By on January 3, 2018

The automotive industry frames electric vehicles as the future of motoring, but despite a large number of plug-in options already available, the entire idea of owning an electric car is still rather futuristic. Leasing one, however, is far more contemporary.

Growing in popularity, automotive leasing hit a record high in 2016, accounting for 31 percent of all new vehicle sales in the United States. But that’s nothing when you isolate the number of electric cars. U.S. drivers now lease nearly 80 percent of battery-electric vehicles and 55 percent of all plug-in hybrids. Accounting for this trend is a consumer perception that EVs will only get better over time — which isn’t all that different from saying the current fleet isn’t all that impressive.

This hypothesis gains further credence when one considers the small market share of electric vehicles. Globally, EVs only account for around one percent of new vehicle deliveries. After speaking with Chevrolet Bolt lessee Jeffrey Jablansky, Bloomberg figures consumers are simply waiting on a better example of electrification .

“I just think in three years I’m going to be delighted at what else is available,” said Jablansky, a freelance autowriter. “And we’re going to laugh one day that we used to plug cars in for eight hours at a time.”

We’re in agreement. Why would you want to settle down with a model you know will have an inferior range and charging time compared to whatever manufacturers have next on the schedule? Combine that knowledge with the abysmal resale value of battery-electric vehicles and the decision is pretty easy. Leasing typically makes more sense.

“When there’s new technology coming out, and it’s coming out so rapidly, and you’re improving on it so constantly, typically people only want to lease it,” Steve Center, vice president of American Honda, said at last year’s New York Auto Show.

Honda doesn’t even allow people to purchase its hydrogen fuel cell variant of the Clarity for that very reason. It can only be leased. “Think of your cell phone,” Center explained.

The mobile phone analogy is an astute one. Consider how incredibly modern your cellular device was when you initially took ownership and how antiquated and trashy it felt just a few years later. Now apply that same thinking to a device that costs sixty times more. The only real difference is that smartphones actually appear to hold their value better than BEVs.

According to Black Book, electric compact cars sold in 2014 are now averaging roughly 23 percent of their original sticker price, compared with 41 percent for comparable internal combustion vehicles. “The buyer of a used EV today is as much an early adopter as the buyer of a new EV was in 2011,” said Nicholas Albanese, an analyst with Bloomberg New Energy Finance.

Be that as it may, we still appreciate those early early adopters for testing the waters and taking the financial risk for the rest us.

[Image: Nissan]

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31 Comments on “Everyone Leases Electric Vehicles Because the Next Crop Will Always Be Better...”

  • avatar

    In CA, with various utility rebates and tax credits, you can lease EVs for $0/mo. I’ve even seen situations where someone has leased it for $0 and got back money, essentially making it a negative cost lease.

    • 0 avatar
      Jeremiah Mckenna

      Can we see your reference for this statement?

      • 0 avatar

        Here’s one example. With that kind of discount a 36 month $0 lease is very doable. The $10K incentives over 36 months is $277/mo alone. Plus getting $10K off MSRP means a sub $300 lease for a Leaf is very doable. So essentially you get a $277/mo lease and then get $277/mo in incentives = VOILA…$0 lease.

        Either way, it’s $20K off a Leaf which MSRPs at $30Kish. And a $30K car with $20K discounts can easily lease for $0 over 36 months.

        “SAN DIEGO, Aug. 8, 2017 – Tis the season for big savings for San Diego Gas & Electric (SDG&E) customers who are in the market for electric vehicles (EV). In coordination with SDG&E, two automakers are offering anyone who can show a copy of their SDG&E bill and a discount flier $10,000 off the manufacturer’s suggested retail price for the purchase of a new 2017 Nissan LEAF or any new 2017 BMW i3 plug-in model at participating local dealerships.

        These discounts are on top of existing state and federal EV incentives, which can total another $10,000 in savings. The auto discounts are good through Sept. 30, 2017 or until inventories run out. The discount offers are funded solely by the automakers, not SDG&E ratepayer funds. “

    • 0 avatar

      Free car, and yet EVs still only have about 1.5% market share in CA. I think this must be a VERY limited offer.

      • 0 avatar

        As usual, anything you, stingray65, say, has to be checked.,amp.html

        As of May 2017 “Nearly 14,000 electric vehicles, or EVs, were bought in the state, raising their market share to 2.7%, up from 2.2% in the previous quarter and from 1.4% in the year-earlier quarter.”

        • 0 avatar

          Did you finish your bowl of organic granola so that Mommy would give you permission to access Internet again? Good for you, and I have to admit, you really got me this time – my information was 6 months out-of-date and 1.2% off. Darn, now I probably won’t get my big bonus from the Koch brothers.

  • avatar

    I think electric cars are perfect for high school kids. Especially if you can talk the school into a “green” project to provide free juice.

    My oldest grandchild will be driving in about 5 yrs and expect there will be some screaming deals buying unwanted off-lease evs.

    • 0 avatar
      Jeremiah Mckenna

      Yeah, because every high school student needs or can afford a car that can cost from $10k and up, as well as replacing the batteries. Unless of course you are talking about TF baby’s. Also, why should the tax payers pay for the electricity that will be powering these sleds?

