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Why Most Electric Cars Are Leased, Not Owned (bloomberg.com)
Bloomberg's research shows that drivers in the U.S. lease almost 80 percent of battery-powered vehicles and 55 percent of plug-in hybrids. "The lease rate for the country's entire fleet hovers around 30 percent," reports Bloomberg, noting that Tesla does not divulge how many of its vehicles are leased since it sells its cars directly rather than through dealerships. From the report: The lopsided consumer preference for leases is fueled by the meager demand for battery-powered vehicles on the used market. Partly this is a consequence of public policy meant to spur electric vehicle adoptions: buyers of pre-owned cars can't grab thousands of dollars in federal and state incentives. The high lease rate is also fueled by the bet [many] are making that upcoming models will far exceed today's in value and capabilities. Perhaps electric vehicles will truly arrive when they are no longer compared to smartphones, which become obsolete after three years.
No shit. I lease my eGolf. Why - I leased it 2 years ago, and could get an 80 mile range car. Today for the same price I could get a 240 mile range car from Chevrolet, or a slightly nicer 120 mile range car from VW. I'm sure in a further 3-4 years I'll be able to get a 400 mile range car for the same price again.
It'd be completely crazy to bind yourself into a technology that's advancing so quickly at the moment.
"smartphones, which become obsolete after three years."
What the fuck? On what planet?
I don't respond to AC's.
When I looked into electric and hybrid cars a few years ago, most of them could ONLY be leased.
I don't know if that still holds, but it would set both a trend and expectations, so attempts to analyse customer preference based on owned/leased would be unfairly bent towards lease. It would be far more accurate to actually ask people with those vehicles if they'd rather own or lease the it if they had the choice.
Isn't there something about lithium-ion batteries having a 3-year shelf/life, whether they're used or not? I'm not sure if this is true, but if it is, it would make sense to turn the car back in if you'd have to replace the battery, which is the most expensive part (?) of an electric car.
There's another piece to this - those federal and state tax credits are built into the cost of the EV.
-I bought a 2015 Nissan Leaf (EV) for $32,000 (new).
-I got $7,500 back from the federal government.
-I got $2,500 back from a state program.
-When I purchased it, it had a $14,000 Kelly Blue Book trade-in value.
Dealerships are stealing the tax credits and bulking up their purchase cost. I still have buyer's remorse.
if one truly cared about the environment, and was still wanting to drive themselves (for whatever reason)
Does it make more sense to:
a. new car, and all the energy intensive production needed to make it.
b. used car
Financially, the calculus is even worse (and gets worse the more you spend, like a fucking Tesla for example)
Tesla -> ~60k (there's other EV's of course, around what, 30k or so?)
Used economy car -> 5-10k ?
That price differential would more than likely be more than you'd spend on gas for the life of the car (realistically several of your life times).
I'll admit Teslas are pretty fricking cool, but i don't think they should be subsidized by tax breaks.
Nobody wants to be stuck with the cost of replacing the batteries when they stop effectively holding a charge, or they hold much less of a charge than when you first bought the vehicle.
Not even their own natural resources or scientific research conducted with their tax dollars. What a cuntry!
Seriously, basic financial skills are beyond most people and itâ(TM)s sad - it leads to a debt ridden lifestyle that makes money your master.
Pay cash for things, donâ(TM)t finance them (and leasing is financing, do not assume it is advantageous to you). You will quickly find that your relationship with money and your overall financial status with both get better.
Not immediately, I am not going to lie and tell you that everything will be great in 1,3, over even 24 months depending on your current financial situation. But set a cash only, pay of debt plan, and stick to it.
If you cannot pay cash for a Tesla, guess what? YouCANNOT FUCKING AFFORD IT.
Be responsible and enjoy your life instead of living paycheck to paycheck because âoethe payments seemed reasonable lolâ
Three things drive this:
1. Battery tech continues to improve, both in charge time, discharge, and cost factors. Literally I've seen 20 basic patents for this in just the last two years here at UW Seattle. Thus, it's not worth buying, as the battery depreciates in value more rapidly than the car. Early EVs had 3-7 year lifespans and new battery tech usually means a retrofit to some of the internal systems or the chargers. So by leasing, you avoid buying into one form of tech, and can buy the winning tech (highest ROI and/or range) when the market stabilizes due to economies of scale.
