## Daimler starts production of new smart fortwo electric drive; buy or lease the vehicle, rent the battery

##### 12 June 2012
 Start of production for the new smart fortwo electric drive. Click to enlarge.

Daimler AG has begun production of the new smart fortwo electric drive at the smart Hambach plant. Like the models with combustion engines, the electric vehicle is now rolling off the production line in the standardized production process. Daimler has invested more than €200 million to upgrade the site.

With its 55 kW electric motor (from EM-motive, Daimler’s JV with Bosch, earlier post), the smart fortwo electric drive accelerates from 0 - 60 km/h (0-37 mph) in 4.8 seconds, with a maximum speed of 125 km/h (78 mph). The 17.6 kWh battery pack (from Deutsche ACCUmotive, Daimler’s JV with Evonik, earlier post) enables the urban two-seater to travel approximately 145 kilometers (90 miles) in city traffic.

The new “sale&care model” offers customers an opportunity to buy, finance or lease the vehicle and to rent the battery for a monthly fee. Purchase, financing or leasing of the vehicle including the battery is also possible.

Prices in Germany (including 19% VAT)
sale&care Coupé Cabrio
smart fortwo electric drive €18,910 €22,000
Battery-rent €65/month
Vehicle including battery Coupé Cabrio
smart fortwo electric drive €23,680 €26,770

Delivery in Germany starts in late summer, all other markets—a total of more than 30—will follow successively.

Plant investment. The largest individual project with a total investment of more than €50 million is the new paint shop where an environmentally-friendly liquid painting process that meets the current Daimler Group standard for passenger car plants will replace the present powder painting process. The new paint shop will greatly expand the variety of paint colors that can be realized, which means that in future smart customers will also be able to choose the color of the tridion safety cell of their smart from all available paint finishes.

The smart plant in Hambach was inaugurated in 1997 and has produced the smart fortwo since 1998—in its second generation since 2007. In 2011 more than 103,000 vehicles rolled off the production line. The one millionth smart fortwo was built in September 2008, coinciding with the tenth birthday of the brand. To date more than 1.3 million vehicles have left the plant.

The plant in Lorraine has always stood for an innovative production concept. The assembly line has the shape of a “plus” symbol to enable it to optimally meet assembly and logistics requirements, enabling efficient production processes. This principle enables system partners and suppliers to deliver modules right to the assembly line. Transport and logistics are therefore reduced to a minimum. In addition, smartville has its own thermal power station that produces heat for the plant and covers approximately 25% of its demand for electricity. In the site’s sewage treatment plant, the wastewater is immediately treated at its origin, using a membrane filter system. The quality of the treated wastewater is superior to the quality of the natural waters into which it is discharged, according to the company.

$285/kWh for the battery?.. that seems kind of low Should I conclude from the price difference that the 17.8 kWh battery costs € 4770 incl VAT and € 4008 ex VAT, which is according to today's exchange rate exactly$ 5000? This would be $284/kWh. Nice. The Smart gasoline version cost 10k EUR in Germany so the 19k EUR electric smart with a leased battery contains a hefty subsidy for the battery lease as an electric Smart without the battery does not cost more to produce than the gasoline Smart. I don’t believe in this car as it is too small and poor featured to attract an audience that will pay more to drive green. Toyota produced the Prius at a loss for awhile. It turned out well for them. In the small numbers a new concept is sold at, I suppose it's hard to make a profit. Perhaps MBZ shouldn't try to make a profit from the start. It would be nice to know how much of the extra price on the EV as against the petrol version, and how much of the 5,000 Euro subsidy, goes towards the battery. We still do not have really good information on actual battery costs. I was at the dealer last week getting an oil change when a Smart ICE version rolled into the shop. I told my mechanic I'd like to have one and he told me an oil change on one of them would've cost me$300CDN.

No clue why...

The best price inference can be made from Tesla’s pricing of Model S that gains 10k USD when going from a 40kWh pack to a 60kWh pack or 500 USD per kWh. Tesla use less expensive cells with less cycle life and less power than other EV makers that use a smaller battery pack and therefore have to use high power high cycle life batteries. My best guess is that Nissan Leaf is at about 700 to 750 USD per kWh at the pack level and that everybody else are higher than that because of low volume.

