CleanTechnica is the #1 cleantech-focused
website
 in the world. Subscribe today!


Clean Transport LEAF

Published on August 19th, 2014 | by Important Media Cross-Post

18

It’s Cheaper To Lease A New EV Than Buy A Used One

Share on Google+Share on RedditShare on StumbleUponTweet about this on TwitterShare on LinkedInShare on FacebookPin on PinterestDigg thisShare on TumblrBuffer this pageEmail this to someone

August 19th, 2014 by
 
Nissan Leaf

Originally posted on GAS2

According to Wired, it costs less to lease a new EV than to buy a used one. Why? Let’s follow the money trail.

The federal government allows a tax credit of up to $7500 when you, the consumer, purchase a new EV. But if you lease that EV, the credit goes to the manufacturer, not to you. That’s why you see such attractive lease deals available on EV’s like the Nissan LEAF and the Chevy Volt. Today, you can lease a LEAF with $2500 down for only $199 per month.

There aren’t many used EV’s out there for sale. Only the LEAF has been on the market long enough for some off lease used cars to be available. Chevy Volts will be winding up their 3 year lease period later this year. With so few cars on the market, there is very little data to calculate resale values accurately.

Right now, Kelley Blue Book estimates a 2012 Leaf with 33,000 miles on the odometer will sell for $15,000. If you put down 10 percent on a 4-year term at 4 percent interest, you will end up paying $305 a month – $100 more than the cost of leasing a brand new one. Plus, you have to figure in to your calculations how the technology has changed since that 2012 car was built and the cost of battery replacement somewhere down the line. No wonder so many people are deciding to just lease a new vehicle

Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.

Print Friendly

Share on Google+Share on RedditShare on StumbleUponTweet about this on TwitterShare on LinkedInShare on FacebookPin on PinterestDigg thisShare on TumblrBuffer this pageEmail this to someone

Tags: , , , , , ,


About the Author

-- CleanTechnica is one of 18 blogs in the Important Media blog network. With a bit of overlap in coverage, we sometimes repost some of the great content published by our sister sites.



  • GCO

    Would someone simply abandon or give away the car right after being done paying for it? That seems to be Wired’s assumption.

    They compare leasing vs financing, but completely ignore the fact that in one case, at the end of the term, you actually own the vehicle!

    Next up, they’ll tell us that renting a home costs less than buying one, because monthly payments are lower? Better yet, sites like this one will repeat their claims without question? Brilliant…

    • Steve Grinwis

      In my case, it was cheaper to lease then buy out the lease, than it was to buy it outright up front. As in: a net-present value analysis yields that I pay less money to lease, then buy out the residual, than an outright buy right now.

      You may actually *own* the vehicle after you’re done buying it, but what’s it worth? On a fairly standard five year term, my car is only expected to be worth 6k. So, you may not be ahead, if you were to sell your car as soon as you were done paying for it, verses leasing it for the same period. The issue comes is that your car may be quite capable of providing more than 6k worth of value to you. Overall, I’d agree it makes sense to own your things, not lease them. That doesn’t mean there aren’t corner cases though. :p

      • GCO

        My beef with Wired is that they simply forget that the car exists at the end of the term. Like it’s worth zero.
        Even “just” 6k$ would be equivalent to a ~120$/month reduction in their example, completely reversing their conclusion.

        As you said, owning will almost always cost less in the long run.
        I’d imagine that people buying/financing will keep their cars longer than the typical 3 year lease term, therefore benefiting from the slower depreciation of an older vehicle.

      • Carl Borrowman

        You can buy your car (Smart EV) here for $9k new after rebates.
        So buying it new is also better than buying it used, right now, but that’s only because it hasn’t had enough years on the market.
        Being able to still sell it for $6k after five years of driving sounds like a better deal than leasing.

  • Pat Campbell

    Lets brainstorm this further.
    Why not work towards “Forever Lease” where leased EV’s are re-leased or the leased is kicked down the road in time increments like Nissan is doing now.
    A new lease option could involve leasing a used, inspected, upgraded, and repaired EV. (Like a used iPhone from an Apple Store). I think that would open up a new market for a large group of people who cannot afford a new EV lease. This lease might include maintenance and battery replacement/repair rolled into the monthly payment. The monthly costs would be plainly stated so folks could compare what they are paying now for their “beater” in gas and repairs to an EV that has much lower costs. I can’t see how folks on a tight budget could get a more reliable vehicle.
    Frankly, I am an idea person not a numbers person. But I am sure there are people reading this who are. I think my 2012 Leaf with a stated $22+K residual could be re-leased to a very happy customer for more than the $99/month I am paying.

    • Steve Grinwis

      If I could have a battery guarantee with that, I’d be down for that.

      I’ve got two options when my lease for my EV is up:

      1) Walk away and buy a Model 3. If they’re out. And if I can afford it
      2) Buy out the lease, and drive it for a few more years, while I save up for my Model 3 / They release it later than expected.

      If I could get additional powertrain warranty, I’d be interested in that.

  • Brian

    The price of electric cars will have to drop more, and the only way, for that to happen, is through mass production. When we can get the price of an electric car down to $15,000, then they will take off and replace gas dirty cars. They are much cheaper to maintain with no oil, or filter changes. Also, electricity averages one third the cost of dirty gasoline.

