Industry News: Most Electric Cars Sold in the U.S. Are Leased

[William Maley]

You find yourself in the showroom, ready to drive away in a new Chevrolet Bolt, Nissan Leaf, or Tesla Model S. But there is one big question that needs to be decided, do you buy or lease it? According to a report from Bloomberg, most buyers of EVs tend to lease.

In the U.S., almost 80 percent of electric vehicles on the road are leased according to their report. It also says that 55 percent of plug-in hybrids are leased. More than 80 percent of BMW i3s are leased as an example. The key reason comes down to the belief that electric vehicles will continue to improve and buyers can simply trade them - similar to purchasing a new smartphone.

"When there’s new technology coming out, and it’s coming out so rapidly, and you’re improving on it so constantly, typically people only want to lease it,” said Steve Center, a vice president of American Honda Motor Co., back in April.

This bet seems to be paying off as the range of electric vehicles has been increasing, while prices of batteries have been going downward.

“If you look at what can happen across the lifetime of a lease, you’re really talking about doubling the range of these vehicles,” said Edmunds analyst Jeremy Acevedo.

The imbalance between leasing/buying an electric vehicle has also made used EVs to become a steal. According to auto analytics firm Black Book, compact electric vehicles sold in 2014 only hold 23 percent of their original sale price. A comparable internal combustion vehicle holds about 41 percent. Doing a quick search on Cars.com, we were able to find low mileage 2015 Nissan Leafs ranging $14,000 to $16,000.

The big question is will this trend continue down the road, considering the likes the Model 3 and models coming from German automakers.

Source: Bloomberg

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[G. David Felt]

Awesome write up and I agree, eight now as much as I like the EV auto's, lease is the way to go as we are changing tech way to fast to buy.

[Drew Dowdell]

A gently used, certified pre-owned Bolt would be a steal for someone shopping the segment. 

That said, I think part of it also has to do with the way the tax credit is structured.  If you lease, you get the full credit vis-a-vie the leasing company.  If you buy, then you have to deal with submitting for the tax credit and possibly not being eligible for the full amount.   I'm certain that is an aspect for leasing as well. 

[William Maley]

51 minutes ago, Drew Dowdell said:

A gently used, certified pre-owned Bolt would be a steal for someone shopping the segment. 

That said, I think part of it also has to do with the way the tax credit is structured.  If you lease, you get the full credit vis-a-vie the leasing company.  If you buy, then you have to deal with submitting for the tax credit and possibly not being eligible for the full amount.   I'm certain that is an aspect for leasing as well. 

I never knew that on leasing. 

[A Horse With No Name]

A gently used Bolt might be just the berries in a few years.

[ocnblu]

From a different perspective, electric vehicles, per the article, can be seen as throwaways.  First off they're leased, then dumped into a market where they have no value.  From a financial point of view, they are a much worse investment than conventional vehicles, which can effortlessly be kept in service by subsequent owners, this adds intrinsic value that is impossible to deny.

[Drew Dowdell]

1 minute ago, ocnblu said:

From a different perspective, electric vehicles, per the article, can be seen as throwaways.  First off they're leased, then dumped into a market where they have no value.  From a financial point of view, they are a much worse investment than conventional vehicles, which can effortlessly be kept in service by subsequent owners, this adds intrinsic value that is impossible to deny.

Effortlessly? I beg to differ. It's going to take me hours of effort to replace the starter in my CRV.

[G. David Felt]

1 hour ago, ocnblu said:

From a different perspective, electric vehicles, per the article, can be seen as throwaways.  First off they're leased, then dumped into a market where they have no value.  From a financial point of view, they are a much worse investment than conventional vehicles, which can effortlessly be kept in service by subsequent owners, this adds intrinsic value that is impossible to deny.

Wrong, EV leasing offers all auto companies a way to off set profits which in the end means having to pay the tax man. Much value to the bottom line.

In regards to Effortlessly be kept in service, stop dreaming silly, Petro auto's often cause hours of wrench time to repair and keep running.

[ocnblu]

I just realized something yuge and even more precarious for the industry we all love.  The electric car mentality is the very same as the cell phone mentality.  Now let me ask you, good citizens, is this really what you want?  To Apple-ize cars?  Are we going to camp out and wait for the release of v.2, v.3 of a CAR?  The implications blow my tiny little mind.