There is not going to be an EV revolution. It will be a slow moving evolution that will take decades. However, I am convinced that future generations will not allow vehicles to pollute at all so gasoline, diesel and even natural gas vehicles will eventually be banned. We may as well start today by requiring each automaker to make a small but over the years increasing percentage of zero emission vehicles (either battery or hydrogen whatever that sell better). That legislation should be in addition to higher mpg legislation and increased emission requirements. Also large cities should be allowed to implement their own legislation regulating the type of vehicles that are allowed to operate in their zones. Many big cities around the world are suffering from extreme air pollution and they could cut air pollution by banning the use of gasoline and diesel powered vehicles. The alternatives would be EVs, public transportation and bicycles electric or not.

I forgot that there is no electric car subsidy in Germany, so this will be cheaper in other markets.

Henrik:
We don't have to guess the price of the batteries in the Leaf now.
Renault lease an identical battery except a bit smaller at 22kwh for the Kangoo ZE, which being commercial would not include VAT.
It's insured value is £7,500.
That works out to about $550 kwh. Insured value is not exactly the same as a sales price, but it is near enough, and would not include any cross subsidy from the £5,000 EV subsidy in the UK, as a replacement battery would not get that. Production costs might then be around$400 kwh

Davemart
It is not that simple. Insurance claims will be based on a probability model of when claims can be expected and what price that will exist at that time for a product replacement. 550 USD per kWh at the pack level seems right when Nissan/Renault are at full speed doing 500,000 packs annually in a few years from now. Right now their kWh price is higher than 550 USD kWh and there will be very few claims today as the batteries are still brand new and designed to last about ten years. Also, production costs are not as relevant as total cost that will have to include allowances for insurance, profit and payback of R&D. No battery is ever sold at production cost as that would surely bankrupt the producer.

'Insurance claims will be based on a probability model of when claims can be expected and what price that will exist at that time for a product replacement.'

Nope. I used to work in the insurance industry, and valuations are based on a right-now replacement cost.
If that changes in future, up or down, you alter the insured value then, you don't guess at future costs.

Davemart you can’t generalize to every product in the insurance industry. Different products will be insured differently and the actuaries are those who need to know how in order for the insurance company to be profitable in what they do. I have not worked in the insurance industry but I have talked to a few actuaries about what they do. In the case of insuring EV batteries that are certain to drop importantly in price as production is multiplied the current price is not the most relevant one.

Henrik,

"The Smart gasoline version cost 10k EUR in Germany"

That is the bare bones entry level vehicle. If you look for a comparable version, you should look at the € 13600 'Passion'.

@Henrik:
Your original idea that they would base the insured value on projected future cost and that they would take into account the probability of a claim confuses two different insurance calculations.
The insured value is what it would cost to replace the battery if it were a write off the next day.
From that figure the premium is calculated, which is where the idea of the probability of an accident is taken into account by the actuaries and how much you pay to insure to that value is worked out.

That is just the way that insurance works, and how the calculations are done, whether it is a cat, a piano, or a car battery being insured.

What your payout actually is varies, but is always below the insured value.
So for instance for a car battery that was 90% depleted, the insurance company is not going to pay out the price of a new battery.

The insured value is the maximum price at the time, regardless of how much of it you would actually receive in a claim.

Renault will one way or another have negotiated with the insurance company to allow for that fact, and that may show up in one of two ways, either a reduced premium in later years or a reduced insurance value for older batteries.

None of that has anything to do with the insured value for a brand new battery in a brand new car right now, which, as I said, is calculated on it's replacement cost right now.

As I said, I have worked for several years in the insurance industry, and your conversations with the actuaries have clearly not covered the relevant parts, whereas the several exams I took on the subject most certainly did.

If the battery price drops then in 2015 or whatever the insured value of a new battery will be reduced to reflect that at that time, so the value on a 22kwh pack might be £5,000 or whatever, but will be based in exactly the same way on present replacement cost at that time.

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