By on October 19, 2015

2015 Nissan Leaf

Almost three out of four electric cars on the road are leased — not purchased — according to data from Edmunds, which was compiled by CNBC. (The leasing data excludes Tesla, who does not report leasing rates.)

The overall lease penetration rate for electric cars, which is 74.9 percent, is much higher than the overall rate for all cars, which is 28 percent. The leasing rate for luxury cars is roughly 50 percent, according to Edmunds.

According to the report, EV drivers are more likely to be early adopters but are hesitant to own the vehicles due to increasing battery capacity and rapidly evolving technology. In other words, electric cars are becoming the new iPhones.

Residual and resale value continue to be a hurdle for many electric cars, prompting new owners to opt for leases rather than pay out of pocket.

“Typically, you would have about 40 to 50 percent retention from three years after vehicle is new. EVs are only at 25 to 30 percent retention from their original price, even after factoring in the $7,500 federal incentive,” Anil Goyal, vice president of automotive valuation and analytics at Black Book, told CNBC.

According to the report, leasing penetration rates for electric cars peaked in 2013 at 84.3 percent. In 2015, 74.9 percent of new electric vehicle owners leased their cars.

Estimates peg Tesla’s lease rate at around 40 percent for their cars — above the overall rate, but still below the average rate for electric cars. Tesla announced last year it would make available its cars for lease through U.S. Bank, which has increased interest, but it’s still hard to tell how prevalent leasing is through Tesla.

(Even used Teslas could be a bubble waiting to burst.)

Federal rebates for EV cars go to the owners — even if the car is leased — although state rebates vary.

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39 Comments on “Three Out of Four Electric Cars Are Leased, Not Purchased...”

  • avatar
    SCE to AUX

    “Federal rebates for EV cars go to the owners — even if the car is leased — although state rebates vary.”

    My Federal rebate went to Nissan, who simply deducted it from the sales price when I leased the Leaf. So technically, the rebate went to the ‘owner’, but that’s not what I think you meant.

    This is excellent data. I suspected the lease rate was quite high, and for the reasons you cite.

    The reason Tesla’s lease rates are relatively low? More battery range means that even when the battery degrades after a few years, you still have a usable car.

    The battery is key. You’ll find used car prices on 2012 Leafs vary from $8k up to about $24k, and there is a direct, inverse correlation with miles. My old Leaf is listed at $8998 (26k miles), while others are priced much higher (miles in the teens or less).
    (By the way, it’s an SL, not an SV.)

    Frankly, anyone willing to accept a clean car with a slightly degraded battery (say, -15%), could get a killer deal on one now. Dealers will have to give them away because of Leaf 1.5 (out now), and Leaf 2.0 (future).

    I expect the lease rate will drop as battery range goes up.

    • 0 avatar

      The Tesla lease is a bad deal. Rather than take the $7500 off the top they seem to (it’s not very transparent) use it to bump up the residual. That helps payments some but it artificially increases the buy out. It also means you’re paying interest on an extra $7500 for the duration of the lease. GM (well, US Bank) did this with the Volt too, making it inadvisable to buy it out at the end.

      Tesla doesn’t subsidize the leases in any way, either. They can’t afford to/don’t need to, I guess.

      The ridiculous numbers of my VW e-golf lease ($1000 at signing, 229/mo for 36 months, $13,100 buy-out on a $36,400 MSRP) only exist because VW makes it happen. $8k came off the top BEFORE the Fed credit.

      • 0 avatar

        The MY14 Model S 85 valuation range is 67-68K for average/clean/xc with one doing 60 which was below average. On the Model S 60, its 57-66 nationally.

        MY14 85

        09/25/15 NEVADA Regular $67,000 4,214 Avg RED EL A Yes
        09/24/15 DFW Regular $63,250 6,029 Avg BLACK EL A Yes
        09/22/15 ORLANDO Lease $67,500 6,304 Avg WHITE EL A Yes
        10/15/15 PA Regular $66,000 10,770 Avg WHITE EL A Yes
        09/08/15 CALIFORN Regular $68,000 13,127 Above Blue EL N Yes
        10/12/15 MILWAUKE Lease $60,100 27,749 Below GRAY EL A Yes

        MY14 60

        06/18/15 RIVRSIDE Regular $62,500 13,113 Above BLACK EL A Yes
        07/30/15 RIVRSIDE Lease $60,000 15,847 Above GRAY EL A Yes
        06/18/15 ATLANTA Regular $66,000 16,927 Above WHITE EL A Yes
        07/24/15 FT LAUD Regular $63,400 19,904 Above WHITE EL A Yes
        07/29/15 SAN DIEG Regular $59,750 21,679 Above BLACK EL A Yes
        10/12/15 NEVADA Regular $57,000 22,190 Avg Black NON A Yes

        Edmunds claims and avg price paid of 77K for the 60 and 87K for the 85. Depending on lease terms, say 3K down and 1,000/mo, that’s pretty darn close to real depreciation.

