Advertisement

Electric Car: Lease Or Buy?

 
Follow John

2011 Nissan Leaf plugged into an EVgo quick-charging station, Texas

2011 Nissan Leaf plugged into an EVgo quick-charging station, Texas

Enlarge Photo

You're considering a plug-in electric car.

Should you lease or buy?

It's a question that all new-car shoppers face--but for electric cars, there are some special considerations.

Each financing option has its pros and cons, so we've outlined the reasons you might opt for each alternative.

LEASING

  • The Federal income-tax credit of $2,500 to $7,500 is wrapped into the monthly payment, so you avoid paperwork and up to 15 months of waiting to realize the cash
  • You're protected against permanent loss of battery capacity; at the end of the lease, you just turn the car in--and any pack loss isn't your problem
  • You're protected against potentially low resale value for used electric cars (the math is complicated due to the various financial incentives)
  • Leasing deals for still-pricey plug-in cars give you a lower monthly payment (in part because you're not building equity)
  • In California, you still get the state's $1,500 to $2,500 purchase rebate in the mail even if you lease

PURCHASE

  • You own the car, and you have an asset once you're finished paying for it
  • If you take care of your battery and live in a temperate climate, capacity loss may not be an issue for many years
  • Drivers who cover many miles each year likely won't find leases to accommodate that
  • Pure battery-electric cars are so simple that they need almost no mechanical maintenance, saving you money over more complicated gasoline cars every single year
  • Plug-in car makers are starting to offer battery-replacement programs, meaning you could keep the same car for a very long time

Leasing is the more conservative route for you if you're at all worried about battery life.

That's lately been reinforced by articles such as one in the Wall Street Journal, which warns in apocalyptic tones, Don't Get Stuck In An Old Electric Car.

93 percent leased

Indeed, it appears that by far the largest proportion of plug-in electric cars delivered have been leased.

The WSJ notes that data-research firm Experian Automotive reports fully 93 percent of electric cars delivered from October through December last year were leased.

Have we missed any other reasons to lease, or to buy, in our lists above?

And if you already drive a car with a plug, which option did you choose?

Leave us your thoughts in the Comments below.

_______________________________________________

Follow GreenCarReports on Facebook, Twitter, and Google+.



Advertisement
 
Follow Us

 

Have an opinion?

  • Posting indicates you have read this site's Privacy Policy and Terms of Use
  • Notify me when there are more comments
Comments (40)
  1. We are an all electric family with a Tesla Model S and a Nissan Leaf. We purchased both.
     
    Post Reply
    +4
    Bad stuff?

  2. In IL, you're eligible for a state rebate equal to 10% of the MSRP up to $4000. However only if you purchase the car. That swayed me to purchase vs lease a 2013 Nissan Leaf in the Chicago-land area.
     
    Post Reply
    +1
    Bad stuff?

  3. I'd buy, I refuse to worry about battery replacement costs it's not really a big deal considering how much you'll save in fuel and maintenance costs. And if the car is upgraded in future model year upgrades who cares, car companies are always brining out new models, facelifts, and tech upgrades. I bought my current car when the model was first introduced I've kept it in great shape and it's still very new looking. There have been a few tech and options upgrades and it has had a facelift for 2013. But my car is still good looking and a blast to drive. So I'm going to keep it and enjoy it until the i3 comes out which coincidentally will be the same time my factory warrantee runs out on my current car.
     
    Post Reply
    +1
    Bad stuff?

  4. One "lease vs purchase" option you "forgot"...

    You don't have a "choice" with some "lease only" EVs such as Honda Fit EV and other "compliance cars." Undoubtedly, they are a VERY small number relative to the number of Leafs and Teslas. And the numbers in smaller if you take into account plug-in "hybrids" (like the Volt and Energi lines).

    Still, I can't help but wonder if those limited number of compliance cars were part of the overall number used in the WSJ piece?
     
    Post Reply
    Vote
    Bad stuff?

     
  5. @Paul: The Honda Fit EV is the only compliance car today that's lease-only. The Chevy Spark EV, Fiat 500e, Ford Focus Electric, and Toyota RAV4 EV are all available for purchase OR lease.
     
    Post Reply
    +1
    Bad stuff?

  6. Good point.

    I don't think you can lease a Tesla S either...
     
    Post Reply
    Vote
    Bad stuff?

     
  7. yes you can for say $1000+ a month.
     
