Auto Makers Continue to Mull How Best to Back Li-Ion Batteries

Special Coverage

SAE World Congress

DETROIT – Auto makers worldwide are getting ready to launch electric and plug-in hybrid vehicles using the latest in lithium-ion battery technology, but the debate continues over the best way to ease consumer concerns they’ll be left holding the bag once the onboard power packs run out of juice.

Engineers from Nissan Motor Co. Ltd., Chrysler LLC and Ford Motor Co., on hand here at the SAE World Congress for a roundtable on new battery technology, say the auto makers haven’t figured out yet whether to provide long-term warranties or to lease batteries to car buyers to take the worry out of owning future EVs.

Ford’s Nancy Gioia says customers may feel more comfortable with a long-term warranty.

With today’s hybrid-electric vehicles, because the onboard electric drivetrain is used to supplement power provided by the internal-combustion engine, the batteries are considered part of the overall powertrain and required under Environmental Protection Agency emissions rules to be covered up to 10 years/150,000 miles (241,000 km) in some states.

But in a pure EV that has no IC engine onboard, the electric powertrain no longer will have to meet EPA emissions rules, and it will be up to the auto makers to determine how to back the batteries.

Nissan, which plans to roll out an EV in a limited way next year and have it available on a mass-market basis in 2012, expects the Li-ion batteries it will source from a new joint venture with Japan’s NEC Corp. to last 10 years.

But Monoru Shinohara, senior vice president-powertrain, acknowledges that unexpected premature failures may occur and overall battery life could be shorter than 10 years depending on a customer’s driving habits.

“There are two ways to approach this, a lease or full warranty,” he says. “We may consider a lease scheme.”

Under a leasing strategy, the customer would buy the vehicle but pay a monthly fee for use of the batteries, which would remain the property of the auto maker or a third party. Once the batteries reach their end of life, the owner would bring the car to the dealer for installation of a new pack.

Think Global AS, a Norway-based maker of small EVs, has used a battery-leasing scheme in Europe and is mulling a similar option for North America if it succeeds in reviving its operations and follows through on plans to launch sales and production in the U.S.

In addition to reducing worry for owners, proponents say leasing would boost resale value of the vehicles because it would take battery wear out of the price equation.

It also could facilitate re-use of the batteries. The Li-ion batteries employed in EVs are expected to have 80% of their power still available once they no longer are of use in the vehicle, making them ideal candidates for subsequent application in stationary power units by other industries. Having ownership reside with the auto maker or a lease company would make it easier to traffic the used batteries to secondary customers.

Steven L. Clark, senior manager-energy management for Chrysler, says his company continues to mull the options, as well. The auto maker plans to launch an EV in the U.S. next year, using batteries from supplier A123Systems Inc.

“The customer is going to expect the batteries to be warranted for the life of the vehicle,” he says. “Whether that happens through a warranty or a lease, it’s important the customer doesn’t have to worry about it.”

Nancy Gioia, director-hybrid vehicle programs for Ford, says her company hasn’t put its plan in stone yet either but may be leaning more toward the warranty route. Ford will launch an electric version of its Transit Connect commercial vehicle in the U.S. in 2010. The EV is expected to use batteries from Johnson Controls-Saft Advanced Power Solutions LLC.

“We’ll meet the demands of our customers,” she says. “Today, a warranty is what they’re used to.”

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