Electric car lease or buy?
There are some who argue that you should lease an electric car. These factors are in addition to all the normal pros and cons of leasing vs. buying. The technology is still new and is advancing rapidly. In 2-3 years, the newer model may have significantly improved features, range, and efficiency, as well as lower prices. If you are the type of person to upgrade regularly to the latest and greatest, leasing can make it a smoother transition. It is hard to predict the depreciation of the vehicles. This is both because of the above factors, but also because these kinds of cars are newer and so the statistical models used to predict their future values are less refined. The models for predicting gas car prices have been honed for decades. EV Manufacturers have in the past made some mistakes in their residual value estimations. When you lease a car, you get essentially an option to buy the car at the future predicted residual value. If, at the end of the lease, the market value of the car is higher than the residual value, you can purchase the car at the predetermined price, making yourself some extra money. If the value is lower than the residual, you can return the car or renegotiate. I know a relatively large number of electric vehicle owners. Most or all of the ones who got the vehicle new leased it. The rest bought used vehicles coming off lease, which can also be a good deal. "Electric does make a difference when considering whether to lease or buy. The make/model is something to consider. The state you live in also makes a difference. If you are purchasing a small electric compliance car (like the Fiat 500e), leasing is almost always a better deal. These cars are often only available in certain states (California and Oregon), and the lease deals available are very enticing. For example, the Fiat 500e is often available at well under $100/mo in a three-year lease with $0 down, while purchasing it would cost far more ($30k, minus credits/rebates = $20k), even when considering the residual value. If you want to own a Tesla Model S, I recommend purchasing a used car -- the market is somewhat flooded with used Teslas because some owners like to upgrade to the latest and greatest features and take a pretty big loss on their ""old"" Tesla. You can save a lot of money on a pre-owned Model S with relatively low miles, and the battery packs have been holding up well. If you have your heart set on a new Model S, I would treat it like any other vehicle and do the comparison of lease vs buy. One thing to keep in mind that buying a Model S before the end of 2016 will grandfather you into the free supercharging for life, which makes the car more valuable in the future. Right now (2016/2017) there is a $7500 federal tax credit when buying an electric vehicle. If you lease, the leasing company gets the credit, not you. The cost of the lease should indirectly reflect this credit, however. Some states have additional incentives. California has a $2500 rebate, for example, that you can receive even if you lease the vehicle. To summarize: a small compliance car often has very good reasons to lease. An expensive luxury car like the Tesla can be looked at like any other lease vs buy decision, and buying a used Model S may save the most money." I would like to add that from my own research, a pro to leasing over buying a new vehicle would be that with the lease the entire 7,500 federal incentive is applied directly to the lease, or so they say. If you buy a new car you get a 7,500 federal tax incentive also but if you dont have 7,500 bucks in taxes this wont be as much value. It doesn't sense to me to buy used since you dont get the tax incentive and also if you're in california the 2,500 rebate only applies to buying new or leasing 30 month or longer. I have coworker who reported that he leased a Nissan Leaf from 2013-2016 and was offered $4000 off the contracted purchase price at the end of the lease due to a glut of other lessees turning in for a lease on the newest model with greater range.  It's not clear that this experience will be repeated by others three years from now, but there is enough uncertainty in the future electric car market that it's quite possible to have faster depreciation on a new vehicle than you might otherwise expect based on experience with conventional internal combustion powered vehicles. Leasing will remove that uncertainty. Purchasing a lease-return can also offer great value. I looked at the price for a lease return + a new battery with the extended range, and it was still significantly cheaper than buying a completely new vehicle. "The good news about maintenance is that there's much less scheduled maintenance because the cars are mechanically much simpler. See the official service schedule. Most of it is just ""rotate tires / replace cabin air filter"". The brake and suspension systems are very similar to those of a normal car and require comparable maintenance. The bad news is the battery will decay over time and is a major component of the cost of the car. From that link: In the UK, the LEAF’s standard battery capacity loss warranty is for   60,000 miles or five years So you should factor your warrantied battery lifetime into the depreciation calculation. I don't think there are going to be many ten- or twenty- year old electric cars from the current crop in 2030 or 2040 as they're still improving dramatically year-on-year. (Slightly too long for a comment, slightly too short for a proper answer)" I might be missing something, but I always understood that leasing is about managing cash-flow in a business. You have a fixed monthly out-going as opposed to an up-front payment. My accountant (here in Germany) recommended: pay cash, take a loan (often the manufactures offer good rates) or lease - in that order. The leasing company has to raise the cash from somewhere and they don't want to make a loss on the deal. They will probably know better than I how to manage that and will therefore be calculating in the projected resale value at the end of the leasing period. I can't see how an electric car would make any difference here. These people are probably better informed about the resale value of any type of car than I am. My feeling is to buy using a loan from the manufacturer. The rates are often good and I have also got good deals on insurance as a part of that package. Here in Germany the sales tax (VAT) can be immediately claimed back in full when the loan deal is signed.