    Post Reply
    Vote
    Bad stuff?

     
  8. Really? How?

    Unless you are talking about the guaranteed value by Tesla.

    That is still NOT the same as "leasing". You don't own the car when you lease.
     
    Post Reply
    Vote
    Bad stuff?

  9. You cannot lease a Model S. They do have a lease-like financing plan with a guaranteed buy back, but you still own the car.
     
    Post Reply
    +2
    Bad stuff?

  10. Leased the Leaf -- it made sense because of how the technology is rapidly advancing. We're placing our bet that in two years, everything from battery capacity to infrastructure will be vastly improved. It's more expensive to lease in the short run (we leased 24 months), but we wanted to "vote with our dollars" early.

    We LOVE the car.
     
    Post Reply
    +1
    Bad stuff?

  11. The EV manufacturers are going to want to sell the cars after the leases expire (let's hope they don't pull an EV1 on us); these cars will eventually need to be purchased! I think this will further encourage making battery replacements available to the existing EVs. I very much hope that any new (compatible) battery technologies will be considered for such replacements, and perhaps third parties may be able to contribute in providing battery upgrades.

    By the way, can anyone comment on whether post-lease-sales (i.e. used) of EVs will count towards compliance requirements?
     
    Post Reply
    +1
    Bad stuff?

  12. I purchased the 2012 Leaf over a year ago. Even the dealer was surprised at my decision, but I could not stand having zero equity in the car since I planned to run it into the ground and await future, better battery options.

    Hello Envia? Where have you been lately??
     
    Post Reply
    +1
    Bad stuff?

     
  13. I bought my 2013 Leaf 3 months ago. I researched it carefully and know my needs. The Leaf (and a second existing vehicle without range limitations) are a perfect fit for me. There is no need to wait for improvements and I do not plan on selling it. I am in MN which should be reasonable for battery life. I expect to keep the battery between 20%-80% fairly consistently. In short leasing would have had overhead cost with no particular benefit to me.
     
    Post Reply
    Vote
    Bad stuff?

  14. I leased a VOLT when they first came out. I did not get any benefit from the $7500 Federal Tax credit. It taken by the bank. As my lease is coming to an end, I have found out that the residual is greater than the blue book value.
     
    Post Reply
    Vote
    Bad stuff?

  15. I bought, and if I'm careful with the battery, then I fully intend to end up with a car fully paid for by gas savings. The plan is to simply not sell it (or get a new battery) until I've done c. 150,000 miles, no matter how low the range goes. I plan to do that by buying a second longer range car for the long journeys, but keep doing the local mileage on my LEAF. The second car will be cheap to lease, because it won't have to do many miles (just the long journeys).

    BTW so far I've done 23,000 miles and not noticed any drop in range!
     
    Post Reply
    +3
    Bad stuff?

     
  16. 150,000 miles @ 40mpg is about 3,750 gallon @$4/gallon, is about $15,000. Not enough to cover the cost of the Leaf.

    But then again, in UK, that gas price is much higher... Maybe 2x the price. But that is also assuming that you didn't pay anything for electricity. 150K miles with 4 miles per KWh, you have used 37,500KWh of electricity. @ $0.12 per KWh, your electricity cost is at least $4500.

    You are lucky since you live in a fairly cool climate, UK.
     
    Post Reply
    Vote
    Bad stuff?

     
  17. I only pay for about 1/3 of the electricity that powers the car. The rest comes from public chargers, my work, my parents, friends, etc... I know your thinking I should pay my parents & friends for the power, and I do offer, but they feel about as silly as I do, when I tell them that the power used comes to £1.50! Granted it does add up over time though!

    Now I didn't mention that I also don't have to pay road tax in the UK or congestion charge in London and often parking in the centre of London is free for 4 hours. The financial benefit of these free "perks" is vastly greater than the cost of electricity and as you say petrol is almost twice the price it is in the US (well £1.35 per litre).

    But I was trying to keep it simple...
     
    Post Reply
    Vote
    Bad stuff?

  18. You neglected to mention in the article that rapidly developing technology means that my next electric auto may have a greater range and more bells and whistles than my 2011 Nissan Leaf. That's why I leased. Right now a Tesla Model S is a strong contender for my next car.
     
    Post Reply
    +2
    Bad stuff?

