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Battery business

September 12, 2011

To kick-start demand for its electric Smart cars, Daimler plans to introduce several new financing models at the IAA international automobile show in Frankfurt. One option is to sell cars, but lease batteries.

Electric car charging station
Daimler plans to lease batteries for its new electric carImage: Daimler

Daimler aims to make its third-generation Smart Fortwo Electric Drive compact more affordable by offering consumers several new financing schemes, including the option to buy the electric car but lease the battery and pay roughly a third less.

"We will be announcing a number of new financing models for the electric Smart Fortwo vehicles this week at the IAA," a Daimler spokeswoman told Deutsche Welle.

The spokeswoman declined to provide details ahead of the announcement but did confirm that battery leasing would be one of the options available to customers early next year.

Still room for improvement

The development of long-range, low-cost batteries remains a challenge for the auto industry. Daimler is no exception.

Its next-generation electric Smart car is touted as the most compact highway-capable electric vehicle in the market. It will come with a 17.6 kilowatt-hour lithium-ion battery pack that gives the vehicle a range of about 140 kilometers before it needs recharging.

German Chanceller Angela Merkel, German auto club president Matthias Wissmann, Daimler CEO Dieter Zetsche
German Chanceller Angela Merkel wants to see more Germans plug into electric carsImage: AP

That's a steady improvement on previous models, but still too short for many compact car drivers who are used to getting 400 kilometers or more out of a tank of gas

Price is another sticking point. Experts put the price of current batteries at about 9,000 euros – or roughly the same price consumers pay for a compact combustion-engine car.

Lower price tag

By taking the expensive battery out of the cost equation, Daimler hopes to make its next-generation electric Smart far more affordable

Although the company isn't announcing any numbers ahead of the IAA, rumors are afloat that the new vehicle could carry a price tag of about 23,000 euros. That's more than a third less than most rivals, such as Mitsubishi's 34,000-euro iMiev.

Daimler plans to produce and sell tens of thousands of the new electric Smart, compared with the relatively small 1,500 unit production run of the previous model, which was leased for about 700 euros per month.

Author: John Blau
Editor: Sam Edmonds