2. Fear of accessibility. Vehicle charge routes keep changing, you may move or get a new job location and find it difficult to charge on either end. This affects renters and salespeople more than others.
3. Massive tax subsidies and exemptions for fossil fuel infrastructure and fleet purchases in the US make them less likely, except in urban car rental and rideshare scenarios.
-- Tigger warning: This post may contain tiggers! --
Buy a used car and retrofit it for electric capabilities.
Or if you are in a state or country without periodic emissions testing or laws making it criminal to modify your vehicles engine or emissions equipment, retrofitting a hybrid powertrain into it. A small 30HP or KW engine is enough to suitably charge/reduce load on battery packs while running an electrically driven car under cruise conditions. Even at 70-80 mph you are only looking at a 50-60KWh peak draw with something shaped like a VW bus.
If we were to retrofit every vehicle on the road to support electric or hybrid power, and held their hybrid powertrains to even 90s level emissions standards, we would see a significant reduction in both emissions and fuel demand, as constant rpm/output engines, like would be used for charging an electric vehicle during daily drives, would both efficiently utilize the catalytic converters or other emissions running gear, which operates best at constant load and temperature, as well as reducing fuel usage, since the engine could be tuned more tightly for its operating range rather than having to compromise fuel economy for peak output as well as low end torque. Even without variable valve timing and similiar features, such an engine could operate extremely efficiently, and since it wouldn't be dealing with constantly varying demand from the road conditions, it would also not be wasting fuel trying to speed up/slow down to make up for changes which the electric motors and battery would help cushion.
If you're in California, you can get a $2,500 check from the State for purchasing a pure EV. It's simple.
If you're looking to capitalize on the $7,500 Federal tax credit, it's less simple. Since it's a non-refundable tax credit, you have to make sure you have a $7,500 tax bill at the end of the year. If you qualify for a $2,000 tax refund, then your $7,500 tax credit just poofed. You get nothing.
If you have a $2,000 tax bill, then $5,500 of your tax credit went up in smoke.
Thus, those who like to minimize the complexity of their tax bills don't like the Federal incentive because it means having to mess with tax withholdings in one year and then switch back to a previous setting for the next year. Thus, claiming the credits on a purchased EV is complex.
On the other hand, a dealership will claim the $7,500 tax credit on your behalf and reduce the cost of your lease by the same amount. Thus, getting the $7,500 value is easier and much more tangible for most consumers.
These cars are expensive. Leases are cheaper on a monthly base than a 3-5 year payment plan.
On the other hand the entire market is filled with wealthier individuals, people in those brackets lease for tax purposes as well as the need to have a reliable vehicle. If you can afford (time-wise) to fix your car every other month, then it makes sense to keep your car 10-15 years, myself I am having more and more time-sensitive meetings so I canâ(TM)t afford not to get somewhere because my car broke down again, I might consider leasing once my current car is starting to wear out.
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That seems to be the take away for this.
Worst case scenario, replace the battery. Leaf cars can even replace individual cells rather than the whole battery.
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When I leased my Chev Volt 3 years ago, the salesman said - why buy - You can take the money and invest in stock market.
The Volt cost around $35K to $40K - doing the paper math, I think yes - it cost a lot less to lease than to buy. So I leased my car instead.
However, if I do it again, I would buy it instead. Leasing is a pain - you can only drive x miles a year.
I seem to recall a lease was the only way you could get an EV-1 or the electric ford ranger unless you were doing fleet sales. Were the electric Rav4's sold or leased?
I might not have as much as other people, but cruise along in a low stress life. And after I bought my house with cash by my 30's, I've accumulated all kinds of crap for not much money. In fact I probably have more junk than most people.
It will always work. We did finance our house at 15 years and paid it off in 7, but anyone leasing a car doesnâ(TM)t need to think about buying a house. We also have a bunch of stuff, but we own it instead of the other way around.
Itâ(TM)s amazing how poorly people manage their finances - witness this article. People are afraid of a one time battery replacement cost so they overpay, in intallaments, for a car that already has the battery replacement cost factored into its residual value. Idiotic.
