Assessing the economic and environmental impacts of battery leasing and selling models for electric vehicle fleets: A study on customer and company implications

Abstract

Battery electric vehicles (BEVs) powered by renewable energy hold promise for significantly decarbonizing land-based transport. However, the environmental impacts of BEVs remain a critical concern. This paper investigates the circular business model (CBM) of leasing batteries for BEVs and compares its economic and environmental impacts with the linear model of selling and buying batteries. A comprehensive approach combining a battery fleet model, net present value (NPV) analysis, and cradle-to-grave life cycle assessment (LCA) is employed. By considering diverse driving profiles instead of the single “average” profile used in previous studies, the battery fleet model provides a more accurate representation of reality. The findings reveal that while leasing batteries can be as profitable as selling them, companies that lease may require higher revenues and tax contributions to obtain a comparable NPV. To generate additional income, companies may need to charge fees that do not always benefit customers. Notably, battery purchasing remains the most cost-effective option for users driving over 10,000 km/year. The LCA results indicate that the environmental benefits of leasing batteries over selling them are marginal. Leasing offers advantages such as user flexibility, and it encourages battery repair, repurposing, and recycling; however, there is insufficient evidence to support the cost-effectiveness of leasing or significant environmental improvements over traditional buying and selling models. The findings may be relevant for other business models targeting a substantial user base in the BEV domain, such as battery-as-a-service (BaaS) programs and battery swapping.