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Battery Pack Maintenance Lease Plans

Battery Pack Maintenance Lease Plans

Well lets see, i buy a Tesla with an 80kwh battery. That gets me 265 miles, but after 8-10 years it will lose like 20% range. (Give or take). That's the big question, "how long will the battery last".

But i propose that buying a car with a battery pack that is your only battery for THE LIFE OF THE CAR!!, is old school, old style, legacy thinking.

That battery pack, can be popped open, and the battery cells can either be reconditioned, replaced, added or removed

As the range can increase by 8% per year. In say 8 years, when a new gen 3 gets printed, (kidding sort of), THAT car will get 64% better range!!!!!! So on a summer fuel free road trip with my 8 year old model 3 all my friends driving new model 3's will have to wait for my 'frequent' charging stops, or they could just leave me in the dust.

To me that sucks. Its like if you could only buy an iphone every 4 years. It only takes one year for a phone operating system to be 'old'.

I would like to suggest that the phone OS is analogous to the battery in a Tesla.
The rest of the car changes in design, features etc. You can't do much for a old model on that score, but the battery pack, if not resized for each model, is something that could benefit a driver/buyer immensely. Imagine if the model 3 you buy in 2017, with a range of 200 miles, in 2021 can be swapped for a fresh battery in 8 minutes, that will give them AN EXTRA 64 miles.

If the packs are built with some space for more cells maybe you can upgrade anytime you want.
It might cost labour, and the new cells, plus the trade in value of the cells of the original pack.

This will grow an after market industry which can use Tesla OEM cells to upgrade and repair Tesla's battery packs.

Perhaps Tesla wants to own the battery packs and rent to own them, or some other financial instrument of ownership can make it a viable reality that would see Tesla packs come home to roost and be upgraded and repaired. The buyers just come every 4 years for a new top of the line state of the art battery pack, and able to take advantage of the lighter weight or increased range the new generation cells provide.

It may even be possible to take 6-10 grand off the cost of the initial purchase, and owners would pay a battery maintenance program that would guarantee them the 4 year upgrade plan.

This way, our car can always be able to take advantage of the newer power cells, and this will also keep the resale value up for the car.

Alternately, hopefully, every 8 years we can trade in our battery and our 170 mile model 3 will get upgraded to the 370 mile pack ready for another 8 years.

Just an idea.

negarholger | 26/07/2014

Wouldn't it be more simple to upgrade the whole car... that is what leases are for.

vgarbutt | 26/07/2014

Remember, the masses can't afford a car every couple years. We need a car that can last a long time. As long as it can. I suppose you are right , but only for lease owners. Im saying lease the battery and every 3 years get a new battery. For buyers, that makes more sense to me anyway.

Leasing is more expensive in the long range unless you can write it off with a business. Am i wrong about that?/@

If i could get the car without the up front battery cost, that means less down payment, less financing costs etc. Then ill pay the battery lease monthly. What would that do to a purchase price? If the battery was 12,000, my new model 3 would be 35,000 - 12,000 - 8,500 = $17,000 !!!!

Now that's mass market!

It also means a new industry is born and thqt means jobs that ICE industry workers can shift to.

negarholger | 26/07/2014

The masses can not afford a new car in first place... the masses need the used car supply generated by the few privileged that are able to absorb the 50% depreciation in the first 3 years.

vgarbutt | 26/07/2014

Personally I am optimistic that a switch from carbon based fuels, will greatly improve the lot of the masses. Provide jobs, freedom from the economic strangle hold the oil cartels have on our transport costs. Lots of new jobs, which could maybe even let them buy a 25,000 car every 10 years.

The difference between us is perspective.

vgarbutt | 26/07/2014

I started the thread to debate the feasibility of battery leasing so as to make the batteries upgradable, not whether lower middle class and upper lower class merit new auto ownership. I would never presume any such thing.

