Growing demand for EVs across Europe will see the rise of multi-cycle leasing as OEMs and leasing companies look to keep control of the valuable battery tech within the EV.

Sofico’s lead product manager Bram Wallach said the latest market development regarding multiple leasing cycles of EVs had been brought about by a number of factors

Automotive and mobility management software provider Sofico said a number of OEMs are now looking to offer used-vehicle leases on EVs as a strategy to hold ownership over the batteries, which may have longer shelf lives than the vehicle itself.

It pointed to plans announced late 2021 by Volkswagen to offer used vehicle leases on its ID family of EVs as a strategy to retain the battery, using secondary or even tertiary leases to recycle the packs into new uses, including home power centres and fast chargers.

VW, which is a Sofico client, has said it believes that battery life could be about 1,000 charging cycles and around 350,000km or about 215,000 miles, meaning it could last longer than the car itself, and that its value survives even as the value of the car depreciates. This would keep RVs high, making secondary leases more affordable.

Its research actually indicates that residuals for electric cars might be higher than for ICE models; even when the car has reached the end of its economic life, the battery may still have 70-80% of its original energy storage capacity.

And leasing companies are also looking to retain control over vehicles for longer leasing cycles. ALD Automotive’s ‘Move 2025’ strategic plan features a business model in which vehicles are leased, in some cases, for their entire lifespan, involving multi-cycle leasing, used car sales and multi-channel distribution.

But such a move to multi-cycle leasing brings its own problems, including the need to manage several different assets with different leasing cycles, and with several different users involved and a requirement to provide for different customers through online and self-service journeys, especially independent leasing companies which may not yet be used to dealing with private individuals.

And Sofico said such developments increasingly require sophisticated, flexible, smart software capable of managing subsequent leases of the same asset – such as its own Miles Enterprise Solution, which is capable of managing complex financing and mobility solutions.

Lead product manager Bram Wallach said the latest market development regarding multiple leasing cycles of EVs had been brought about by a number of factors, including battery costs; the current long lead times for new cars, which had made used cars more in demand, and a re-evaluation of mobility needs by businesses as a result of the pandemic.

He added that Miles not only had the flexibility to handle multiple contracts for multiple assets with multiple users on the same platform, but could also produce an assortment of analytics at the same time that allowed sound business management decisions to be taken.

“While descriptive analytics can be leveraged to accurately track and monitor profitability on every cost centre and for each individual cycle, thanks to Miles supporting separate cost center accounting on vehicle and contract, we’re also anticipating the use of machine learning in predictive analytics for decision support in contract management to optimize the lifetime value across the portfolio.

“This could be done, for instance, by combining internal cost information with external market data to highlight for which of the vehicles on fleet a second cycle would make sense,” he emphasised.