        • 0 avatar

          Is Manheim lumping all 85s together? A ’14 with the 85kWh battery could have cost from 80 – 130+k new. (Just for fun, I just did an all-the-boxes-checked build on a new S: $145,700 incl destination).

          Any idea where Edmunds gets their numbers? 77 sounds close for a 60 but 87k is low for the full 85 range.

          • 0 avatar

            Correct, they lump them all together. Normally with cars under the “style” drop down you will see all trims but not with Tesla. Just 4D Sedan 60, 4D Sedan 85, 4D Sedan Performance.

            No idea on Edmunds.

    • 0 avatar

      For me the choice to lease was tied to the federal tax credit. $7500 was paid to Ford which lowered my monthly payments. Had I bought my Focus EV, I wouldn’t have gotten that money until the next year.

      Now that I look at resale values, I’m glad I leased. The fact Washington waives sales tax on new EVs but not used makes buying used even less attractive.

  • avatar

    Off-lease cars become stupid cheap, too.

    Anaheim Mitsubishi currently lists an off-lease 2012 i-MiEV with 18k miles for $6988.

    At that price, you could use it strictly for commuting and keep the miles off your “good” car, and save it for further adventures.

    • 0 avatar

      i-MiEV makes the Leaf look like an Accord. $7K + tax + tags + registration + insurance + charger installation + parking space = lots of money to spend on your primary car’s depreciation, maintenance and fueling. Plus, you wouldn’t have to spend a second of your day in an i-MiEV. Even typing its name is annoying.

    • 0 avatar

      I’m seeing 2012/13 Leafs for 12K in Pittsburgh, all in the 15-30K miles range. Those are great prices, if I lived in Pittsburgh at the moment instead of finishing my contract out in NOLA I would be all over that. I would just keep the xB for trips/hauling bigger items and use the leaf for 99% of my trips. Thing would be great combo-ed with some solar panels or a wind mill…

      It’s actually a genuinely good deal at 12K for 84 miles range. An i-MiEV at 7K is even better because of the cheapness of commuting. Pretty much you could live with this thing for a few years, no payments, let your ‘good car’ gently age, and then after a few buy something really nice and hopefully Teslas have come down in price to be worth it.

      • 0 avatar
        SCE to AUX

        You’re correct in principle, but in practice I’ll kindly offer some cautions:

        1. On the plus side, my ’12 Pittsburgh Leaf ended up in NC listed at $9k with 26k miles on it. Good deals are available.

        2. I’d avoid the ’11-’12; they have an inefficient heater. Most of the ’13s and all later models have a more efficient heat pump. This matters a lot in Pgh.

        3. On the very negative side, you’d never see 84 miles range in Pittsburgh’s terrain and weather, especially with an aged battery. If you got a ’13 with 20k miles on it, you’d have a battery that’s about 12% degraded. In normal commuting in this area, you might see 55 miles in the summer, and 40 miles in the coldest part of winter. And that’s to empty. The Low Battery Warning light at 6-8 miles keeps you from wanting to go that low.

        But even with all those caveats, buying a used EV for the right application would be pretty terrific.

        • 0 avatar

          I looked pretty seriously at new/used Leafs, but (as it would be my only car), I couldn’t live with the range limitations, even with a 12-bar battery.
          So, I bought a new 2015 Volt – love it – pulls like a train to 40mph, and you can set the regen to “L” (aggressive) and basically drive the car with one pedal in the hills around Pittsburgh.
          It’s not that I “needed” one, but sort of a “bucket list” thing; I may have to retire soon, so I figured what the heck.
          I have no illusions about the depreciation; I may have to trade it on a 1995 Corolla once it’s around 6-7 years old. :-)

    • 0 avatar

      A local independent dealer has one with 5k on the clock for just under $9000.00. Assuming its still there next Monday, I’m going to go in and take a test drive. Curious what they’re like – and my commute is only 11 miles each way.