[Drew Dowdell]

2 hours ago, ocnblu said:

I just realized something yuge and even more precarious for the industry we all love.  The electric car mentality is the very same as the cell phone mentality.  Now let me ask you, good citizens, is this really what you want?  To Apple-ize cars?  Are we going to camp out and wait for the release of v.2, v.3 of a CAR?  The implications blow my tiny little mind.

I think for people who don't care, car sharing, car subscriptions, and various schemes like that will increase. They'll take the place of the CamCordTima crowd.  For the people who do care, there will still be the niche products out there. 

[regfootball]

I've had some interesting observations over the last couple years when i was looking at used Volts.

About 18-24 months ago when there was a bunch of lease return Volts, 3 years old etc.... they were getting really cheap in some cases because so many were coming off their lease returns.  The used 2013 with 36,000 miles on the market in mid 2016 was sometimes had for 13,000-14,000.  Here at week one of 2018, if i look at used 2013 Volts and some of them do still have 36,000 miles they are actually going for more money (15 grand plus) for the same car, now 18 months older.

Leasing electric cars will perpetuate drops in used retail prices but if you time it well and buy one of those 3 year pre owned, I think you will get it for a fair price and after you buy it I don't think you will lose a lot more on depreciation.  I think that will be the sweet spot for ownership on an electric car.

For leasing new, the problem is california customers will get more incentives offered to them than other parts of the country.  On Volt fourms and places like leasehckr you see many examples where between the extra tax credits and special localized incentives, things like Volts and Bolts can sometimes be had for little down and absurd monthlies.  Like 250 a month zero down and then no gas bill.  Spark EV's towards the end were going close to zero down and 100 a month for places in CA.  Foolish not take advantage of leasing when its like that.

Edited January 6, 2018 by regfootball

[regfootball]

I'll add, Spark EV's used....good buy, as low as 8-9 grand and 30-40k miles in some instances,  just they are only in certain parts of the country to be found.  not bad for 327 lb ft of torque....

Edited January 7, 2018 by regfootball

[ocnblu]

A real shocker.  But I always liked the Chevy 327.

[regfootball]

14 hours ago, ocnblu said:

A real shocker.  But I always liked the Chevy 327.

blu, the new tesla is out, you should get one, here is the unboxing!!!!

 

https://youtu.be/6K_nTNvyTtE

[ocnblu]

That video was way too short.  LOVE IT! 

[A Horse With No Name]

On 1/7/2018 at 7:03 AM, ocnblu said:

A real shocker.  But I always liked the Chevy 327.

I do also...but I am not stuck in 1966 either.

[ocnblu]

You don't know what you're missing

[Zane Wylder]

So, riddle me this, what happens when the batteries die and there's no warranty, how much would that all cost to fix?

[Drew Dowdell]

16 hours ago, Zane Wylder said:

So, riddle me this, what happens when the batteries die and there's no warranty, how much would that all cost to fix?

With the hybrid Prius and Ford Escapes that hasn't been an issue, the batteries typically outlast the car. Prius and Escape taxis go multiple hundreds of thousands of miles on their original batteries.

[Zane Wylder]

8 minutes ago, Drew Dowdell said:

With the hybrid Prius and Ford Escapes that hasn't been an issue, the batteries typically outlast the car. Prius and Escape taxis go multiple hundreds of thousands of miles on their original batteries.

True, and from now on, I'll tone down my comments, but I digress

 

So when the time comes then, how much is the repair?

[Robert Hall]

I wouldn't want one out of warranty...I'd get the extended warranty w/ any modern vehicle and trade before it expires.  With an EV, a lease really makes the most sense...

Edited May 19, 2018 by Cubical-aka-Moltar

[Drew Dowdell]

Just now, Zane Wylder said:

True, and from now on, I'll tone down my comments, but I digress

 

So when the time comes then, how much is the repair?

It varies depending on the kilowatt hour of the battery and the type of the battery. I've seen as low as $1,500 for a Prius and $14,000 for a Tesla. The Tesla can be $120,000 car though.