     
  19. I have a Model S in my garage as a replacement for our 2011 Leaf, VIN #320. It resides with our 2011 Volt, VIN#679, which will almost certainly be replaced in January 2014, at the end of that lease with the BMW i3.
     
    Post Reply
    +1
    Bad stuff?

     
  20. Cool - I didn't realize that the VIN number is an actual count that indicates how many such models are on the road.
     
    Post Reply
    Vote
    Bad stuff?

  21. A few folks have already written that they're expecting new battery tech within a few years. I think folks were saying the same thing a couple years ago when the Leaf & Volt first became available. My viewpoint then, as it still is now, is that new battery tech remains at least 5 (if not 8-10) years from market, and the lack of any new significant battery tech to market in the past few years only validates this expectation for me.

    You may get a 10-20% better battery (range) in 2-3 years after your new lease expires (above the ~10% net gain from a new vs. used battery), but you won't see the breakthroughs in that timeframe. This was a primary reason I bought.
     
    Post Reply
    +2
    Bad stuff?

  22. Is there link to see the longer term data on Leased vs purchased (instead of the mentioned relatively short time period)? I can understand a higher lease rate than purchase given given the technology immaturity and lack of long term field experience with battery life, but 93% seems a little high. We saw some of the same concerns with the early generations of Prius HEVs years ago. This number could be skewed high by some incentives that the OEMs happened to offer to make year end sales goals..etc.
     
    Post Reply
    +1
    Bad stuff?

  23. When I first looked into a hybrid I was worried about the battery. But the high dealer pricing on the packs is irrelevant because used battery packs from crashed vehicles do the trick at much much lower cost.
    As for leasing: if I had learned about the $250 leases for the Leaf just one week earlier last fall I would have kept my Passat wagon for long distance and done all the local driving in a leased Leaf. I feel we're still a bit close to first generation with today's electric cars and that three years (and $9000) later I will have highly advanced models available with comfortable range of around 200 miles.
     
    Post Reply
    Vote
    Bad stuff?

  24. I purchased a RAV4 EV. Toyota Financial Services does not give lessees the full benefit of the tax credit, they keep a big chunk of it in their pocket - apx. $4,000 IIRC. So, with the 0% 60 month financing on offer, I think most people choose to purchase the RAV4 EV. Of course, the thermally managed Tesla battery pack probably also has a lot to do with the decision.
     
    Post Reply
    Vote
    Bad stuff?

  25. I bought. Expecting to drive lots and lots of miles. I drive back home so my wife can take the car. i take the bus so my wife does not use her gas car. My kids fight over taking the electric. 30 thousand miles in 15 months. at 8 bucks a gallon, and a 20 MPG gas car already paid for, i have saved ab out 5000 bucks driving the EV. 4 years and its like not buying a new car, unless its a Tesla in which case its like not buying a sixth of the Tesla battery
     
    Post Reply
    Vote
    Bad stuff?

     
  26. $8 a gallon? Where do you live?
     
    Post Reply
    Vote
    Bad stuff?

  27. Hmm, I cast some doubts on that 93% number, I couldn't find anything corroborating it besides this WSJ article.
    Even if correct, it applies to Q4 2012 only, time at which I'd reckon very few people would commit to flat-out buy a 2012 Leaf, when $199/mo leases were already common, and the not-yet-available 2013 was anticipated to come with better specs and lower MSRP.

    Leasing, and quite possibly ditching the car after only 2 or 3 years, doesn't seem very compatible with the stated goals of many EV drivers: saving money and/or be more environment-friendly.
     
    Post Reply
    +1
    Bad stuff?

     
  28. It will be interesting to see what happens when all these leased EVs appear on the used car lots in a few years. Will they be inexpensive enough to bring in another kind of buyer?
     
    Post Reply
    +4
    Bad stuff?

     
  29. If the price is low enough, then I might pick one up for fun...

    It will be a fun little project car. Even if it has only 40 miles range, it is NOT a bad 3rd or 4th car perfect for plenty of around town driving...

    Not to mention the fact that used BEV has the MOST significant saving over an used ICE in terms of service cost.
     
    Post Reply
    +2
    Bad stuff?

  30. "•In California, you still get the state's $1,500 to $2,500 purchase rebate in the mail even if you lease"

    Only if it is a 3-year lease!
     
    Post Reply
    Vote
    Bad stuff?

  31. I think buying an off lease used BEV is a perfect solution. They will drop in value pretty fast and if the range is acceptable, then buying them used is perfect since the service requirement is low and battery degradation should slow down after some years.

