Cheapest, but is it the best option?
this post was submitted on 28 Aug 2023
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If you've got a home outlet you can plug into and drive <250 miles most days, then yeah.
If you live somewhere without access to charging or if you drive really massive distances weekly, you may still want to consider a gas vehicle.
In terms of leasing vs owning an EV, that's up to you and your finances. Many (if not most) EVs nowadays come with a 10yr/100k mi battery warranty, so if you're someone who tends to hang onto cars, you can still keep one around for close to a decade with confidence. At those timescales, owning tends to be favorable over leasing. If you're someone who likes to change cars every few years to keep up with the latest and greatest, leasing may be a good choice.
This is what I can’t figure out. I am trying to tell my wife that I’m seriously skeptical about leasing an ev, but I don’t have enough info to support my unexplained feeling.
I think leasing an ev can make a lot of sense for many people, especially considering the biggest problem with evs (imo) is battery degradation over time. You get a pristine new EV with max range and the dealership or leasing agency gets to deal with it when that battery inevitably stops storing a full charge. I'm not normally in favor of leasing vehicles and have never done it myself but I could see this working out.
Battery degradation over time is definitely a thing, but it's getting less and less severe, both because batteries are getting better and because they're getting bigger.
My old eGolf losing ~15% of it's range in 5 years hurt quite a bit, going from 85 miles of range to ~72. With an ~80 mile round trip commute it took me from being able to make it home in a pinch without charging to needing to charge at work.
If my new EV6 has the same issue (which I'm not anticipating it will have even close to the same degradation rate), going from ~300 mi of range to ~260 I won't even notice 99.5% of the time.
That said, if you're unsure, leasing an EV is a great way to get your foot in the door at minimal upfront cost. Think of it like an extended trial period.
Im thinking of leasing for the first time, specifically for an EV. Im comfortable with the battery lasting as long as I’d own it, so that’s not it. The thing is the technology is still changing rapidly. Given all the upcoming changes for most products, can you really expect to be happy with your EV by the time you pay off a loan
For example, consider the switch in charging connectors in the US. After years of pushing a standard no one wanted, most manufacturers just gave up and agreed to the Tesla Connector (NACS). Basically, as soon as next year all your existing non-Tesla EVs are going to feel outdated
Or how about GM pulling their Ultium platform early to re-architect from pouch cells to cylindrical cells. In a couple years all your existing non-Tesla EVs are going to feel outdated
Even bigger, what if the Toyota announcement of solid state batteries is real, instead of marketing FUD? Solid state batteries have existed in the lab which will be a huge jump in battery capacity , safety, and weight. If Toyota really worked out the side effects and figured out how to mass produce them, all your existing EVs are going to feel outdated
It's a good point, but even with fast changing technologies, it takes quite a few years to reach the affordable models. There's really no good time to get a new car ever. There's a new better model every year.
Change is hard! If you have a place at home to charge though, driving an EV is hands down the way to go. They're way more fun to drive, you never have to go to a gas station again, they're cheaper to refuel, they're cleaner and quieter, they require very little maintenance.
The hardest thing I've noticed people get hung up on is the reduced operating cost. When most people are shopping for a car they're focused only on the upfront costs / payment plan, in which case there's usually plenty of "cheaper" gas cars out there. What this article does a good job of pointing out is those upfront costs are masking the fact that operating the EVs are SIGNIFICANTLY cheaper than ICE cars.
Feel free to ask any questions you may have about driving an EV, I've been all electric for 7+ years now and I'm always happy to share the good & bad sides of it. EVs have come a long way in that timeframe, and I'm sure they still have a long way to go.
How do you feel about the rate of change in the industry, where a fantastic cutting edge vehicle one year can seem outdated a year or two later?
Note: it’s not just the higher upfront cost for an EV, but for some of us it means trading in a perfectly functional car with no payments for a seven year loan commitment or indefinite lease commitment
My strategy has always been to buy new but keep until maintenance exceeds the cost of replacing. Not only is that a better way to get value from a depreciating asset, but even with a loan, I have no payments for most of the life of the car. It also lessens the impact of buying and selling hassles. I haven’t regretted that strategy until now
Addressing your second point first, my note about costs was more focused on the costs for someone who is already planning to purchase a new car. If you're financially not in the new car market at this time, 100% understood - if it ain't broke... The used EV market is starting to grow, if you need to replace your car but don't want to go new, but it's got some challenges.
The rate of change in the industry is impressive and I can see how it can be considered a negative, but I don't personally view it that way.
First, basically everything about the driving experience (in my opinion) is better in an EV, so if you're already looking at a new car, you may as well dive into the EV space. Choosing an ICE car just because you think there'll be a better EV in the future just doesn't make sense, especially if it saves you from driving an ICE car for another decade.
Second, I don't see the changes in the EV market happening at a rate that would negatively impact my experience. E.g., if everyone goes NACS, there's still infrastructure in my area for CCS to keep me going indefinitely. Additionally, 99% of my charging happens at home - literally not figuratively.