The biggest issue is that battery technology is still advancing getting more capacity per volume than previous generations. Why would you want to buy something that today only gets 100-200 miles per charge when 5 years from now 300-500 miles might be common.
Yes Teslas get this kind of range already but they are far from common and too pricey for the average person. When egolfs, prisus, insights, and volts all can get this range off battery alone at a price the average customer can afford i would call it common.
The other problem is the batteries degrade, if your planning to keep the car for the long haul then you're probably going to have to replace them at some point. Lithium batteries degrade even without use. Buy a new battery cell, stick it on the shelf and not touch it for 3 years, it will have much lower capacity than it did new even with no use. It gets even worse with daily charge/discharge cycles
When you eventually have to replace that large battery pack it is probably going to cost as much or more than the car is actually worth.
The last reason, a lot of EV drivers are still early adopters, The kind that like to have the fancy newest of any tech. Why would you lock your self into an aging car when you can just lease it and get the latest ohh shiny in 2 to 3 years. It's the same thing with people who have to buy the latest greatest ohh shiny apple products every year to replace their still perfectly functional devices from last year.
To understand why, you have to understand the economics of EVs. The real economics - not the "EV sales are rising because more people want them" rose-tinted version its proponents like to believe.
EV sales are taking off because of CARB (California Air Resources Board). They have a ZEV mandate (zero emissions vehicles - mostly EVs though Toyota has a hydrogen vehicle on the market). Beginning in 2013 or 2014, CARB required a certain percentage of each manufacturer's vehicle sales to be ZEVs or PZEVs (partial ZEVs - basically plug-in hybrids). The percentage goes up every year. The formula is a bit complex but it's about 2% ZEVs for 2018, and supposed to reach over 15% by 2025.
If a manufacturer fails to reach this percentage, the manufacturer must buy ZEV credits from another manufacturer which exceeded its required quota. This is what keeps Tesla afloat. Since they only sell ZEVs, they always have excess credits which they sell to other manufacturers who didn't sell enough ZEVs. That's right - if you buy an ICE vehicle, you are likely subsidizing someone buying a $70,000 Tesla. This is also why Tesla is in no hurry to ramp up Tesla 3 production. They don't want to flood the ZEV credit market - that would devalue their own credits. So they're going to ramp up production just barely fast enough to keep up with how many credits other manufacturers need to buy to comply with CARB's requirement.
If the manufacturer fails to sell enough EVs or buy enough ZEV credits, they are banned from selling cars in California. Since about a dozen states automatically adopt CARB's rules, that ban would extend to about 1/3 of the U.S. by population. No manufacturer wants to be banned from that huge chunk of the market, so they do whatever they can to sell enough EVs to comply with CARB's ZEV mandate. This means sales, discounts, incentives, whatever it takes to get however many EVs they need into buyers' hands to satisfy CARB's requirements. This is why the EV deals are better in California than in other states - CARB only counts EVs which are sold in California. So California is where automakers offer the biggest EV incentives. I almost pulled the trigger on a 3-year e-Golf lease in 2016 for $500 down, $79/mo in Los Angeles (the Bay Area had zero down, $79/mo available).
Since EVs are not actually popular with buyers (at least not at the percentage the ZEV mandate requires), this means the manufacturers have to sell the vehicles at below true market value to generate sufficient sales (sometimes even below manufacturing cost). If they're going to do this, leasing it is preferable to selling it. With a sale, they've lost the entire manufacturing cost of the vehicle. With a lease, they at least get the materials for the vehicle back at the end, which they can then reuse or recycle. And if the blue book value of the EV is less at the end of the lease than was projected, they can write off the difference and get a tax deduction for the loss. Leasing also allows anyone to take advantage of the full $7500 federal tax credit. Being a tax credit, you have to owe at least $7500 in income taxes to take full advantage of it. Based on IRS tax stats, this means the buyer needs to make more than about $70,000/yr to take advantage of the full tax credit. But if you lease it, the tax credit goes to the car manufacturer, who pays a lot more than $7500 in taxes each year. So they can take advantage of the full credit and pass it on to the buyer. That means the real price for a leased EV for anyone making less than $70,000/yr is often less than for a purchased EV.