Red Sage ca us | 27/07/2014

I think it more likely that people who buy the car will decide to upgrade the battery pack. They would trade in their old battery pack to a Tesla Service Center for a higher capacity version. There would be a reduced cost on the new one due to residual value of the older one. Simple. Straightforward. Done. The owner of the car can either continue driving it into infinity, or put it up for sale, with a higher resale value than it would have had with the older battery pack. Sorted.

vgarbutt | 28/07/2014

Exactly. Hopefully i can get a seat at Tesla university to learn how to service and upgrade the packs, install a battery swapper, and start a business upgrading packs. (If i had the cash)

vgarbutt | 28/07/2014

Im 60 now, and make 35k a year, so i won't be buying a second tesla. But if i can get a new battery every 8-10 years, i can live with that especially if each new battery gets me 50 - 80% range increase! Unless i can find a sweet lease.

Brian H | 28/07/2014

Sounds like a plan.

DTsea | 29/07/2014

Tesla is not going to sell you the car and lease the battery. That would mean they own the battery and would have to carry all that inventory.

vgarbutt | 29/07/2014

i dont care who owns the battery. The cars will carry the inventory.

DTsea | 29/07/2014

What? No. Either the car owner or the car manufacturer owns the battery.

Or are you suggesting a third party owns the battery and leases it to you? What extra margin does he add?

vgarbutt | 29/07/2014

The economy will grow new arms that can accomplish this economically and affordably. In a way, the battery equates to the fuel, which, with ICS's, is paid out by the tank-full.

What if i had to pay for all the gas for the life of the car up front?

Of course the free energy from public chargers is aside this discussion.

Grinnin'.VA | 29/07/2014

It's fine with me for Tesla to "own" the battery.

What I care about is having a legally binding agreement that requires Tesla to provide a suitable battery at no more than an agreed price for as long as my Tesla remains in service.

Of course, Tesla should be allowed to charge a fair price for replacing batteries that are damaged due to accident or misuse.

I just want the battery functional in years 9-20 or so. Tesla should be able to bear the risk and expense involved in that.

Ron :)

Brian H | 29/07/2014

vgar;
Feeling entitled, are we?

vgarbutt | 29/07/2014

Here is another more eloquently put take on battery packs.

Tesla car ownership for decades.

Brian H

Entitled? No. And lets not even get into it please!

DTsea | 30/07/2014

So grinning you say tesla should carry that risk.

If I were tesla I would tell you no thanks.... they can sell the car just fine without taking that risk. Owners buy the car knowing this risk exists.

Never heard of an ICE car with guaranteed maintenance costs for years 9 to 20.

DTsea | 30/07/2014

Brian h +1

Grinnin'.VA | 30/07/2014

@DTsea:

"So grinning you say tesla should carry that risk."

Yes. Because Tesla is much better able to deal with this risk. I'd guess that only a few of the batteries will suffer an early demise. To the individual owner, that's a big risk. To Tesla it's a modest, manageable risk.

"If I were tesla I would tell you no thanks.... they can sell the car just fine without taking that risk. Owners buy the car knowing this risk exists."

A lot more people will feel comfortable buying Tesla's cars if/when Tesla takes on responsibility for the long-term viability of its batteries. And it's highly likely that Tesla will be production-limited for only a few years. To achieve Elon's goals, Tesla must sell millions of cars.

"Never heard of an ICE car with guaranteed maintenance costs for years 9 to 20."

Right. Heard of any ICE car manufacturer offering road-trip fuel for the life of the car for $2000? Me neither. Elon and Tesla have repeatedly shocked people with the boldness of their initiatives. Does anyone else with a substantial patent portfolio offer their competitors free use of their patents with no royalty fees? I haven't heard of any such thing.

BTW, if the MS is as good as Tesla says it is, they could offer routine maintenance of the car for 500,000 miles for their standard $600 per year fee. And extend the warranty as well without raising the price in the years 9-20. This is astounding, I know. But don't bet too much that Elon will not introduce more such "unthinkable" things for Tesla to advance his goals.

Go Tesla!

Ron :)

DTsea | 30/07/2014

Grinning if it is a big risk for an individual it is a gargantuan risk for TMC once they are carrying hundreds of thousands of vehicles.