[Drew Dowdell]

Ford, Toyota, GM, and Tesla all had battery buyback programs at one point where you get a trade in value for your old battery. I haven't heard anything in a while so I don't know if they're still active or not.

[G. David Felt]

21 hours ago, Zane Wylder said:

True, and from now on, I'll tone down my comments, but I digress

 

So when the time comes then, how much is the repair?

We have reduced the costs of EV battery packs 80% in the last 6 years. As we get more efficient with production as well as recycling and move to solid state batteries, as Hybrid / EV auto's increase in production and sales, prices always come down.

This chart is just one showing where our costs are and how we have already beat 2020 cost projections.

https://cleantechnica.com/2015/03/26/ev-battery-costs-already-probably-cheaper-than-2020-projections/

Plenty more info in the story above, but you can bing or google your own "yearly auto battery price reductions for EVs" and see that there is plenty of evidence that shows the cost of a replacement battery is always reducing. By the time you have 250,000 miles or more on the auto, it will be much cheaper for a much superior battery pack or you might not even own the auto any more.

The low maintenance cost of Hybrid and EV auto's beats ICE auto's and as we learned about lead paint, asbestos, diesel and so many other polluting toxic things, we are learning how to create much better products.

This all helps with other pollution issue especially in the inner big cities in regards to noise pollution, exhaust pollution, etc. Cleaner, quiet, better.

21 hours ago, Drew Dowdell said:

Ford, Toyota, GM, and Tesla all had battery buyback programs at one point where you get a trade in value for your old battery. I haven't heard anything in a while so I don't know if they're still active or not.

Tesla, GM and Toyota along with BMW have all canceled their buy back programs as they have focused on using the warranty replaced batteries in power storage packs available to the public and businesses for solar storage systems. Ford I could not find anything on now.

Yet with the much higher dependable packs, I think the cost of recycling or dealing with disposal is what has led to the ending of that program it seems.

[ocnblu]

There is no place to plug in a golf cart in the city, which is ironic because electrics are only good as short hop toys, not long distance cruisers.  This is a big country. 

[Robert Hall]

1 minute ago, ocnblu said:

 This is a big country. 

 

[Drew Dowdell]

5 minutes ago, ocnblu said:

There is no place to plug in a golf cart in the city, which is ironic because electrics are only good as short hop toys, not long distance cruisers.  This is a big country. 

A Tesla has a longer cruising range than my Honda. 

[ocnblu]

And when you get low on fuel in the Honda... how much effort do you have to put into finding a place to refuel it in less than 10 minutes so that you can continue your "electric cars for everyone!" tour?

[Drew Dowdell]

I never said EVs for everyone. You're against EVs for anyone. You want to tell people what they can't have. 

With EVs you must change your mindset on your fill up patterns.  You start each day in a Bolt with a full tank. You "filled up" overnight.  If you're on a trip and need to locate a station to charge up, like everything else, there's an app for that...  In fact there are multiple apps for that.

[ocnblu]

Yes the world has sped up, which makes sitting around a charging station wasting time all the more ridiculous.  You're not going to sell me on this crap.

[G. David Felt]

3 hours ago, ocnblu said:

Yes the world has sped up, which makes sitting around a charging station wasting time all the more ridiculous.  You're not going to sell me on this crap.

Enjoy your craptastic ICE auto  as the rest of the world moves forward. Remember to write when you have to wait for that special order of Petro as the rest of the world zips along in EV auto's.

[balthazar]

22 minutes ago, dfelt said:

Remember to write when you have to wait for that special order of Petro as the rest of the world zips along in EV auto's.

This will not occur in any of our lifetimes, Dave.
In fact, I predict it won't even get to 50% EV usage in our lifetimes.

[G. David Felt]

21 minutes ago, balthazar said:

This will not occur in any of our lifetimes, Dave.
In fact, I predict it won't even get to 50% EV usage in our lifetimes.

Thanks my friend, Sarcasm is so hard to get across in writing.  

[ocnblu]

 

Dictionary

a·pos·tro·phe

əˈpästrəfē/

noun

noun: apostrophe; plural noun: apostrophes

a punctuation mark ( ’ ) used to indicate either possession (e.g., Harry's book ; boys' coats ) or the omission of letters or numbers (e.g., can't ; he's ; class of ’99 ).