All this is why the blue book value of a used EV is so low. The ZEV mandate only applies to new vehicle sales, not used EVs. The incentives lower the price, effectively causing more new EVs to be sold or leased than would've at the correct market p
At one point I looked at used Leaf prices, about 60% depreciation for 3 year old one. This makes direct ownership too expensive.
There two major incentives to lease: price, and obsolescence.
When I leased, I got a very steep discount on the vehicle total price, and federal tax credit ($7500) was already factored in without going thru any hassles. Also sales tax (which is very high here in CA) is only paid for the portion that you lease every month, and not the full vehicle price. And, when I finally return the vehicle, there won't be another tax for resale, like one would when you do on the used market. Given the lease financing was about 0%, there were many economical reasons to lease than to buy.
And of course I was expecting the technology to progress fast, like many others, and it would not be wise to be stuck with a short range vehicle (even though I enjoy it in my commute) for the long run.
The manufacturer and the market just pushes you to lease than to buy with all these incentives.
These cars are leased rather than purchased because they are a ticking time bomb of pile after pile of huge heaping expense to keep them on the road based on the cost of battery replacements and high-current charging circuits, etc ......... While they may be better for the environment they will be far, far more expensive to keep on the road and will have nearly no resale value when they get to their end of life.
I leased an EV for two years and I am glad I did.
The total cost was exactly the same as that owning my old gas car. The total worries were much less. And after two years I had moved to a place with great public transport and could get rid of the car without the hassle of selling it.
I will buy an EV eventually - when it covers all my use cases. 60 kWh and good winter performance (useful range of 200km in -30ÂC) should be fine.
A significant number of vehicles, in particular vehicles for business, are leased. This is because Congress hacked up the tax code a long time ago (80's version). And they made an overpriced MBZ require 100+ years to depreciate. The solution, lease. The entire lease is fully deductible on month 1 to end of lease. I believe that maintenance is covered as well, although many leases include all the normal services. Excluding tires, IIRC.
This was probably written up by someone that is too young to know the reason leases are so crucial to business customers. Taxes. They didn't follow the money, basic reporting done wrong. Is that the new Bloomberg way? Have to wait and see if they get something else right.
The cost of vehicles has become so outrageous that people lease just to get lower monthly payments. Dealers now offer seven year car loans. If you are buying a car and loot at the spot at which the total price of the deal is listed it is like buying a home. The auto industry is stuck. They want more sophisticated machines but the prices are already so high that prices kill sales. Thus the leases. But a slightly larger view suggests that robotic vehicles using an Uber like structure will win the field completely. Imagine a car that works without humans picking up rides and dropping them off 24 hours a day. It may not matter that the vehicle costs $90,000 as it pays for itself. Drivers will be driven away from ownership due to price issues. The implications are far reaching. Your cops are funded by traffic tickets. With robotic cars who gets the ticket? And machines tend to follow rules precisely. In other words your cops will either go out of business or some sort of money stream must be put in place. Then we will have a gas station problem as well. Much like cell phones killing off public phone booths a lack of sales will shut down most gas stations. I think that is why we see newer stations operating more like stores, selling food and the like rather than depending upon gasoline sales. so how far will you need to drive to get a tank of gas? You can bet it will be further than usual. Less sales may also cause a sharp rise in gasoline prices. We are in for one heck of a ride.
Pay cash for things, donâ(TM)t finance them (and leasing is financing, do not assume it is advantageous to you). You will quickly find that your relationship with money and your overall financial status with both get better.
Financing isn't always bad. In particular, it's fine when either the thing that you're financing is an appreciating asset that will appreciate at a higher rate than the interest, when the cost of owning including interest is significantly lower than the cost of not owning, or when you can afford to pay cash and the interest is lower than you can get on savings / investments minus tax. Some concrete examples:
When I bought my first new laptop, the manufacturer was offering 10 months interest free financing. At the time, I was getting around 4.5% tax free on savings. This meant that, for the 10 months, I had an average of £1000 (around £2000 total cost) more in savings. At the end, I was about £35 better off than if I'd paid cash up front (which I could have afforded to do). Often, this kind of financing is available to let the company either increase sales or spread their costs and income around between cash years (or move them to different subsidiaries entirely). They're a bad deal for you if you can't afford to pay cash, but if you can then they're basically free money.
