Octillion Power Systems announced a new demonstrator program for battery-leasing that allows for batteries to be leased to fleet customers when they purchase vehicles.
Under the program, participating fleet operators will be allowed to source batteries through a five-year lease-to-own program with no up-front payment. Access to the program will be on a first-come, first-served basis.
“The program is designed to ensure that fleets feel prepared to make the switch from vehicles powered by internal combustion engines to electric vehicles,” says Paul Beach, president, Octillion Power Systems. “This innovative leasing plan makes it easier for fleets to go green and save money right away.”
The goal of the demonstrator program is to collect data on battery degradation, evaluate fleet-operation-use models and to assess second-life viability of the used batteries. Ultimately, this will allow Octillion to build market cases for traditional financing groups eager to get into battery leasing but concerned by the technology, the company says.
Leasing is a critical leverage tool to drive the adoption of electric commercial vehicles by allowing fleet operators to immediately tap into the total cost of ownership benefits associated with operating electric vehicles versus those powered by with internal combustion engines.
In a 2019 survey, customers in the market for a new vehicle were asked why they would be hesitant to purchase an electric vehicle (EV). The top responses included anxiety surrounding range per charge, the higher price point, lack of charging infrastructure and questions surrounding recycling and disposal. These four supposed drawbacks of EVs have inspired Octillion to roll out its battery leasing program for the convenience of fleet operators, the company says.
“Leasing batteries to fleet operators addresses many of the underlying issues associated with the adoption of EVs, including higher upfront vehicle costs, range anxiety, the expense of charging infrastructure and end of life recycling,” Beach says. “With leasing, the upfront cost of the battery is significantly reduced, making the vehicle, in most cases, less expensive than [internal combustion engines] vehicles.”
Building the cost of the lease into the operating budget helps to defer expense as well as allow for lower overall operating costs of the fleet. Fleets are ideally suited for electrification, because they can accommodate a “right-sized” battery that optimizes range with cost and weight to address range anxiety issues, Octillion says.
Regional and local routes typical of many fleets are 100-150 miles in range, allowing for efficiently priced and sized batteries customized to meet these routes. Roundtrip routes can use localized charging at a centralized depot, allowing charging infrastructure to be shared. Once the demonstrator program transitions to a normalized leasing program of six to seven years, the fleet operator will be able to swap out the used battery for a new one and the lessor will then repurpose the battery for second life in the grid, the company says.
Octillion says it is in a unique position to tackle the issues people have when considering an EV purchase. Octillion engineers and manufactures custom batteries that are tailored to the specific needs of the fleet operator, ensuring that they begin saving money from the very first mile of operation.
“With a standard EV purchase at full price, it can take months or even years to see a return on investment, depending on how frequently the vehicle is used,” Beach says. “But with our leasing service, this wait time drops to zero. The lease will be almost identical to a power purchase agreement, which are currently used to lease solar energy sources to households and buildings.”