Arcimoto Inc., an electric vehicle manufacturer based in Eugene Org., is aiming to create a finance plan comparable to that of a typical cell phone bill, after accounting for financing and tax credits, President Mark Frohnmayer told Auto Finance News.
“If you put a few thousand (dollars) down, your monthly payment over a six-to-eight-year loan term is basically the amount you’re saving on gas,” Frohnmayer said. “A number of financial institutions have approached us and have been very interested in financing the product.”
Mass production of the three-wheeled, fully-electric SRK (which we were able to test drive) will begin early next year, and the company is in talks with outside lenders to come up with “creative financing options” for both private consumer and rideshare services, Frohnmayer said.
In order to do that, Arcimoto aims to implement an “all of the above” financing strategy, including battery leasing models, which have been pioneered by European lenders. The hypothetical program would set a monthly rate for the battery over a three-year term, said Jesse Fittipaldi, business development lead at Arcimoto. At the end of that period, consumers would receive a new battery with better performance and range priced at the same monthly rate, or they could opt to lower their monthly rate if they are satisfied with the current range output from the old battery, he added.
“You’re paying for two thirds of the vehicle and a third of it is the battery pack,” Fittipaldi explained. “We can amortize the cost of that pack over a long period of time so that it reduces your cost to own the battery.”
Batteries could then be recycled by the company, because, “we’re ultimately trying to find solutions for carbon reduction,” Fittipaldi said.
This kind of lease structure is all the more important given the rate of depreciation among EV batteries. Think of your smartphone. At first that new phone lasts you all day from the juice the night before, but two years later and it can’t make it past lunch without a charge. Batteries on electric cars act much in the same way and it affects their resale value. Despite their greater initial cost, used 2012 EVs already sold for less than their gas counterparts just three years after leaving the lot, according to Auto Remarketing.
Furthermore, battery technologies are advancing rapidly and Arcimoto believes consumers will want to upgrade on a regular basis. ChargePoint, an EV charging station infrastructure company, found that battery range has improved by 5-10 miles per year on new models. In 2014, EVs such as the Kia Soul Electric and Nissan Leaf both fell under a range of 100 miles, while the 2016 Chevy Bolt is expected to travel 238 miles on a single charge when it hits show rooms later this year.
Because of this fewer consumers are buying or taking out loans on cars, as leases trend up. Excluding Tesla (because it does not share leasing data), lease penetration in the EV market was 75% in 2015, according to a report from CNBC compiled from Edmunds’ data. That’s compared to just 28% lease penetration across all cars and 49.5% across luxury vehicles, which typically serve a bigger market for leasing.
All of these factors are pointing toward a surge in battery leasing programs, and Arcimoto has designed its vehicle to be a part of those plans. The SRK has an easily removable battery and is designed to be shared through keyless entry, which would allow an owner to grant permission to another driver through their smartphone.
The SRK is already a relatively low cost vehicle at $11,900, and Arcimoto thinks that cost will be split among several household members or a cohort of ride share service drivers. “Our plan is to be the company that sells the vehicle to ride share services,” Fittipaldi said.
For now, the company is more focused on the actual launch of the vehicle later this year, knowing it has a pool of early adopters that are willing to buy the vehicle outright. But in time, these creative loan structures could open the door for others.
“It’s finding the right partners for that financing and running the numbers to understand whether that’s actually viable,” Frohnmayer said. “We need to predict what the utility market looks like three years from now, six years from now. Is that actually a good business and where will battery technology be?Like This Post