I think they are very comfortable not selling cars to those who won't buy without this plan. This is a company that invests every penny in expansion... This plan would choke that by cutting revenue and holding massive inventory.

Brian H | 31/07/2014

As I posted elsewhere, inventory is carried by a company to increase or support sales. So far, not an issue for TM. Especially for gear in use in the field, potentially very costly, and a major commitment of capital.

At some point (well into the Gen 3 period), it might be feasible and necessary to help market penetration.

Grinnin'.VA | 31/07/2014

@DTsea | JULY 30, 2014:

"Grinning if it is a big risk for an individual it is a gargantuan risk for TMC once they are carrying hundreds of thousands of vehicles."

That would be true ONLY if a very high portion of the batteries come to an early end -- something like in years 9-12. Suppose that 20% of the batteries 'die' each year starting in year 9. The individual owner would need to prepare for either replacing the battery or junking the car in year 9 -- a tough decision for many people of modest income. They would face this risk starting in year 9.

Tesla would need to deal with only 20% of this in year 9. They would have 5 full years to learn how to recycle these dead batteries efficiently before feeling the full cost of the unexpectedly short battery lives. And of course, they would be able to sell refurbished or recycled batteries to owners whose batteries die year by year. Or some of them could be resold to be used for other purposes. They would probably never an unanticipated sudden need for a wholesale 'loss' of battery functionality.

I believe that Tesla is in a position to confidently predict that a substantial portion will last more than 12 years. And I think it's highly likely that Tesla will develop or acquire significant improvements in battery technology in the next decade. Tesla this. And I'm inclined to trust them on this.

So yes, I believe Tesla is in a far less vulnerable position than its owners in dealing with the risks of premature battery problems. And I think it would be a great selling point for Tesla to offer very long battery warranties or battery swap deals.

The simple story is that battery risks do not scale up proportionally with increasing numbers. There is an inherent 'economy of scale' working in Tesla's favor on this. It's fairly similar to auto insurance. The insurance company takes on a very small risk by assuming substantial risks of many car owners. That works so well that they can make a healthy profit from it, even after pay significant mounts for administration and advertising.

Ron :)

Brian H | 31/07/2014

Ron;
Yabbut - is it a rational use of capital? You need to be demand constrained to consider it, IMO.

vgarbutt | 31/07/2014
Red Sage ca us | 31/07/2014

How's this for an idea...? Engineer a battery pack that is pretty much bulletproof, with advanced control electronics, complete with integrated heating and cooling, and monitor it remotely with advanced custom software to ensure your customers always have the best possible experience with your products. Sorted.

DTsea | 01/08/2014

Grinnin... you said it was a big risk for you but not for tesla. If the batteries last well its not big for you either

Keeping the batteries as tesla owned would be a very wasteful use of tesla capital given that customers are willing to buy the battery packs.

Grinnin'.VA | 01/08/2014

@DTsea

"Grinnin... you said it was a big risk for you but not for tesla. If the batteries last well its not big for you either"

Of course, if all of the batteries last for 20 years, there wouldn't be any risk for me. But that merely means if the risk is insignificant, few Tesla owners will suffer a big repair expense when his/her battery dies. Risk comes from a non-trivial incidence of batteries that die prematurely. The current consensus view is that this is a real risk. Lots of people are anxious about this risk. Tesla, on the other hand, faces a much lower risk from anything better than premature battery failures for substantially all of the many thousands of these batteries.

"Keeping the batteries as tesla owned would be a very wasteful use of tesla capital given that customers are willing to buy the battery packs.

Many owners would benefit significantly from renting their batteries, leaving it to Tesla to deal with raising the money needed. Tesla has a very strong financial situation; they can raise almost an unlimited amount of money without incurring any unusually high cost.

Another point: I think it would be a huge marketing/sales benefit for Tesla to take full financial responsibility for Tesla batteries for the useful life of the cars. That would virtually wipe out a major concern of many people. And it sure would be reassuring to people buying used Teslas that are 4 years old or older.