  • avatar

    Two things:
    Buying a used electric seems to be a very significant risk for most folks, especially for those that have not previously owned and electric. Do you have enough range left on the battery to make your commute? …on a cold winter day? …or in the summer with the AC going non-stop? And, even if your used electric has enough range in the first two years of service—what about the two years after that?
    Also, with the values of these cars falling off a cliff, do they become “disposable” much earlier than other cars –essentially increasing the carbon footprint of the car—and negating the environmental advantages. How much is a Leaf worth that has only 30 miles of range left? 15? Is it really worth buying a new battery for? Maybe the answer is yes, for the 25% of drivers that own their electric—but for the remaining 75%?—it really isn’t their problem…but, governments have been throwing a lot of money in the direction of these cars, so it should be somebody’s problem.

    • 0 avatar
      SCE to AUX

      The answers to your questions are… it depends. I could give very precise answers for my 12 Leaf for the next few year if it remained in Pittsburgh. But I’m not so sure about the newer, better ones that live in easier climates.

      One thing’s for sure: A/C has a very small effect on range compared to running the heater, for two reasons: a) A/C draws much less power, and b) the battery likes warmer temperatures (but not extremely hot).

      Then these cars’ batteries get down to the ranges you mention, I suspect some will be disposed of (the Leaf is highly recyclable), but some will be scored for a few thousand dollars and refitted with new batteries. At that point, you’d have a decent car for about $8k.

      • 0 avatar

        Throw an additional 5K at a 8 year old us economy car, only to get its range up to 60 miles–assuming the rest of the car has no problems, or, even better, trusting the used car dealer that says he just put a brand new $5000 battery in that 8 year old car. I am sure it will happen occasionally–but not that often, especially if other electric cars improve in range, subsidies continue, or prices of new electrics fall.

        A 10 year-old Corola vs. a Prius vs. Leaf–which do you expect to have more useful miles left? –in the real world.

        • 0 avatar

          Logically, the one with the fewest moving parts. You keep talking about this 5k battery like that is on top of the normal ICE maintenance.

          That figure (that you pulled out of thin air, since no one knows what a Leaf battery will cost in ten years) is almost the entirety of your running costs over 10 years.

          No oil, no tranny, no water pump, no radiator, no fluids of any kind really save washer fluid. Add in tires and replacement of suspension and internal bits and you are looking at what another 3k over ten years?

          Yeah, give me the Leaf all day long over a Prius or Corolla.

  • avatar

    I think the primary driver of high lease rates for electric cars are the incentives, which make leasing very cheap.

    • 0 avatar

      Teslas command relatively high valuations but the Leaf does not (neither does Volt although it is not a true EV). This is very good for Musk as it means not many Teslas will find their way into the ghetto anytime soon (I think it is partially because Musk said he would guarantee the battery on used models) I find the prospect of the true EV to be a very interesting proposition on the used market. True EVs, unlike hybrids with an ICE, have fewer wearable components and other than the battery, brake, and steering system, and will have little to replace as time goes on.

  • avatar

    Why would you lease one of these things when the technology improves so quickly?

    If you got a P85 in 2012 – you’d still be stuck with it by the time the P90D was released.

    1 YEAR LEASES are the answer!

  • avatar
    schmitt trigger

    “In other words, electric cars are becoming the new iPhones.”

    This essentially sums it up.

    • 0 avatar
      SCE to AUX

      I’d say EVs started this way, but will gradually grow out of that niche as range improves. In the near future, your 200-mile Model 3 won’t be so bad if it’s 5 years old and can still go 160 miles.

      • 0 avatar

        The batteries may be lasting longer now too. I’ve got 21k miles on the new Nissan formula and the quick charge count is in the triple digits. Still haven’t “lost a bar” and I typically get the same miles from the top bar as I do on the second. I’m sure there’s probably some degradation there, but it’s not noticeable – yet.

        • 0 avatar
          SCE to AUX

          FWIW, I hadn’t lost a bar, either, at 26k miles on my ‘old formula’ battery. But my battery’s SOH was at 85% when I returned it, so I think it was about to drop a bar. I read somewhere that a persistent 85% SOH (like two months) would result in a dropped bar.

          My QC count in 3 years = 2. L2 charges were 2356.

          • 0 avatar

            That’s what kept me away from a used Leaf – even the ones showing “12 bars” could be a few months away from being “11 bars” – that’s a 15% drop from new, which “ciphers to” (lemme see, eight-three times nought-point one-five, take that and minus it from eight-three)

            70 miles… and that’s in the summer; probably as low as 40 in the winter.

            As you’ve said, a 200-mile battery degrading to 170 would be much more tolerable – and that will happen soon enough.

  • avatar

    if you have a kid in need of a car to drive to high school < no bus where I live HS is 3 miles away, these make a very interesting choice as a use car or as a train station commuter car same idea.

