General Motors, GM Financial seek similar EV lease penetration as gas-powered cars

General Motors and GM Financial seek to lease electric vehicles at a similar proportion to internal combustion-powered vehicles, GM Financial CEO Dan Berce said Aug. 10 at the J.P. Morgan U.S. Auto Conference.

"We're targeting a comparable penetration," he said.

Penetrations would vary between GM makes. The electric Cadillac Lyriq would lease at a similar proportion to a gas-powered Cadillac, which historically has a higher lease rate than a Chevrolet model, he said.

Berce also discussed the pricing of electric vehicle leases. GM Financial always has exposure to vehicles at the end of a lease. It uses J.D. Power's ALG to calculate the residual value of a vehicle and establish the transfer pricing between itself and GM, he said. Transfer pricing is the price agreed upon by subsidiaries of the same company, which can have competing interests.

ALG tends to be more conservative in estimating the residual value of EVs compared to internal combustion vehicles, which have a large historical record to draw from, Berce said. "EVs don't have that much history," he added.

But GM does have experience with the Chevrolet Bolt. It has been leasing the Bolt for about five years and seen "thousands of returns" in that period, Berce estimated.

"The conservatism of ALG has really proved out," he said.

GM Financial has found initial residual calculations to be low and its resale experience with the Bolt to be "quite good," compared to ALG's projections.

The lack of data on EVs wouldn't prevent them from being priced competitively with internal combustion vehicles because GM could always sweeten the pot with a rebate, price reduction or higher residual, Berce said.

"GM can put money on the hood," he said. "They can make a lease quite competitive."

Berce said leasing is an important sales tool for an automaker, one delivering "much higher" loyalty than a loan. While ALG residuals would be conservative, automakers could spend money to make leasing a viable EV alternative.

"And they'll do that," he added.