"The new Tesla car with exchangeable battery means that the battery is not owned by you. How can the batteries owned (and paid) by you if every time you exchange them with batteries of unknown past, owners and quality?  If you want to insist to own your batteries and charge them at home, then, yes, you will have to pay for your set of batteries, but then why would you exchange YOUR batteries for another set with unknown past and owners?  Let me explain it in a different way: Nobody pays their share of the cost of the expensive Electric infrastructure needed to supply their home with electricity. You just pay as you consume. Yes, part of what you pay is to cover the costs of the infrastructure, but big consumers of electricity (factories and businesses) covered much more of that than the individual home owner.  Yes, electric car batteries are expensive but you don't need to pay for them if the arrangement is ""pay as you go"".  With conventional car, would you like to pay $1000s of Dollars for huge tank and fill it with gas, so you don't have to ""pay as you go""?  Also, if we exchange batteries as we go, we don't need such expensive batteries. They can be cheaper (not cheapest) batteries that have less range." Yeah, it's going to happen a lot faster than that.  Today we're starting to see the 2nd generation of modern electric cars becoming available at $35K price and 200+ mile range.  It was only 7 years ago that the first generation started becoming available.  If progress continues at the pace it has up to now, then by 2025 we might see the 3rd gen EVs appearing and I expect they'll have 300+ range starting around $25K.  EV infrastructure is easy peasy to install.  All you have to do is pick an electrician out of the phone book.  Apartments, parking garages, and hotels will all have to start installing level 1 and level 2 chargers, if they want customers. You SHOULDN'T lease one if you are going to get an economy car, if you don't drive too much (<15K / year), and you want to hang on to the car for a long time.  Otherwise, if you are a regular driver, driving a leased new quality car can be cost effective. Many cars now have bumper-to-bumper warranties that last as long as the lease (say 80K). So there is rarely any extra costs apart from regular maintenance. The sweet spot for most new cars is in the 5th, 6th, or 7th years, after they are paid off. But at that point, you may find you have maintenance bills that are approaching an average of $200 - $300 per month. In which case, a lease starts to look pretty good. I owned a 7 year old Honda Accord that cost only $80 less per month in maintenance than the new leased VW that replaced it.  Haven't looked back after that. Into my 3rd car and 9th year of leasing. Buying a car is a very big financial decision.  There are three major factors to decide which car to buy: Pick two because you can't have all three.  You can either have a reliable car that has cheap running costs but will be expensive to buy or a cheap car that is unreliable.  If you are mechanically minded then reliability might not be that important to you.  However, if you must get to work on time every day then owning a car that breaks down once every six months might be something you wish to avoid. There are a lot of hidden costs that should be thought about very carefully when considering purchasing a car: In my country, annual car registration costs are around $650.  I budget around $1000 for maintenance each year (a major + minor service and some extra repair work).  When I factor in an amount for depreciation, that brings the running costs of the car to somewhere between $1500 and $2000 per annum before I've driven it anywhere. Generally I will fill up my car for $50 around once a month (I don't drive too often) which makes my total cost of ownership somewhere around $2500 per annum.  When I was driving my car to work daily, the petrol costs were much higher at around $50 per week, which made my TCO somewhere around $4500 p.a. And this is on an extremely reliable, fuel efficient 2006 model car which cost me $18k to purchase.  I have no debt on this car.  But the car itself is a liability.  Any car will be a liability. I understand that petrol prices are ridiculously low in the US and probably registration is lower as well.  In this case you will need to adjust your figures and do the maths to work out what your annual cost of ownership will be. There are three alternatives to car ownership to consider which may save you money: Public transportation and car pooling are highly recommended from a financial perspective, though you may not have access to either in your situation.  Moving closer to work may also be an option, though for many jobs this may increase your cost of living. If you decide that you do need a car and decide that $2000 is not going to get you the car you feel you need ($2000 usually does not get you much), you will need to decide how to finance the car. You will want to avoid most dealer-based finance deals.  