If you disagree, please tell me why.
Thanks.

Ron :)

vgarbutt | 01/08/2014

I wouldn't want to keep a battery pack 20 years!

Well at least , I would want to keep the pack, but get new cells.
after 20 years, a new gen pack would get 150% more miles on a charge.
(if the 8% rule lasts that long)
why would i want to drive a car with such old tech? I wouldn't. My friends with new cars would leave me in their dust!.

After 20 years, there is no telling what would be inside a pack. Maybe a small reactor.

No every 4 - 8 years will be just fine.

Brian H | 01/08/2014

Perhaps TM could come out ahead that way, but it has better (higher return) uses for its money.

Red Sage ca us | 01/08/2014

Grinnin' Ron: I'm just wondering... Are you basically saying that you think it would be a good idea for Tesla Motors to sell 60% of a non-functional car, while renting the final 40% of it..?

Realo.de | 02/08/2014

@Red Sage
...to sell 60% of a non-functional car, while renting the final 40% of it..?
why not? Just different alternatives:
1. A rental company has to invest first in their fleet and than make the revenue by renting the cars. In fact, after the business is established, cost and revenue are balanced. The customers rents a car "as good as new" - well established procedure and business model.
2. you could by the traditional Tesla: 100% sell, 0% rent. Nowadays, Tesla gives you just warranty, but, with the GF, Tesla could offer a better price for battery replacment. Besides the technical issues, this would Tesla give a very high reputation in "customer care".
3. when doing doing "battery swap", you "rent" a battery signing a contract with Tesla that you bring the battery back. Tesla recharges "your" battery in the meantime and you swap back (for a swap-fee) - no problem, if there are enough batteries (because of the GF). But steill, you stay with "your" old battery and have to pay for an update (see above).
4. What's wrong with leasing? Today, either you can pay your Tesla in cash - fine! your you take a credit, buy a "non-functional" car from Tesla and rent a battery from the bank; then you pay back the credit / the battery in monthly rates to the bank. Leaving financial details aside, why should Tesla not act as a "battery bank"? (Again, no one yet has answered the question why this concept obviously works for Renault, btw: there is also a "Renault bank"? It is not that uncommon, that car manufacturers also have banks and insurances)

I think we should not take the financial aspects too much in focuse (I'm sure EM is better here). The concept of leasing/renting batteries would primarily be a emotional one: it would people give the feeling, that they always have an actual battery technology and that degradation is no longer an issue.

Red Sage ca us | 02/08/2014

What I don't like about the concept is that it is presented here as a means to 'reduce risk' of battery failure. That presumes there is an untoward level of risk to begin with... These are not the 1.4 kWh traction batteries from a Toyota Prius.

Grinnin'.VA | 02/08/2014

@Red Sage

Grinnin' Ron: I'm just wondering... Are you basically saying that you think it would be a good idea for Tesla Motors to sell 60% of a non-functional car, while renting the final 40% of it..?

Not exactly.
I'm talking about a new option: leasing of the battery packs instead of buying them.
Buyers who prefer to own their battery packs would still be able to buy the battery packs as Tesla buyers always have.

I see two main benefits from battery pack leasing.

1. Lower prices for 'buying' the cars. Hence, more people could afford to swing the deal.
2. Freedom from anxiety about premature battery death -- a significant concern of many buyers.
3. Ability to upgrade the batteries when cost-effective improved batteries become available.

On this last point, I think the MS85 I'm buying has marginal range. It's good for about 200 miles at freeway speeds. I really would like to have a Tesla with a practical 300-400 mile range. And I hope Tesla will deliver an improved battery with such a range in a few years. I don't like to buy new cars often. Assuming that I'm happy with my MS when it's 4-5 years old, I would very much like to upgrade its battery to get the range that I'd like to have.

Of course, Tesla's statements on battery swap could be interpreted as meaning that they intend to swap my 85 kWh battery for a 120 kWh battery in a few years. However, this vague promise of being able to upgrade my battery in the future is rather lame compared with a clear commitment by Tesla to provide suitable batteries for the life of the cars.

