Update: A California study* has found that ”71% of the sample of 3,800 PEV owners who acquired their car after February 2012 buy the car and only 29% lease it. Out of the three main models, Volt owners have the highest lease share of 38%, the Leaf lease share is 31% and the Plug-in Prius lease share is 18%.”
This is probably something that crosses the minds of most people looking to go electric — “Should I buy or lease an electric car?” I’ve thought about it many times, and I’ve come to the conclusion that I would lease one, but I’d love to receive more feedback on the pros and cons of buying versus leasing if you have some to offer.
The thing that triggered this article was actually a comment from a redditor on why he leases his Chevy Volt: “I hate owning cars vs leasing. (that’s my preference though) To me, I buy things that appreciate in value and rent/lease things that depreciate. (I know that doesn’t apply to everything, but you get my point.)”
That sounds logical. So, that’s the first reason on my list of 4 reasons to lease rather than buy an electric car, but check out the remaining 3 and the big retort, and then tell me if you think I’m an idiot or if you think my conclusion makes sense.
4 Reasons To Lease Your Electric Car
- Cars depreciate in value rather fast, especially electric cars. So, unless you plan to keep your car for a while before selling it, leasing the car rather than buying it might be a smarter move.
- Electric car batteries are coming down in price fast, and so are electric cars as a whole. In two to three years, you might be able to get a much better deal on an electric car, so leasing until then seems like a pretty good idea.
- Electric car batteries and overall electric car range are projected to get much better within the coming few years. Again, you might get a lot more car for the money if you wait two to three years to buy, and simply lease until then.
- Tesla is supposed to be coming out with an “affordable” electric car with at least 200 miles of range by 2017. Don’t hold off on going electric until then(!), but maybe save your money for that one. (Of course, this is assuming you aren’t in the market for the Model S or Model X.)
1 Reason To Buy Your Electric Car
But, wait a second, when I do some math, I notice that the 3-year savings from leasing rather than buying aren’t that big, and I’d actually spend more money leasing over the course of 5 years.
If I was in the market for a Nissan Leaf, even if I didn’t pay for it all up front but financed and paid it off over the course of 60 months (5 years), the price would come to $30,360 (before the $7,500 federal tax credit). At the 39-month leasing rate provided next to that same quote ($583 a month), I’d spend $30,360 leasing the car in under 52 months (about 4¼ years). Unless I really don’t want to drive the same car for 4 years, why in the world would I lease the car rather than buy it?
I Would Lease
Going against my tendency to buy rather than lease, I would actually lease in this case for a few reasons:
- I think that electric cars will improve enough in the next few years that I’d want to upgrade in two or three years’ time.
- Assuming the cars do improve a lot and costs continue to come down, I think it’ll be hard to get much money back for a used, 2013 or 2014 electric car.
- We are currently a 0-car family. We live in the city center of a fairly large European city, so we have almost no need for a car (ever). If we moved and did decide a car would be useful, I definitely don’t think we’d get two — we both love bicycling for transportation, and we’re cool riding transit (I actually love it). So, if we decided after two or three years that we wanted to ditch the car again, it seems we’d be better off financially if we leased than if we tried to get our money back on a used EV.
However, that said, it would be quite a tough decision to lease rather than buy when I’d pay the same amount leasing in just about 4 years as I’d pay buying.
If I’m missing something here, please clue me in — I’ve never given much consideration to leasing in the past, since I’ve always thought it made much more sense to eventually own what you are paying for.
*The study noted in the update is: “Studying the PEV Market in California: Comparing the PEV, PHEV and Hybrid Markets.”