  • avatar

    Off lease leaf with reduced range can be a good deal for teen drivers and old people that doesn’t want to travel far but still want a newish car.

  • avatar

    We have a friend who’s owned a succession of MINI’s but just got into an electric Fiat 500e. Two grand and down and $169/mo, walk away after 36 months, that’s a pretty screaming deal if you like the 500 and want to try an EV. Of course, that doesn’t include a charger, and, at 24 hours to fully charge the battery on 120V, you’ll want one, unless your commute is really short. And at 3 grand installed, there goes your screaming deal.

    • 0 avatar

      You should charge at workplace. If your workplace doesn’t have a charger, why even buy one?

    • 0 avatar

      A lot of places have local or state incentives on the charger too. Also, they are not necessarily that expensive. My formerly Leaf owning now Tesla owning friend paid $750 for the charger for his Leaf. And having a quick look at, 30-amp chargers are now down to the $500 range. Even paying an electrician to install it, not that much money.

      No idea if he is still using the same charger for the Tesla, or if he had to do something else.

    • 0 avatar

      This is why you go private. A quick search brings up numerous Stage 2 chargers for their respective models around $1-1.5K (and a great deal far under) that just need a dedicated 240V outlet which isn’t all that hard. If you’re a decent DIYer with some electrical knowledge you could manage or it or hire it out and still be under 2K for it installed and it’s a nice addition because 240V is always good for stepping down and running bigger power tools in the garage.

    • 0 avatar
      SCE to AUX

      I installed my own Schneider Electric charger (bought from Home Depot) for about $850 back in 2012. It awaits my next EV or plug-in hybrid. Hopefully nobody is paying 3 grand for an installed charger.

      Incidentally, Nissan recommended Level 2 charging (what I had) rather than regularly trickle charging with 110 V. I guess there is such a thing as charging too slowly.

      • 0 avatar

        Nice, I searched and the i-Miev’s dedicated L2 charger is less than $500. Some of the generic models are listing around $700, I was looking at specifically branded. I think as they all agreed to a standardized advanced plug more chargers are coming on the market and 240V is common for washers/dryers so if you’ve already got them in the garage, just unplug them when out of use. Not exactly mind boggling…

  • avatar

    EV proponents are harsh critics of automakers as they believe that the continued dominance of the ICE is all a huge conspiracy by “big oil” and automakers.

    The more you dig into the details and learn all of the drawbacks of EV’s, it’s perfectly logical that they haven’t taken over. That is not to say they have no merit or that we won’t have mass adoption of EV’s someday, but with today’s available tech it makes no sense.

    Tesla proved nothing — that you can build an uber sedan with laptop batteries that has half the range of an ICE uber sedan?

    It’s a lot harder to build a competitive car in the mainstream of the market for a small profit than a super premium toy for the rich that they lose money on (because Wall Street is funding the whole venture at a huge loss hoping it scales up and takes over the market). This will all take years to play out. Tesla and it’s Wall Street investors are hoping for a big battery breakthrough or that they can convince enough people to change their expectations on range and refueling in order to supposedly save the planet.

    • 0 avatar

      It’s not a ‘huge conspiracy’ so much as there was limited research dollars into much of the core tech for a very long time. Then on top of that there became a huge and complicated inter-marriage of industries that are desperate to keep ICEs in the spotlight until EVs have huge ranges. This includes but is not limited to the real estate industry, the oil industry, and the fast food industry. There is a strategic need to keep the idea that you need 400 miles on tap at all times at any given moment when the average commuter drives less than 30 miles a day. Even with the average driver putting on around 12K miles a year that amounts to 33 miles a day (even if you assume you don’t drive on weekends that’s still only 46 miles a day).

      Many of your comments ring true in the sense that EV’s don’t hold a range and cost advantage in practical terms right now but it doesn’t mean that won’t change and where does an uber ICE sedan have a 600+ mile range on a single tank of gas? Most are hitting 450 at most if they have HUGE tanks.

      • 0 avatar

        Well, my 1996 Passat TDi has an 18 gallon fuel tank (that you can stuff almost 20 gallons into) and the car gets close to 50mpg. I can drive from Seattle into California before having to refuel!

        I’m watching prices on used EVs as one would be just perfect for my daily commute. It sounds like I need to travel elsewhere (away from the Seattle area where EVs are very popular) in order to get a good deal on one – but then I can’t drive it home (in a reasonable amount of time, anyways) so I would have to get it shipped, negating some of the savings.

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