There have been many references in the news media to the idea that GM might lease out the battery pack.

We have previously discussed how this idea may have originated from Compact Power CEO Prabhakar Patil. More recently, a report from the Financial Times continued to expand on the idea and indicated that GM themselves may be considering the scenario.

I have alluded to this possibility on previous posts as well, and many readers have picked up on this and expressed concern.

What I can tell you from knowledgable sources is that GM is apparently giving a lot of "board-room time" to this idea, and may be working with 3rd party underwriters and partners. I have been unable to get an "official" GM statement on this issue, and I suspect the reason for this is that there is no official position yet.

Although, there was just a report about a comment by Nick Reilly, the President of General Motors Asia Pacific. Quote:
“People won’t buy a full car. They will buy a car and rent or lease the battery and the cost of leasing the battery will be the same as, or less than, the cost they’re paying today for petrol. So the motoring costs of an electric vehicle don’t necessarily have to be much higher than the cost of today’s vehicles,” he said.
Mr Reilly said the leasing approach could speed up the adoption of hybrid vehicles. “Before we were saying it will be an awfully long time before we can get the costs down so people can afford it, but actually if you offset the fuel costs, people can afford it,” he said.
The issue of requiring a lease agreement even for part of the car is unpleasant for some potential buyers, who are really interested in ownership. The idea also brings up memories of the EV-1's required lease and eventual recall and destruction.

So why would GM be considering this?

Well, for one thing, perhaps cost is the issue. We have been told many times that cutting-edge lithium-ion battery technology is expensive, mostly so for a first generation system. How much will the pack really cost? Articles looking at the Volt's pricing suggest the pack could be between $5000 and $10,000. Current low end laptop grade lithium ion batteries are sold at bulk for $250/kWh, and high end medical/scientifc grade ones go to $1100/kWH. Since the Volt's pack is 16kWH, then price could be anywhere from $4000 to $17,600. The median of that range is $11,000, which sources tell me would be a "game-ender" for the Volt. So I think the range will be between $5000 and $8000 from the supplier, for a median cost of $6500-$7500or roughly $450/kWH. Since this could account for 25% of the car's total cost, leasing it out separately could lower cost to the buyer.

The next reason for GM to consider leasing is premature failure and liability exposure. What if the packs don't work out over the long-term, with those risks multiplied by 10's of thousands of vehicles. Remember, this technology has never been in mass-produced cars ever before. If the driver doesn't own the pack, if it fails or leads to his/her death or disability, would GM's liability be less. This is a question for a lawyer. Any of you out there?

Finally, we can consider that the technology will improve rapidly in future years. Many people here have thought about "swapping" out packs as they get better and with longer ranges. Also, since lithium is a limited natural resource, recycling the chemicals could help to reduce cost of future packs. If the packs were leased, GM would own them and thus be able to retrieve them from you in a few years, in exchange for a better pack. They could then take the lithium back in put it into the newer packs.

So in conclusion, it seems that the lease option has some strong arguments in favor of it. Personally, it wouldn't really matter to me as long as I could get the car as soon as possible. What do you think?