Eventually – we’re honestly not sure when – electric cars will arrive on dealer lots where we live — the Denver, Colo. area.
At that point, we’ll have to make a final decision about whether to lease or buy our first EV.
In fact, in some ways we already have had to make a partial decision about whether to lease or buy due to the complexities of the federal tax credit, which requires that you very carefully calibrate your W-4 allowances in the tax year in which you plan on getting the EV in order to ensure you get as much as possible of the $7,500 federal credit.
That’s because it is.
However, I’ve already examined the tax issue in a different story. Let’s use this entry to weigh whether to buy or lease a new EV.
REASONS TO LEASE
- Leaps in EV battery technology. This is the single most compelling reason to lease an EV such as a Nissan LEAF rather than buy one. It’s pretty clear that in three to four years battery technology will be considerably better than what it is now, with, among other things, longer range, quicker charging times, longer battery life, and cheaper costs a virtual certainty. What’s less certain, is exactly how much longer, quicker, better and cheaper EV batteries will be in three to four years.
- First generation kinks. The first generation of any product, whether a car, a computer or a washing machine, typically isn’t as good as the second, third, or fourth generation. That’s because manufacturers – at least the good ones – learn from having their products being tested by consumers in real-life conditions.
- Falling EV costs. The ideal scenario is one in which the cost of producing plug-ins such as the Nissan LEAF and Chevy Volt falls as demand and production ramp up and as car and battery makers improve the technology and reduce their production costs. Under this scenario, a $41,000 Chevy Volt or $33,000 Nissan LEAF will cost less, perhaps a lot less, in three to four years. Of course, there’s the possibility that EV production costs will not fall enough to make up for the disappearance of state and federal EV incentives, which could be gone three years from now.
- You avoid dealer price gouging. Lease terms are set by the auto manufacturers, not local dealers. That’s a good thing for consumers who want to avoid paying a middle-man, meaning the dealer, a fat profit.
REASONS TO BUY
- Federal and state tax credits. With a lease, the automaker pockets the federal tax credit, although you clearly still benefit from the credit by getting some pretty reasonable lease costs, at least for the LEAF and the Volt, which both lease for $349 monthly (you have to put down $2,000). You can pocket the state tax credit even if you lease — at least in some states.
- The ugly history of automakers and EV leases. General Motors infamously took back the EV1s it had leased to consumers and crushed them – see the documentary classic Who Killed the Electric Car? for more on this. Toyota did the same with many of its RAV4 EVs. If you buy your EV, ain’t no one gonna take it from you and crush it. Unless, of course, you fail to keep up on your monthly payments.
- You can do anything you want to an EV you buy yourself. OK, so this might not be all that important to most folks, but it just so happens to be hugely important to me. You see, I desperately want to ad wrap our electric vehicle in a big, eye-catching way to advertise to the world that, yes, a highway capable car can literally run on sun. I won’t be able to do that if we lease, though we could go with a custom plate that 99 percent of people probably wouldn’t pay attention to and/or wouldn’t understand.
The final decision
For most folks out there, leasing seems to make most sense – the leapfrogging of technology is just such a truly compelling issue.
That noted, for us, the answer about whether we’ll lease or buy is a big, fat, “I don’t know.”
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On the one hand, I really don’t want to be driving around in a non-descript Nissan LEAF that most people are going to mistake for a Nissan Versa – it leaves an activist like me who wants to sell the world on solar-charged driving wondering, what’s the point?
On the other hand, technological advances leaving early EVs in the dust perspective is very persuasive – and this is coming from a guy who would never, ever consider leasing a new gasoline powered car. I just don’t think leases make any financial sense, at least not for someone who buys a new car and then holds on to it for 20 years, as I have with my 1992 Acura Integra (which, by the way, is still running strong!).
In the end, the more logical, reasoned move would be for us to lease. The emotional one would be to buy so that I can directly pitch solar-charged driving to the world by ad-wrapping our new solar-charged EV.
Can you tell which way I’m leaning 🙂 ?
- The Chevy Volt: At a dealer near you this year
- They’re plugging a LEAF and a Volt into solar
- The real EV competitin is coming for Nissan
- CODA vs. Ford Focus Electric vs. Nissan LEAF