When I bought my first house, I was spending £350/month renting (and had high utility bills because the place had terrible insulation). After I bought, I was spending £100/month on interest, and another £50-70 or so on maintenance. My heating costs dropped by about 50%. I ended up about £200/month better off (which mostly went into paying back the mortgage early, and that £100/month dropped quite quickly as a result).
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I live in New England. I've got a wife and 2 young kids. The only vehicle we own is a bicycle. When we need something that can carry us more comfortably, or longer distances, or with cargo, we use something else. Zipcar. Rental. Subway. Amtrak. Airplane. Taxi. Uber. Lyft. Carpool. Delivery service. For our lifestyle, the frequency with which we use those things costs less money than the rent we charge other people to park their cars in our garage.
Dumb? For some maybe. Certainly not for all.
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Leasing is great for those who have no money or too much money. The purchase cost for EVs is rather high compared to equivalent gas powered vehicles. That means anyone who is not loaded (and even those) can only afford and EV as a lease. Leasing an EV also circumvents the rather costly battery replacement.
when you lease the vehicle, the battery is covered in the lease. if you buy it and your battery is underperforming because of age, #charges, etc. you have to buy a new one yourself, which is expensive.
On a long enough timeline, the survival rate for everyone drops to zero.
We all have too much experience with electric gadgets that won't hold a charge after a few years. When EV batteries have proven themselves robust over time that trust may develop but it will take many years to prove and for that proof to be widely believed.
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In the same way it never happened to your computer.
The auto industry is the one that is treating cars like smartphones in terms of packing them full of gadgets that have little to do with driving. A 3-5 year old car is now a joke that nobody wants, and often times the connectors for gadgets are no longer compatible with current gadgets. In many ways your used car is obsolete and things are going to get worse, not better.
“Common sense is not so common.” — Voltaire
I looked at leasing and it was a better deal to purchase my Chevrolet Volt outright. I did the math and it was cheaper for me to pay $27000 for the volt than it was to continue driving my 2003 gas car and continue paying for gas.
Not paying for Gas for 90% of my driving was the single greatest factor that made the Volt a better deal. I wouldn't even accept a new free gas car if I was forced to own and operate it. The fuel is way too expensive and you don't realize it until you actually save up your receipts and add it all up.
I also pay for electricity, and it is so insignificant I consider it a rounding error. It's like $6 per month to charge my car.
So customers ain't idiots to buy an expensive battery to recycle ; they lease it which makes a lot of sense. Leasing perishable resources is great.
Also leasing fad gadgets makes sense, you can play with them and then return them back.
That data debunks the electric vehicle hoax quite nicely.
There is currently a $7,500 federal tax credit on EVs. But it's a non-refundable credit; you have to actually owe $7,500 or more in taxes to get the full benefit. There are people who can afford an EV who do not pay that much tax, including people with large itemized deductions. And it's even more likely to apply to seniors; they get a larger standard deduction (two of those for a married couple), their housing expenses are often low because they live in fully paid off houses, and their Social Security income may be non-taxable (it depends on total income). If those people lease an EV the leasing company gets the full tax credit even if the driver would not if they bought the car, and that credit is then reflected in lower lease payments.
That's just the federal picture. Some states also offer tax credits for EVs where the same consideration may apply. Others give EV rebates that you get regardless of tax liability. And in a few of the rebate states the rebate goes to the driver even if you lease; California and Massachusetts are two such states.
Sure, because why would anyone enjoy their lives now instead of waiting until a day they might be dead.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Given that after the fracking boom , the US is a net oil exporter; reducing dependance on oil only hurts Texans and Alaskans not Saudis. And EVs are charged using electricity from coal which is a lot dirtier than ICE so the environmental argument fails too. The only argument that is valid is that Tesla is based in California while other car companies are in the Southeast or the midwest. Totally makes sense for California to encourage EV adoption. Why the federal govt is paying for it? 56 Reps in Congress. Thats why.
**Life is too short to be serious**
As another example, when I bought my last car it came with a forty-eight month zero-interest loan.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Electric cars are generally more expensive to buy due to the price of the battery, but cheaper to drive since they don't need fuel. So TCO can be better.
If people were good at math, they would be able figure out such a lower TCO despite a higher initial cost - but most people probably don't so they just lease it instead.