A battery lease option would give a very clear signal of Tesla's commitment to the wonderfully radical idea that 'instead of growing obsolete, your Tesla will get better as it ages'. That IMO would support higher resale prices for the cars and attract more buyers. Hence, it would advance the cause of BEVs replacing ICE cars a bit quicker. That's why I think Elon should seriously consider this option.

Ron :)

vgarbutt | 02/08/2014

@red sage

Cheers buddy! Great summary.

Red Sage ca us | 03/08/2014

Grinnin' Ron: Having the option to lease a new battery pack, as an extension of the battery swap scenario, is OK for me. I believe the vehicles should be sold complete, though. As it is, there are people who just have the mental acquity to 'get a car', but do not understand the difference between buying and leasing. Making an offer of a hybrid of the two simply adds undue complexity to the transaction. It would be like buying a car at a dealership sans tires, then getting wheels & tires seperately from a Rent-A-Wheel office next door...

Grinnin'.VA | 04/08/2014

@Red Sage

"Grinnin' Ron: Having the option to lease a new battery pack, as an extension of the battery swap scenario, is OK for me. "

I think such an option would appeal to lots of people who of typically modest financial means. (That includes only a small minority of current Tesla owners.)
And it would make a huge positive contribution to swatting 'battery life' anxiety in many Tesla buyers.

The only down-side I see in it is that the amount of money involved is huge. But not IMO beyond Tesla's capability.

Ron :)

ISO | 04/08/2014

This is very much what the airlines do now with engines. They call it power by the hour. They do not own the engines on the planes. The buy the power the engines provide. This gives both the airline and engine manufacturers benefit. For the airline is give predictable maintenance cost. For the engine manufacturer it gives predictable revenue.

The airline has no maintenance cost for the engines. They just pay a fee and they get power. If the engine goes bad it is fixed or replace at no extra cost.

The big difference is that jet engines have a very long track record to pull cost and reliability info from.

I think it would work here as well, being as the battery is a large percentage of the cost of the vehicle. It would help overcome some adoption issues as it becomes more main stream. It would also make sure the batteries are recycled and not just abandoned at end of life.

DTsea | 04/08/2014

No ISO the maintenance cost is there, it is just hidden, and that's where the engine manufacturers make all their money.

Brian H | 04/08/2014

ISO;
Listen to JB on static power; the batteries will have decades of use (in what he calls cake-walk conditions). And there will be a recycle/reuse facility in the GF to feed the production line. And EM's >10 yrs to get to $100/kWh means cheaper up front and ongoing than ICE, with better range.

Grinnin'.VA | 05/08/2014

@Brian H | AUGUST 4, 2014

"Listen to JB on static power; the batteries will have decades of use (in what he calls cake-walk conditions). And there will be a recycle/reuse facility in the GF to feed the production line. And EM's >10 yrs to get to $100/kWh means cheaper up front and ongoing than ICE, with better range."

I'm delighted to agree with you.

Go Tesla!
Ron :)

Brian H | 06/08/2014

Actually, an error there: EM's <10 yrs to ...

Grinnin'.VA | 06/08/2014

@Brian H

None of us is infallible.

Ron :)

ISO | 06/08/2014

@DTsea

Do you pay any direct maintenance cost for the power your house consumes. No, you pay for power by kWh.

All costs are hidden in everything we buy. I am talking about predictable cost. If the power goes out in my area. I do not need to pay extra to have the power restored. I am paying the power company to provide power at a set (in the short term) rate.

@Brian H

I get that the GF will have a recycle shop. But who is responsible to make sure the battery in a totaled Tesla sitting in a junk yard gets back to the GF. If Tesla is leasing the battery out. Then it is still the property of Tesla and they will retrieve the battery.

Just my view on this.

Brian H | 06/08/2014

Such a battery has enough residual value to ensure it would get recycled, unlike parallel components of an ICE car.

DTsea | 07/08/2014

Iso, the electric grid is a protected monopoly. TESLA isnt.