      • 0 avatar

        I’ve seen plenty of Leafs for 5 grand, probably safer to drive than most of the other 5 grand cars available and regarding battery life, for 5 miles each way, how much battery do your really need?

        The taxpayers funding the school system (and potentially some free electricity) can take solace knowing that they’re doing it “for the children” and “Mother Gaia”.

    • 0 avatar

      “I think electric cars are perfect for high school kids.”


      They’re not terribly fast, they’re cheap to buy and run, and they all have the latest safety stuff. Plus…limited range means they can only f**k around so much. Perfect teenager-mobile. If I had a place to charge one, I’d love to get one for my kids to tool around in.

    • 0 avatar

      Agreed, I am getting a used EV for commuting duties, then giving it to my daughter when she is ready to drive. The value proposition cannot be beat, and they are perfect for new drivers with limited funds and experience.

  • avatar

    Hopefully the electric cars will reach the point cell phones have. I’ve got a now 3 year old Nexus 6, which was 2 years old when I purchased it, and is still a fantastic phone that is only marginally outperformed by modern offerings – this is not an ad for the dang phone, my point is that with phones the tech has advanced enough that each generation is incremental instead of monumental in it’s improvement.

    Phones are there now, computers have been there for a while, game consoles are reaching that point – and most relevant, normal cars have been there for decades.

    When BEVs reach that point, the masses will buy them – if they are cheap.

    • 0 avatar
      Felix Hoenikker

      This. I got my current Samsung k10 smart phone free from T-mobile as long I stay with them. They charge me $10 per month for it but then credit me back with $10 per month. After 24 months I own it, but will probably get another one from them if I can get a similar deal. If I were to switch carriers before the 24 months, I simply pay them the balance.
      Now if I can only get a subsidized lease deal on a BEV CUV for my wife!

  • avatar

    It’s not as clear cut as that.

    A lot of people would not be able to take advantage of the EV tax credit because of their tax situation. Leasing is a way for them to do this, since in the case of leasing, the tax credit goes to the leasing company.

    In some cases, manufacturer incentives are more generous for leases. There have been some really amazing lease deals available on some of the EV models.

    • 0 avatar

      Precisely – many people are leasing them simply because it’s cheaper: Look at the Soul EV: Right now Kia is offering $21k in lease cash toward the car. Buy it, and you get a couple grand off, and have to qualify for, and then get, the $7500 fed incentive a year later – and you’re then paying almost $10k more than if you leased it, paid up front, and bought it out all in one day. (Which was a legit option that I talked to a salesperson about. But at that point, why not wait the three years to see if you can buy it out for even less at the end of the lease!)

      • 0 avatar

        I agree, but I am not sure about your last line- re: buying the lease out for less.

        I’m not saying that is impossible, but probably unlikely.

        A closed-end lease establishes the buy-out option up-front. If the market value is worth MORE than the pre-determined buy-out option, then the lessee has the option to buy their leased car for less than market value at the time. But if the market value is worth LESS than the buy-out option, lessees are inclined to give the car back to the manufacturer (unless the lessee went over their mileage or caused a lot of damage to the car).

        Manufacturers are not inclined to sell a lease to the lessee for less than the pre-determined amount. If the car is worth less, they can still sell it to a dealer at auction for about what the lessee would want to pay. Selling to a dealer would be better for their network than selling to the lessee, and would give the manufacturer another shot of leasing the lessee a new car.

        • 0 avatar


          Sure – I was simply saying that if a person relly wanted to buy an EV, often times it is dramatically cheaper for them to lease, then buy out. And in that case, rather than doing it all in one day, they might as well wait until year three to see what happens, and if they still want to buy it then.

          I’ve heard of a lot of leasing companies making offers for significantly less than the pre-negotiated lease buyout price, once the leasee indicates that they’ll be turning the car in. Nissan, in particular, hasn’t been shy at all about offering competitive buyout offers on the Leaf, as leases end. They don’t want them back, especially higher mileage cars, and dealers don’t want to resell any with more than 20k on them. Typical buyout on a Leaf is around $18k, with them trading for well less than 10k at auction.

          Another example, a lot of the early i3s that are coming off lease right now have buyouts of around $30k. Current market value for them is about roughly $17k; auction prices are well under that for cars with 3/36k on them. Thus, it’s in BMW’s best interest to offer people to keep the car for $21k, rather than auction it for $12k. There are no guarantees, of course, but with the hot depreciation of EVs, who knows what the auction values will look like in three years.

  • avatar

    The combination of high depreciation (particularly where you are in a state that offers no state tax advantages for EVs) and heavily subsidized lease deals means that leasing electric and PHEV cars is a no-brainer right now.

    We are leasing our 2016 C-Max Energi. When the C-Max lease expires in April 2019, we will lease its replacement too, unless the EV market changes dramatically in the next 15 months.