    I recommend leasing a BEV such as Leaf, SparkEV and Focus EV b/c there will be more and "better choices" coming out each year. And their leasing rate is really attractive. Also, you don't have to deal with their service and support in the long run.

    For PHEV/EREV, I recommend buying with low APR. Most of them don't have any issues with battery and they are both a short distance commuter and long distance car. So, your risk of losing value is low. Also, they are dual "energy" source
     
    Post Reply
    Vote
    Bad stuff?

  32. I bought my Leaf in December 2011. I'm pretty jealous about the new models double speed level 2 charger, but I tend to keep my cars for 10 or more years. The 2012 Leaf replaced a '97 Sedan. My wife's 2007 Prius replaced a '98 minivan. So I'll probably keep the leaf for a very long time.
     
    Post Reply
    +2
    Bad stuff?

     
  33. Level 2 charging is definitively a reason NOT to buy a first gen Leaf.
     
    Post Reply
    Vote
    Bad stuff?

  34. Purchased a 2013 Leaf in March as a 2nd car. Jetta TDI now only used for long trips, the Leaf is the everyday car. I prefer to buy cars and drive them until they go to the crusher, usually 150 to 300K miles. I considered the lease option for the Leaf, thinking about the rapidly changing technology, but it still didn't make economic sense to me. After over 3 months of driving the Leaf I am more convinced of this. We usually charge it to 80% which is plenty for our normal days use and keep it in a heated garage so expect the battery to last a long time. Savings on gas, maintenance and the superior driving experience should more then offset the higher initial price.
     
    Post Reply
    Vote
    Bad stuff?

  35. I leased my 2012 Leaf because I wasn't able to afford the finances on a bought Leaf. I am retired and live on a fixed income. I will either lease a Cheve Volt or buy my Leaf after the lease runs out. Since my Leaf is the highest model, I will have to pay $16,000.00 at the end of the Leaf.
     
    Post Reply
    Vote
    Bad stuff?

  36. I just bought a volt, history indicates that I hate buying cars and drive my cars almost to oblivion. Leasing made little sense for me.
     
    Post Reply
    Vote
    Bad stuff?

     
  37. We bought the Volt in Nov 2012. Can't see the sanity of paying interest on a depreciating asset by financing it so leasing is even more revulsive.

    People really need to get away from accepting that you will always have a car payment. We always bought used and kept them forever. Saved up to buy the next car in cash.
     
    Post Reply
    +1
    Bad stuff?

  38. Leased my Volt so I can drive a new state of the art car. It was to be the #3 car but it is so much fun we both drive it as our #1 choice. Lease every 3 years is my plan. Cost will be about $16,000 to $20,000 after fuel savings and I will have 3 new cars. The Volt is saving $200 per month in fuel cost and a blast to drive.
    If I bought the Volt the payments would equal almost $40,000-21000 fuel savings=$19,000 cost ... Almost the same but I would be driving a nine year old throw away. I am driving the Volt for my pleasure and and it is terrific.
     
    Post Reply
    +2
    Bad stuff?

  39. I leased a 2011 Nissan Leaf and as mentioned, I got the benefit of the entire federal and state tax credit which manifested as a much lower residual value than the current blue book price for the same Leaf. I can now choose to buy it and then turn around and sell it for a profit, or just buy it outright and keep on driving. My typical commute day for the foreseeable future consists of less than 40 miles and we have our trusty Avalon as a long range back up for trips.

    I will probably do the latter since there is just very little to go wrong with this car. The interval maintenance consists of checking brakes, tires and changing the cabin air filter.

    Don't discount the tremendous advantages of a very simple machine.
     
    Post Reply
    Vote
    Bad stuff?

  40. We have a purchased chevy volt, and decided to lease the nissan leaf -- i'm hoping that charging infrastructure and technology improves somewhat in the next two years (my lease term). I'll make a more educated decision at that time whether to lease again or purchase an all electric. I LOVE my new leaf - so peppy and fun to drive!
     
    Post Reply
    +1
    Bad stuff?

 

Have an opinion? Join the conversation!

Advertisement

Find Green Cars

Go!
Advertisement

Advertisement

 
© 2014 Green Car Reports. All Rights Reserved. Green Car Reports is published by High Gear Media. Send us feedback. Stock photography by Homestar, LLC.