault is in the business of selling new cars and not upgrading old ones. They also struggle with battery supply and keeping up with the demand for new orders, so such an upgrade program would put extra demand on battery supply,
The cost of these battery upgrades was published, even though the facility was never available in the UK. These were:
- For hire batteries - £3,100 fee, then you pay the ZE40 hire rates which are £10 per month extra.
- For owned batteries - £8,700 on a part exchange basis or £13,100 if you keep the old battery pack.
Photos of the upgrade being done on a Zoe in Holland can be found here.
In the near future, other companies will be offering battery repairs and upgrades. This is something that will grow over the coming years as the demand starts. Some are already working on early Nissan Leaf batteries in the UK, but its all early days yet and until the EVs get older, there's not enough demand yet for anyone to make a business from this service. However, if you have a leased battery, you do not own the battery, so you cannot upgrade it. It could be possible to get a Renault dealership to remove the battery and return it, ceasing your hire agreement, but you have to pay for this work. Then you'll be free to fit an third party battery pack. No one yet offers this, but it looks like Twizy owners may have the option later in 2019.
Buy out of the lease
It is not currently possible to buy a leased battery to stop lease agreement. A vehicle that came off the production line with a leased battery, will always be a leased battery for the life of the vehicle. However, there are a few exemptions to this:
- Nissan did allow owners of early FLEX model to purchase their battery packs.
- If the vehicle has been written off by the insurance company, they pay RCI for the pack, which ceases the agreement. There are cases where vehicles have been stolen and later recovered or crashed repaired, where the insurance company has paid off the battery lease and the vehicle returns to the road.
- Smart ForTwo owners with leased batteries are able to settle the lease and the ownership transfers to them, with a new 12 month guarantee on the pack.
Within the battery agreement is an insurance value for the battery pack. Typically this is around £7,200 for a 5 year old 22kWh pack in a Renault Zoe or Kangoo. This is the amount paid by the insurance company to cease the agreement if the vehicle is stolen or written off. So I would assume then it is technically possible to pay this insurance value figure to buy yourself out of a lease agreement. Due to the high figure I suspect no one has ever done this as it would be cheaper to sell the vehicle and upgrade to a newer vehicle with a larger battery.
Update to buy out - March 2020
RCI have just announced that they will now allow customers to buy their leased battery packs. Initially, this is only being offered to owners of Renault Zoe 22kWh. Later it will be offered to all vehicles, Zoe ZE40, Kangoo & Twizy, but as yet no timescale is available as to when this will be available to these other models.
An example I was quoted today (12/03/2020) was £3,000 for a Renault Zoe ZE22 registered 8/9/2015 and has done 29,500 miles (although they didn't ask for the mileage).
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 motor dealer buys in the vehicle, they have take on the battery hire themselves while they have the vehicle 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.
Also be very wary of older Renault Zoe or Kangoo models that aren't 'i' models and the seller tells you that the battery is owned or there is no longer a battery lease on this vehicle. As described above, legitimate examples are few and far between and may be a stolen and recovered or an insurance write off vehicle. However, there are cases where battery lease vehicles are purchased and sold by both individuals and motor dealers where they don't understand the battery lease arrangement and the vehicle ends up changing hands without RCI being kept informed and the lease doesn't get transferred. Don't believe you've bought a vehicle with an owned battery. RCI will still own that battery pack and will catch up with you one day and you could be liable for all the backdated rentals. RCI can also remotely turn off the battery pack if their agreement terms have been broken as they still own the battery.
Here are samples of the RCI battery agreement documents for both individuals (including sole traders) or companies (Ltd, plc). You can also download the battery proposal form, which is the initial fact find form that is given to RCI to allow them to raise the agreement document.
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.