MG EV Subscription Model- Pros n cons

MG Motors has launched a subscription model for their EVs. This post gives you detailed analysis to help you decide if it is worth for you.

Advantages:

#1 Reduced upfront purchase cost- Since battery is not sold to you (i.e. not included in vehicle ex-showroom price) your initial purchase cost for the vehicle will be bit lower and correspondingly registration cost, road tax,insurance and other aspects come down.  MG Comet EV Ex-Showroom price is 7 lakhs with battery, 5 lakhs without battery. So about 2 lakhs savings in ex-showroom and another 50k approx savings in on road price- roughly 25-30% savings in initial purchase cost.

#2 No risk of battery life- battery costs 30-40% of EV cost - if battery fails soon after warranty, vehicle owner will have to shell a lot. In subscription model, battery risk is owned by the company

#3 Assured buy back: MG seems to offer an assured buyback at 60% of ex-showroom price after 3 years/45000 kms usage.  This way you may get back about 3 lakhs for your MG Comet after 3 years. Note that there will be dozens of fine print for this- like vehicle damage, usage etc, but it might work for you if you plan to change the car after 3 years. 

Note the catch: MG enforces min usage of 1500 kms per month. If you drive this month, in 3 years you will be driving 54000 KMs, bypassing the 45000 kms limit set for byback. If you want to qualify,you will have to use for 45000 kms but pay for 54000 kms- 9000 kms * 3 INR/km or 27000 extra for free!

Disadvantages of MG EV Subscription Model

1. There is minimum usage commitment- MG has enforced a 1500 kms per month minimum usage condition on EV Battery subscription. This is 50 kms each day. Not all of us drive so much. If you're not using your car much, you will still have to pay 3 INR per km * 1500 kms= 4500 INR every month.

Over a period of 5 years, subscription amount paid adds up- some 54000 INR per year or 2.7 lakhs in 5 years. For a 7 lakh car, this feels like entire cost of battery. So instead of buying battery upfront with vehicle you will be paying the price in installment over the years. If you're using the car for 10 years, it is a huge loss as if you'd bought the car with battery there will be no need to keep paying.

Summary: Might work out if intention is to use for short term like 2-3 years.

2. 18% GST on battery subscription charge

MG Charges 2.5 INR per km on battery subscription. What they have not disclosed is the 18% on top of it, which adds another 50 Paise, making it 3 INR per km

3. Economics don't add up if you've to use paid charging facilities

If you charge your EV using domestic charger it is cheaper- may be around 1 INR per km. If you've to use commercial chargers, the charges may come to 2.5-3 INR per km. If you've to pay 3 INR for battery subscription, another 3 INR for charging, then this whole EV subscription model makes no sense. Petrol will work out cheaper and less headache and no need to worry about range anxiety.

With a spending of 6000 INR per month, if you buy a normal car like Alto instead of comet, you can pay for petrol good enough for about 1200 kms, which is more than normal usage for most families, minus all the headache of subscription, range anxiery etc.

Let us do the math for MG ZS EV vs MG Astor

When you buy a vehicle like ZS EV you will be going out of town and can't use home charging all the time. With paid charging stations costing more, the unit economics don't work out if you've to rent the battery. Regular petrol version works better.

My thoughts:

• MG should remove minimum usage count or at least reduce it to 500 kms a month for entry level vehicles like Comet. 
• Please confirm if GST is included in battery subscription amount or extra
• Match buy back kms to 54000 kms instead of 45000, as 1500 per month minimum adds to 54000 in 3 years
  

I've already written about regular car subscription model not working out in India, as subscription amount is more than EMI. Let us see how MG's subscription model works out. Let me know what you think.

Related: My review of MG ZS EV * Maruti's subscription scheme analysis *