  • avatar
    Jeremiah Mckenna

    It has a lot to do with affordability. A lease is usually a little lower monthly payment, unless you are talking about certain models that have a higher lease payment than a 60 month loan. Although with the huge depreciation that is plaguing the EV’s, it is way better to let the banks deal with the end result. Even though you are paying for a majority of the depreciation up front, when you go to trade in the vehicle after the same amount of time, you will be hosed on the value. Also think about the cost of replacing the batteries in 8-10+ years will outweigh the savings of not burning gasoline.

  • avatar

    75+% depreciation does not equate to a cheap lease in any normal situation. Tax credits offset some of the loss, but besides taxpayers I guess shareholders of GM, Ford, VW, BMW, etc. are the other party taking a bath to subsidize EV leases.

    • 0 avatar

      “To put the depreciation in context, whereas a Tesla (Model S) will on average lose 28% of its value after being driven 50k miles, a Mercedes S-Class will lose 38%, a BMW 7-series will lose 40%, and an Audi A8 will lose 41%. As a result, Tesla owners end up with considerably more money in their pocket.”

    • 0 avatar

      No, the people taking the bath are those paying luxury car prices for outdated piles of raw metal called pickup trucks. Nice of them to fund the technology that will make their purchases worthless.

  • avatar
    SCE to AUX

    There are only a handful of BEV cars with any EV market share in the US, namely those made by Nissan, Tesla, and Chevy. Everybody else is eating table scraps.

    The abysmal resale value for compact EVs has been driven by Nissan, since Tesla doesn’t produce a compact EV.

    EV depreciation is directly related to battery degradation. Nissan’s early batteries degraded terribly, and so did resale value. My leased 12 Leaf lost 75% of its value in 3 years (26k miles) *after* discounting the subsidies. So glad I didn’t buy it outright.

    In contrast, Tesla resale values are on par with – or better than – competitive vehicles, because its batteries don’t degrade much. This is either due to better chemistry or less deep-cycling, or both.

    It remains to be seen how the newer 150-200+ mile batteries from Nissan and Chevy will degrade.

    Interestingly, demand for used Model Ss is picking up as people tire of waiting for the Model 3. A nice used Model S is the same price as a mythical low-end Model 3, and is available now with the same range.

    • 0 avatar

      “A nice used Model S is the same price as a mythical low-end Model 3”

      Not around here. It’s pretty much impossible to get a used Model S with semi-reasonable miles for less than about $45k (and that’s a high-mile, stripper 60), and they sell the same day dealers get them.

      One doesn’t make sense for me because we still need one gas car, but if it weren’t for those pesky road trips I’d jump all over a $35k used Model S.

      • 0 avatar

        Yeah seriously. The cheapest ones within 200 miles of me are $45k, though they are at least P85 models. But if you want one that is from 2016+, you’re starting at $78k.

  • avatar

    You really need to control for the differing demographic between EV and ICE car obtainers. The same guys who lease a Tesla, previously leased a 7 or 5 Series. While those who just bought a stripper Superduty, bought their previous one as well. At least according to my anecdotal experience. Sans hard numbers, there is no reason for anyone else to believe my claim over the more general one seemingly made in the article.

    • 0 avatar

      I had a similar thought. How does this compare to the leasing rates on luxury brands like Cadillac, BMW, Audi, etc? I know I leased my Alfa Giulia… not only was the lease “deal” really good compared to buying, but I have no desire to own ANY luxury European car after the warranty is over. I speak from personal experience with my old 5-series BMW and my girlfriend’s Audi A4.

      I would hazard to guess that the lease penetration of luxury cars isn’t that much different than for EVs. I searched online and found a 2017 report by Edmunds ( According to their data, the lease penetration (in 2016) had these brands at the top:

      Infiniti: 63%
      BMW: 58%
      Lexus: 55%
      Audi: 52%
      VW: 51%
      Mercedes-Benz: 50%

      followed by Jaguar, Land Rover, and Lincol, all at 48%. So… it isn’t only the technology of EVs and PHEVs that’s leading people to lease. There is likely a lot of demographic stuff at play (business owners and tax benefits, for example).

  • avatar

    Electric cars today are a lot like computers were in the 1980’s & 90’s. Every two to three years a new computer of that era was far superior in almost every way. While computers continue to improve, it is nowhere near the “leaps and bounds” improvements of the past. The same will hold true for electric cars. I leased a Chevy Volt previously and currently lease a Spark EV because I knew what was coming out in the near future would be far superior (i.e. the Bolt).

  • avatar

    And in the case of the Leaf, less ugly.

  • avatar

    Depreciation and battery health.

    A 2011 Leaf with 4 bars of battery gone and out of warranty means it lost probably 1/3 of its range, and is no longer good enough for a lot of people’s commute in cold weather, EVEN IF THEY CAN CHARGE AT WORK.

    Since getting into carpool lane by yourself is the biggest (maybe other than free charging at work) reason to get an EV, you should just keep leasing new EV and let someone take the used one if they can use it for short commute, or as a teenager car.

    A $30k EV for $5k after 1/3 of the range is gone sounds quite scary and awesome, depends on who you ask.

    • 0 avatar

      So they’re not leasing because the marvelous technology will be even better? They’re leasing because they don’t trust the technology, as indicated by poor resale value due to poor battery durability? That’s a whole different angle!

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