    • TedKidd

      I don’t think current barrier is a price thing until you look at Tesla.

      When you factor in the tax credit you get a LOT of car with all these EV’s. I’ve driven Leaf, BMW, Mercedes, Tesla. These cars are all amazing, and Nissan has removed the “battery” worry with a $5k replacement (try replacing your ICE engine for that!), and Tesla has done it with 8 year unlimited mileage warranty.

      It’s more a charging infrastructure/charge time and range thing.

      Would my fiance get an 80 mile electric now? Probably not. Would she get it if there was charging (even 15 amp) at work? Or if range were 150 miles? Probably so.

      Me? I want access to the Supercharger infrastructure, so my barrier is cost.

    • CMCNestT .

      The average selling price of a new car is just a tick over $32k.

      BEVs don’t need to come down to $15k for mass adoption.

      • Mint

        People underestimate how many people buy $30k+ cars. New car buyers are generally higher income folks. The rest usually buy used cars, which is very sensible.

        Tesla got it right in targeting high performance. That’s where EVs have the biggest advantage. Tesla’s 416hp motor is a watermelon sized lump of steel and copper that produces maybe 100hp of waste heat; a Mercedes/BMW V8/V10 is a giant thing because it produces 1500hp+ of waste heat to be cooled.

        The $30k+ market is where EVs have the most potential to nab marketshare, IMO. But it requires a serious engineering effort. You can’t sell a $70k EV/PHEV with the performance of a $20k car. I’m looking at you, GM…

  • Steve Grinwis

    This was my experience. Battery replacement is going to be hard. Except for Tesla which makes modules out of standard size batteries, everyone else has custom size large format cells. 7 years from now, where are they going to find them? Will they still be manufactured? That seems unlikely.

    • GCO

      No, I don’t think battery replacement, if ever needed, will be a problem at all. First, manufacturers are bound to offer parts for 10 years minimum.
      Next, popular vehicles enjoy a wide selection of non-OEM after-market equivalents or upgrades, e.g. refurbished packs for the Prius, so I
      would expect the same for e.g. the Leaf when warranties run out and
      enough owners start looking for a capacity boost.

      The cells don’t have to be the same type as the original, only the pack needs to be mechanically and electrically compatible.

      Re Tesla, while the size of the cells is standard, the chemistry and
      packaging obviously aren’t. Attempting to swap thousands of small cells will be a tough job, so I don’t think using 18650s is an advantage there.
      Anyway, fortunately, it doesn’t seems like battery replacement will be required more than maybe once during the life of the vehicle, if at all.

      • Steve Grinwis

        That’s actually not true about the ‘required to stock parts’ for x years, as far as I can tell.

        They only have to be able to honour their warranties. That would mean most manufacturers are only required to provide parts for 5 years for power train. For vehicles with an 8 year battery warranty, they have to be able to replace a battery 8 years from now. Note that they don’t actually have to sell you one out of warranty 8 years from now. My car however, only has a 4 year warranty. There is no provision in law that requires that the manufacturer stock parts past that warranty. In general, they seem to, but they are not required too. If you can find a law that states this, I’d be interested to read it.

        I’d not heard that there are replacement third party packs available for the Prius. That’s good news. However, from what I can tell, these packs aren’t new manufactured packs, but rather, they are taking the good cells from numerous old packs, and combining them into a single good pack. Do you know of after market newly manufactured packs for the Prius?

        For the Tesla, you wouldn’t swap thousands of small cells. You’d manufacture a new battery module, which all the Tesla’s use, using the standardized sized cells, which are a commodity, and will continue to be made forever a good long time. That’s the advantage. Will there be a manufacturer of the oddly shaped, paperback novel sized cells in my car in 10 years? I still bet no.

        • Mint

          It’s not child’s play to replicate Tesla’s battery module. There’s a lot of electronics and safety systems in there, passive and active.

          Anyway, it should last the life of the car. After 1000 cycles, a Tesla will have been driven 200-300k miles, and even if battery capacity is down to 60% by then, that’s still a very useful range for a 15 year old car.

          • Steve Grinwis

            I expect the Tesla battery pack to last several thousand cycles, given the low rate of discharge and recharge, the low depth of discharge, and generally keeping charge less than 80%.

            I have to write an article on battery durability. Modern chemistries are a lot more durable then we’re lead to believe.

            Also, I’m implying that it won’t be difficult for Tesla to continue to manufacture battery modules, not a third party.

          • Mint

            So do I. I was just outlining a worst case scenario.

            There’s a paper from Panasonic showing 3000 cycles (roughly half depth, judging by the voltage range) at elevated temperature still having >85% capacity:
            http://ma.ecsdl.org/content/MA2011-02/17/1282.full.pdf

          • Carl Borrowman

            At a cost of $10,000 – $12,000 to replace, it better last a long time.

            “The battery is guaranteed for eight years or 125,000 mi (201,000 km) for the base model with the 60 kW·h battery pack. The 85 kW·h battery pack is guaranteed for eight years and unlimited miles.”

            http://www.teslamotors.com/models/design

    • Carl Borrowman

      From what I understand, the way it works for the Leaf, you just take it back to a service center and they replace it for you at $5500 now. And you get a better one in the process.
      http://www.greencarreports.com/news/1092983_nissan-leaf-battery-cost-5500-for-replacement-with-heat-resistant-chemistry

Back to Top ↑