Battery-leasing strategies for electric vehicles considering a performance guarantee

Electric vehicles (EVs) have gained significant popularity due to their eco-friendly benefits. However, EV batteries are capital-intensive and their performance deteriorates with usage, which undermines their market competitiveness compared to gas-powered cars. To address this issue, EV manufacturers have introduced battery-leasing services (BLS) to reduce the upfront cost for consumers and have provided a performance-guaranteed warranty policy (PGWP). Nevertheless, the high upfront production costs and maintenance expenses associated with PGWP impose a financial burden and risk on manufacturers. Therefore, based on real-world cases, this study introduces a battery asset company (BAC) to explore related pricing strategies for providing BLSs under PGWP and to examine the impact of various collaboration models with BAC on manufacturers. The findings reveal that the relationship between the total discount factors of consumers and firms significantly influences the pricing strategies of EV bodies and BLS. When consumers’ total discount factor is relatively low, the “razor-blade effect” emerges. Furthermore, we identify that the cost advantages of BAC are the primary drivers of manufacturers’ collaboration strategies. Interestingly, although the collaboration model where manufacturers sell batteries to BAC while retaining BLS operational responsibilities is theoretically the least favorable option, it can yield the highest short-term returns and cash flow protection when battery maintenance costs are relatively high. Additionally, under cost-revenue ratio constraints, this collaboration model can also effectively alleviate manufacturers’ financial pressure, enabling them to achieve maximum profitability.