As auto leaders experience the imminent entry of electrification into their industry, they're seeing disruptive business models. Business 2.0 recently reported in 'Have you Driven a Fjord Lately?' http://money.cnn.com/magazines
/business2/business2_archive/2007/08/01/100138830/index.htm about launch plans for the Think Global City Car that will use battery packs built by Tesla. The article had some details about new ways to finance large battery systems:

Capricorn Investment Group, a Palo Alto private equity firm that has invested in both Think and Tesla, intends to launch a battery-leasing company to jump-start that market. 'You have a natural way to create a total maintenance package,' says Capricorn co-founder and partner Ion Yadigaroglu. 'You're not going to pay the gas station; you'll pay us a monthly fee to use a battery that our company owns, which can be replaced in later years.'

At a GM press conference in March, (see GM's Media Briefing on PHEVs Offers Major Opportunity http://www.calcars.org/calcars-news/713.html) we proposed the company look at third-party extended warranties. Since then, utilities have made clear they would buy slightly degraded batteries that would be suitable for stationery applications, which means there would be a second customer for older leased batteries. Now GM is starting to think through the numbers involved, and recognize that leasing may be a way to reach its pricing goals for the Volt. (We hope they will engage with the broader community of government, corporate and other institutions that want to help them make leasing and warranty programs work!)

Recently, Compact Power CEO Prabhakar Patil, whose company is developing batteries for the Chevy Volt, raised the possibility of new strategies for both supplier's battery warranties and battery leasing options, but deferred to GM to announce the details -- see http://www.evworld.com/article.cfm?storyid=1298. ('Premium Access' article requires $29/year subscription to EVWorld.com.) Now GM Vice Chairman Bob Lutz and Volt Chief Engineer Frank Weber are starting to do just that!

Below are excerpts from reports about GM's leasing 'trial balloon' from Reuters, Detroit Free Press and the Financial Times, plus a link to discussions at AutoblogGreen.

REUTERS
GM to begin testing Volt electric car by spring
Product chief Bob Lutz says the plug-in vehicle is on track for production in 2010.
August 9 2007: 1:49 PM EDT
http://money.cnn.com/2007/08/09/autos/gm_electric.reut/index.htm?cnn=yes

TRAVERSE CITY, Mich. (Reuters) -- General Motors Corp. will begin road testing its Chevrolet Volt plug-in hybrid in the spring of next year and remains on track to produce the rechargeable car by late 2010, a senior executive said Thursday.
<snip>
'The cost of the battery would likely be high even at the time of production,' Lutz said, adding that GM is exploring options that would allow consumers to lease the battery when buying the vehicle in order to bring down the sticker price.
<snip>
Lutz said GM is requiring a 10-year life for the battery, and said the No. 1 U.S. automaker would look to price the vehicle like a 'traditional mid-market car.'

DETROIT FREE PRESS
GM: Battery on track for Chevy Volt Detroit Free Press
August 10, 2007
By Katie Merx, Free Press Business Writer
http://www.freep.com/apps/pbcs.dll/article?AID=/20070810/BUSINESS01/708100367

TRAVERSE CITY -- General Motors Corp. is growing increasingly confident that battery developers will be able to create a safe, durable and affordable power source that will allow it to begin selling its electrically driven Chevrolet Volt to consumers by the end of 2010.

Speaking before a crowd of more than 1,000 at the Management Briefing Seminars in Traverse City on Thursday, GM Vice Chairman Bob Lutz announced that the automaker will develop lithium-ion battery cells with A123Systems Inc. to power its electric-drive vehicles.
<snip>
Initially, the cost of the battery likely will remain high, Lutz said, but GM is exploring the possibility of selling its electrically propelled vehicles but leasing its batteries, the idea being to get people to think of the batteries as a fuel source and pay for them as they go, the way they do for gasoline and diesel.

'The target,' for the Volt, Lutz said, 'is to come in at the price of a conventional mid-market car.'

THE FINANCIAL TIMES
GM eyes electric-car initiative Battery rental idea to keep down prices.
Carmaker aims to launch Volt by 2010.
By Bernard Simon in Traverse City, Michigan
Published: August 12 2007
http://www.ft.com/cms/s/f455b442-48fc-11dc-b326-0000779fd2ac.html

'General Motors may allow buyers of its Chevy Volt electric car to rent the vehicle's battery as a way of pricing the vehicle at a comporable level to a traditional, petrol-driven family sedan. The volt is emerging as one of GM's most crucial vehicles in GM's history. Failure would be a deep embarrasment after the fanfare surrounding its developmant. But success could propel GM past Toyota as a pioneer in alternative vehicles. GM has assigned 150 engineers to the project.

The Detroit carmaker aims to launch the volt by 2010. The battery would give a range of 40 miles and maintain full performance for at least 10 years. it would be recharged either by the car's small combustion engine or from a normal electrical point.

Battery rentals would help fulfill GM's goal of giving the Volt a wider appeal than the petrol-electric hybrid vehicles now on the road. noting that the Volt will be marketed under GM's global, mass-market Chevrolet brand, Frank Weber, the carmaker's chief engineer, said that it 'needs to be affordable to the buyer of a normal mid-sized car'.

Bob Lutz, GM's vice-chairman, said the Volt would be produced in both left and right-hand drive versions. GM has so far shown a concept sedan model, but plans to unveil a second design at the Frankfurt car show next month. Mr. Lutz said: 'We see it being sold round the world.'

GM's confidence contrasts with reports that Toyota has delayed the launch of new hybrid models because of concerns about battery safety.

Justin Ward, a Toyota engineer, told a research conference last week that lithium-ion battery technology 'hasn't proven that it's ready for the automotive market yet'.

The two companies are pursuing different lithium-ion chemistries. Toyota uses nickle-cobalt aluminum oxide, while GM has turned to a newer nano-phosphate technology.

GM experts to start testing batteries in October. Ric Fulop, co-founder of A123Systems, one of three companies developing the Volt's battery pack, said a big challenge was to maintain temperatures throughout the battery once it was in the vehicle.

GM's goal is to price the Volt, excluding battery, at about the same level as its Chevrolet Malibu sedan.

Mr. Weber estimates that an average Volt owner would spend about $25 a month on petrol, against $145 for a traditional Malibu. The difference could be used on battery rental payments, giving a similar total cost.'

AUTOBLOG GREEN You can see some discussion of the issue at http://www.autobloggreen.com/2007/08/14/gm-buy-the-volt-rent-the-battery/