Buy or lease the battery? Understanding consumers’ non-compensatory and heterogeneous preferences for electric bicycle business models

Abstract

The rapid growth of the electric bicycle (e-bike) market has sparked the emergence of innovative business models, notably the battery-leasing model (BLM) as an alternative to the conventional buying model (CBM). Although BLM holds promise for meeting diverse consumer demands, its viability hinges on unclear preferences between competing business models. This study investigates consumers’ heterogeneous preferences between CBM and BLM using stated choice experiments conducted in China, focusing on their non-compensatory behaviors. First, the latent class model identifies two distinct consumer groups: the CBM-preference subgroup (70.9 %) and the BLM-preference subgroup (29.1 %), with the latter exhibiting higher awareness of BLM and valuing its benefits. Subsequently, the latent class model with attribute cut-offs further reveals non-compensatory behavior. Overall sample attribute thresholds (i.e., cut-offs) reveal that 47.6 % of respondents require BLM purchase costs at least 20 % below CBM’s, while only 27.4 % accept 50 % higher operating costs than CBM. However, the attribute cut-offs differ significantly between the groups: the BLM-preference subgroup require a smaller average purchase cost discount than the CBM-preference subgroup (500 CNY vs. 800 CNY) and tolerate a larger annual operating cost increase (360 CNY vs. 120 CNY). When these cut-off values are exceeded, the probability of consumers choosing BLM decreases significantly, particularly among the CBM-preference subgroup. Additionally, the BLM-preference subgroup shows less concern about the cut-off for the distance to a battery swapping station. These findings enable operators to evaluate BLM’s viability from a consumer perspective and offer valuable insights into the sustainable development of innovative business models.