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Battery leasing models are becoming the backbone for used e-2W & 3W market

Today no one wants to buy a used EV because of battery performance uncertainty and the cost of procuring a new battery exceeding twice the market price of the old vehicle. Jeenit Mehta, Co-founder of RedE EV Mobility Pvt Ltd. shares his take on this price disparity and how battery leasing models can help support the secondary market of electric 2Ws and 3Ws.

Source: Meme from Twitter

As the dialogue from Govind Namdev (Veeran) in the Hindi movie Sarfarosh goes, “Goli ke bina yeh laakhon-karodoki bandook patthar hai patthar” (“Without the bullets, these guns are just stone”).

The same way, the value of electric vehicles without the costly batteries is nothing.

  • The cost of a lithium battery pack currently forms 40-50% of the new electric 2W or 3W.
  • Whereas the price of a new battery pack is at least 200% of the market price of the old vehicle in which it is to be fitted.

Primary reasons for this price disparity are

  • FAME subsidy is for the entire vehicle: A new EV gets the FAME subsidy, whereas a new component for an old EV has no subsidy.
  • Lack of residual value for old lithium-ion batteries: In India, most recycling companies do not retrieve valuable materials like Li, Ni, and Co from spent Lithium-ion batteries. They instead extract the black mass using mechanical separation and export it. The price of this black mass for export mainly relies on its Cobalt content. According to an industry practitioner, these end-of-life lithium-ion batteries are at times acquired at rates as low as INR 150 per kg.
  • Battery health is difficult to ascertain: Since battery warranty is a function of charge-discharge cycles, and the range of the battery is more or less kept grey. Even if a battery is under warranty, it is difficult to ascertain the future utility of a used battery and generally valued at scrap.
  • Until now, the electric vehicle market for 2Ws and 3Ws has been dominated by small-scale OEMs that rely heavily on imported components. The availability of these components can be problematic. Additionally, as there are many different models with varying component specifications, people are hesitant to purchase these vehicles second-hand.

The scrap value of electric 2-wheelers with an end-of-life lithium-ion battery is typically between Rs 3,000 to Rs 5,000. This is equivalent to around Rs 30 to Rs 50 per kg for the vehicle, which is roughly 4% to 6% of the ex-showroom price of a new vehicle.

How battery leasing is turning the tide for used electric 3W market

For the low-speed 3W, we are seeing a different story. Unlike most electric 2Ws, electric three-wheelers are commercial vehicles. Companies like Battery Smart and Sun Mobility are providing batteries on lease for three-wheelers. For an investment of Rs 8,000 to Rs 10,000, lithium-ion batteries with a capacity of more than 80Ah can be leased for life time.

As a result the electric 3W body (without the battery) still commands a good resale value.

  • A used e-rickshaw, which is a low-speed L3 vehicle, generally costs around Rs 30,000 in its mid-life without a battery. Instead of investing in a new lead-acid battery of Rs 35,000 or a new lithium-ion battery with a charger worth Rs 80,000, an investment of Rs 8,000 to Rs 10,000 for a lease makes more sense. This investment is hardly one-third the total price of the old vehicle.
  • Battery theft, which is not covered by vehicle insurers, gets covered by battery lease service providers.
  • With multiple battery leasing players now in the Indian market, the vehicle owner is not dependable on a single provider anymore and thus has a say.
  • Swappable Lithium-ion batteries not only reduce the vehicle’s net weight but also prevent corrosion of the chassis due to acid (which happens in the case of lead-acid batteries), thus prolonging the vehicle’s life.

Outlook for used electric 2W

With most battery leasing done at 48V, many used electric 2Ws that work on 32V get excluded from availing of the battery leasing service.

With more OEMs getting into the 48V system and the booming number of riders for the gig economy, a rise in the leasing of batteries for the used as well as new electric 2Ws is expected.


Till the time lithium-ion battery costs get reduced drastically, the battery leasing model will continue to create value in used electric 2W space and has already demonstrated it for the low-speed three-wheelers. With more new 2-wheelers and high-speed 3-wheelers penetrating the market, we expect to see similar value creation for used vehicles through the battery leasing model.

Also Read: Battery swapping – The new ‘gig’ in town, which is here to stay

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