General Motors and GM Financial seek EV rental penetration similar to gas-powered cars

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General Motors and GM Financial are looking to lease electric vehicles at a similar rate to internal combustion vehicles, GM Financial CEO Dan Berce said Aug. 10 at the JP Morgan US Auto Conference.

“We are aiming for comparable penetration,” he said.

Penetrations would vary between GM brands. The electric Cadillac Lyriq would be rented in a similar proportion to a gas-powered Cadillac, which historically has a higher rental rate than a Chevrolet model, he said.

Berce also discussed pricing for electric vehicle rentals. GM Financial is still exposed to vehicles at the end of a lease. It uses JD Power’s ALG to calculate a vehicle’s residual value and establish the transfer price between itself and GM, he said. The transfer price is the price agreed by subsidiaries of the same company, which may have competing interests.

ALG tends to be more conservative in estimating the residual value of electric vehicles compared to internal combustion vehicles, which have a significant track record to draw on, Berce said. “Electric vehicles don’t have a lot of history,” he added.

But GM has experience with the Chevrolet Bolt. He’s rented the Bolt for about five years and has seen “thousands of returns” over that time, Berce estimated.

“ALG’s conservatism has really proven itself,” he said.

GM Financial found the initial residual calculations to be low and its resale experience with the Bolt to be “pretty good,” compared to ALG’s projections.

Lack of data on electric vehicles wouldn’t prevent them from being priced competitively with internal combustion vehicles, as GM could always sweeten the pot with a discount, price cut or higher residual, a said Berce.

“GM can put money on the hood,” he said. “They can do a pretty competitive lease.”

Berce said leasing is an important sales tool for an automaker, providing “much higher” loyalty than a loan. While ALG residuals would be conservative, automakers could spend the money to make leasing a viable alternative to electric vehicles.

“And they will,” he added.

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