If in the highly unlikely event the NACS apocalypse happens and I can't find any non-NACS chargers, then worst case on the 2-4 days a year where I choose to road trip outside of my 150-mi can-round-trip-on-a-single-charge radius, I can just rent a car. If you have a 2 car family, you could even hedge your bets and get one of each charger.
Finally, in terms of timing the market, we're in the flip phone to iPhone transition phase of the auto market, there's always a new iPhone on the horizon, with a faster processor and better camera, you just have to decide when you want to transition.
The Toyota battery tech sounds awesome, but I'd be surprised if they can roll it out in an affordable and meaningful way in <5 years. They'll probably get an overpriced car with 600 miles range out for $100k in a few years as proof of concept, but it'll be a while before an average car buyer can see a benefit. I wouldn't hold my breath if that's the only thing preventing you from buying now
Thanks, but I’m mainly not in the market yet.
My older teen is just starting college so the counterpoint is that the next six years will likely be a worse time for me to buy, until they’re both through. I spent a lot of time considering whether my car will be good for that or I should buy now. I let my dog decide 😉and she wants to keep
Totally understood! Everyone's finances are different. Plus what dog says goes, so you're stuck with that car forever.
I suspect that it's more about leasing than anything else. Committing to a long term fixed expenditure in a rapidly depreciating asset is a risk, particularly in the current economy. If one of you lost their jobs or something unexpected happens in the coming years, you'd be stuck with the monthly payment.
Leasing is - in essence - spending money you don't have yet.
You have to run the numbers based on the current deals. When I got my Rav4 EV in 2014 and Bolt in 2017 it was FAR better to lease. A $36k Bolt was leasing for $280/mo for 3 years at 12k miles per year after lease incentives and a high residual. Buying that car would be $700/mo. Even if you factor in getting back $7500 federal (no longer available) and $2500 state (hard to get that much back), that still equates to purchasing for $520/mo. Saving $240/mo every month for 3 years comes to $8640 saved. Factor in another 2 years of payments, and the total is $14,400. At the end of that you own a 5 year old Bolt that was selling for about $12,000.
Nowadays, though, car makers have dropped the residual to a more realistic number, making leasing much more expensive. I haven't looked in the past year, but buying is a bit better these days. That's purely financial, though. It doesn't take into account technology advancements, economic issues (COVID really fucked up the used car market), psychological value of knowing you own a car, how long you keep a car in general, etc.
leasing only makes sense if you change out cars often. Otherwise it is a massive loser.
Not in the current climate. Just leased a PHEV for the first time because the lease was a lot cheaper than financing. It’s a backwards car market at the moment.
Again, that only matters in the short term. Just like real estate, leasing (renting is leasing) only makes sense for short term. Otherwise it is a massive loser.
You are basing your blanket statement on an undefined "short term" and also an assumption that has changed a lot in the last few years. If you cut off short term vs long term at 5 years, you could be wrong and definitely not "massive loser." If you are talking keeping a car for 10 years, then yes of course owning makes more sense. Also, if car companies set residual values very high, then leasing can be enough cheaper in the long run than buying. Car companies still aren't sure how to set residual values for EVs, so you can get ridiculous lease prices (sometimes).
I was leasing a $36k car for $280/mo for 3 years because they set the residual value at $24k. At the end of those 3 years, a person who bought would be paying almost twice as much per month on a car worth about $18k. At the end of 5 years the car was worth about $13k. So I could have paid a total of $10k to rent a car for 3 years or paid a total of $19k to own a car worth $4k more than I owed. That's a negative $5k vs what I spent. So in the 3 year term, leasing was WAY better. At the end of 5 years if I leased another car at the same price, I would be driving a 2 year old car and would have paid a total of $17k. The owner would have paid a total of $31k to own a car worth $13k, a net of paying $18k vs my $17k. So for my lease with a poorly crafted residual, leasing was $1k better in the 5 year term AND I'm in a newer car. If you extend it to 6 years, then owning starts being better depending on how much work you have to do to fix the 6 year old car outside of warranty.
However, in the last year or so the car companies have started getting a better handle on residual values for EVs. Additionally, COVID has fucked up the used car market, making actual residual values be all over the map compared to the fixed residual in a lease.
Term being declared by the word lease. Justify your decisions any way you like, but the math does not back it up, so just accept you are trying to convince no one but yourself.
OK, so you define "term" as being 3 years? In that case, I can pay $10k for renting a car and you can pay $19k to own a car worth $4k more than you owe. You just paid $9000 more than I did for the privilege of having $4k in equity. Congrats.
Yes, the lease determines that. You would be correct if that is remotely what I suggested. Again, if you are only keeping the car short term, meaning about as long as the lease, then the lease is cheaper. If you are keeping the car long term, meaning useful life of the vehicle, them lease is a massive loser. Equity means nothing when you still need a car and must get another. However driving a paid for car for the rest of its useful life destroys leasing another car each time the lease is up.
Sadly lots of folks have gotten sold on them with the same bad math argument you use.