Nissan downplays chances of Leaf battery rental scheme

Car maker Nissan will announce UK pricing for its Leaf electric car next month, and is expected to offer either an outright purchase or a lease-only arrangement for the innovative battery-powered vehicle when it goes on sale in the UK early next year.

According to a source at the company, the firm has ruled out a combined lease and purchase plan where the car is sold but the battery is leased, due to the potential complexities of resolving any customer disputes.

Whereas a leased car can be physically repossessed if too many payments are missed, for example, the company appears to have decided that a leased battery would be too difficult to seize when it forms an integral part of a car.

While exact pricing is yet to be announced, the Leaf should prove an interesting option for business buyers, financially at least. Capital allowances – tax breaks designed to encourage investment – are provided for electric cars, allowing companies to set the entire cost of a purchased vehicle against tax in the first year. In addition, a grant scheme run by the Office for Low Emission Vehicles (OLEV) will provide up to 25 per cent of the cost of the initial purchase, capped at £5,000.

Businesses can also set full leasing costs against tax, although leased cars will not benefit from the OLEV grant.

Nissan said that about 2,000 Leafs will be shipped to the UK in 2011, the first year of sale, and the company aims to be cost-competitive with Toyota's Prius hybrid.

Paul Willcox, Nissan UK managing director, said he expects fleet demand to outstrip supply, although the car will nonetheless be offered to consumers through Nissan's retail forecourts, with business and retail buyers competing on a first-come, first-served basis. "We think an innovative car such as the Leaf will bring consumers into Nissan showrooms," he said. He also argued that limited supply should keep residual values high, at least initially.

Long recharging times and "range anxiety" will be the major stumbling blocks for purchasers, who will probably need to hire cars or join a car club for longer journeys – at least until the UK's charging infrastructure becomes better developed.

However, Jerry Hardcastle, vice president for vehicle design and development at Nissan Europe, argued that a lack of infrastructure may prove to be less of a barrier than many assume. "Our research suggests most people prefer to use home charging, even when you give them the opportunity to do otherwise," he said.