To Lease or Buy an Electric Vehicle

As electric vehicles (EVs) become more popular and accessible, consumers face the decision of whether to lease or buy an EV. This LinkedIn article provides a comprehensive analysis of the pros and cons of leasing versus buying an electric vehicle, including multiple examples of lease deals:

Financial Benefits:

Leasing an EV typically results in lower monthly payments due to manufacturer and dealer incentives. Additionally, lessees are less affected by depreciation, as leasing companies bear most of the cost. However, purchasing an EV provides long-term ownership benefits, such as building equity. Depending on the region and EV model, federal and state tax credits can make buying more financially attractive. Some leasing agreements may also include these tax credits as part of the deal, further reducing the cost of leasing. For example, in my state of Colorado, there is a $1500 state tax credit for a 2-year+ lease.

Technology Upgrades:

The EV industry is rapidly evolving, and leasing allows consumers to upgrade to newer models with better features and improved performance every few years. Unfortunately, EV buyers may miss out on these advancements and potentially face higher depreciation due to outdated technology.

Based on a Polestar survey, the primary reason why U.S. consumers purchase EVs is for their advanced features and technology. As someone who works with numerous automotive suppliers building electronics, I can attest to the rapid growth of technology being integrated into the cockpit of EVs. Data indicates that an average EV can have up to three times the amount of electronics compared to a comparable internal combustion engine.

Mileage Limitations:

Leasing an EV typically comes with mileage restrictions, often between 10,000 to 15,000 miles per year. Exceeding these limits can result in additional charges. Buying an EV does not impose such conditions, allowing owners to drive as much as they want without any added costs.

Customization:

Owning an EV allows for personalization and modifications, while leasing agreements may impose strict limitations on customization.

Residual Value and Depreciation:

When leasing an EV, the residual value (the vehicle's estimated worth at the end of the lease term) is predetermined. This can work in the lessee's favor if the EV's value declines significantly during the lease period. According to Elmodrive, electric cars, on average, depreciate by 52% after three years and 36,000 miles of driving. As a result, buyers may face more significant depreciation risks, especially if they plan to sell or trade in the vehicle at some point.

End of Lease or Ownership Costs:

When the lease term ends, lessees can either return the vehicle, buy it, or lease a new one. This provides flexibility and potentially lower costs at the end of the lease. On the other hand, EV buyers may need to account for the costs of selling or trading in the vehicle, which can be influenced by market demand and the vehicle's condition.

Tax Credit Loophole:

A tax credit loophole allows those not qualified for the entire federal tax credit to still benefit from it when leasing an EV. Since the leasing company is the vehicle's legal owner, they can claim the tax credit and pass the savings onto the lessee in the form of lower monthly payments.

Examples of Lease Deals: *

• Chevrolet Bolt EV: Lease offers for the Bolt EV start at $269 per month for 36 months, with around $3,000 due at signing.
• Nissan LEAF: Nissan offers lease deals for the LEAF, starting at $199 per month for 36 months, with about $4,000 due at signing.
• Hyundai Kona Electric: Leasing the Kona Electric can start at $289 per month for 36 months, with roughly $3,500 due at signing.
• Kia Niro EV: Lease deals for the Niro EV can begin at $239 per month for 36 months, with approximately $3,500 due at signing.
• Audi e-tron: Audi offers lease deals for the e-tron starting at $729 per month for 36 months, with about $5,500 due at signing.
• BMW i3: Leasing the i3 can start at $399 per month for 36 months, with around $4,000 due at signing.
• Tesla Model 3: While Tesla does not typically advertise lease deals, they offer leasing options for the Model 3, with monthly payments starting at around $371 for 36 months and a down payment of approximately $4,500.
• Volkswagen ID.4: Volkswagen provides lease deals for the ID.4 starting at $379 per month for 36 months with about $3,500 due at signing.

* Data provided by Electrek

Conclusion:

The decision to lease or buy an EV depends on individual preferences, financial circumstances, and long-term plans. Factors such as monthly payments, technology upgrades, mileage restrictions, customization options, residual value, end-of-lease or ownership costs, and the tax credit loophole should all be considered when making this decision. The examples of lease deals provided show that attractive offers are available for consumers interested in leasing various popular EV models.

As the EV market continues to grow, weighing the benefits and drawbacks of leasing and buying is essential to make the best decision for your personal and financial needs. So please stay tuned and watch for new deals and advancements in the electric vehicle industry to ensure you're making the most of your investment.