The growing uptake of electric vehicles across Europe is leading to the development of multi-cycle leasing as OEMs and leasing companies look to keep control of the valuable battery within the EV. Such developments increasingly require sophisticated, flexible, smart software capable of managing subsequent leases of the same asset.
So says Ghent-based automotive finance, leasing, fleet and mobility management software provider, Sofico, as growing numbers of OEMs look to offer used-vehicle leases on EVs as a strategy to keep control over the highly valuable batteries which may have longer shelf lives than the vehicle itself.
Lead Product Manager, Bram Wallach, said: “This latest market development regarding multiple leasing cycles of EVs has been brought about by a number of factors. The first is the value of the battery within EVs and the amount of scarce earth materials it requires in its production. This makes for a steeper initial EV purchase price, in itself already an incentive for leasing, as well as a higher residual value over time, thanks to the remaining value of the battery pack.
“The second is the current lead time for new cars, caused by the global semiconductor shortage, which has made new cars less plentiful and used cars more valuable and in greater demand. While this may be only a temparary phenomenon – although some experts suggest it may last well into next year – it makes absolute sense to try and optimise vehicle life cycles through multiple uses.
“The other impact has been that of the Covid pandemic which has made many businesses re-evaluate their mobility needs, often replacing car use with other multi-modal mobility provision. This has introduced the need for flexible and scalable management of several asset classes, again with a multitude of users.”
Wallach said that Miles not only had the flexibility to handle multiple contracts for multiple assets with multiple users on the same platform, but could also produce an assortment of analytics at the same time that allowed sound business management decisions to be taken.
“While descriptive analytics can be leveraged to accurately track and monitor profitability on every cost centre and for each individual cycle, thanks to Miles supporting separate cost center accounting on vehicle and contract, we’re also anticipating the use of machine learning in predictive analytics for decision support in contract management to optimize the lifetime value across the portfolio.
“This could be done, for instance, by combining internal cost information with external market data to highlight for which of the vehicles on fleet a second cycle would make sense,” he said.