Be very wary of any dealer offering interest free finance as they usually have some pretty nasty conditions. Getting a loan from your parents or another family member is usually the best option.  Otherwise consider getting a personal loan, which will have a lower interest rate than a credit card or dealer finance. Another option could be to get a credit card on an interest-free promotional deal which you could pay down before the interest kicks in.  Be warned though, these deals usually require you to pay off your whole balance before the due date or they will back-charge interest on the whole amount. In short, these are the decisions that you will need to make: I'm no expert but I don't think it'll take to 2040 will have 54% of sales.. Once full EV's cost 25k there isn't any reason to buy a gasoline car, the gas savings alone will be cheaper let alone repairs, oil change, filters, and they're already at 35k. They lobbied to get a monopoly on direct to buyer cars (no dealership), they also receive subsidies on each car, as they aren't affordable for consumers. Their goal is more to take over the electric car market, not to put consumer desires first. I'm probably going to hell for pointing this out, but I thought you could know. Dealer financing should be ignored until AFTER you have agreed on the price of the car, since otherwise they tack the costs of it back onto the car's purchase price. They aren't offering you  a $2500 cash incentive, but adding a $2500 surcharge if you take their financing package -- which means you're actually paying significantly more than 0.9% for that loan! Remember that you can borrow from folks other than the dealer. If you do that, you still get the cash price, since the dealer is getting cash. Check your other options, and calculate the REAL cost of each, before making your decisions. And remember to watch out for introductory/variable rates on loans! Leasing is generally a bad deal unless you intend to sell the car within three years or so. No, I did not get upset or went overboard. Sorry if you got that impression.  I am discussing this topic with you.  To summarize: the future is exchangeable battery because no battery today and in the near future can be used for a very long drive.  You will pay only for the electricity you consumed from the battery. You will pay more per KW than you pay for KW consumed at home because you have to pay for additional costs and profits by Tesla.  You will not pay for the battery because you don't own the battery. It's exchanged every time.  If you want, and you mostly do short drives, you can buy a car with a fixed set of batteries, costing a lot of money, but you will not have to pay the fees for KW you charge into it at your home. Of course you do.  You can sell it, wreck it, do whatever you want with it.  Of course, some things may void warranty, or whatever, but since you do in fact own the vehicle, it is technically yours to do with as you please.    Did you know that you can bore the engine of a car to increase performance?  Not saying you should, there are lots of pros and cons there, and it requires an individual with specialized knowledge to do it, who you will have to pay for his service, but it is doable.  Should you be upset that this wasn't already done by the manufacturer?    Did you know that lots of vehicles are equipped with gps functionality?  If your car can display a compass, there is a decent chance that you already have the basics of what you need to set up gps in the vehicle.  Should you be upset that your vehicle doesn't have gps?  But you can't boil it down that far.  Well, I suppose you can, but it makes everything cost more for everyone.  When you buy a Tesla, you aren't just buying a car.  You are buying into the company.  They make updates, fix programming issues, etc. and this requires access.  They chose to market their vehicles differently, and so they sell them differently.  Alternatively, they could have 2 separate assembly lines, one for the 60 (discontinued) and one for the 75.  Now this will equate to both cars costing significantly more than they currently do, but hey, at least you have the right battery, right? He's comfortably middle class, but not wealthy. The Tesla was purchased in a multi-owner shared arrangement, and the solar panels were installed by a company that supplies the capital for the panels with a long-term agreement to supply power to the homeowner and takes care of the more complex business agreements to feed back power to the grid. The situation on paper looks like  a long term break even - but we'll have to see.  Overall, even if he's paying a bit more in electric cost, the arrangement gives a lot of stability in exchange.  To me it's clear that going electric car + renewable electric is a long-term good on the principle of becoming nationally independent from geopolitical enganglements, but also more towards becoming individually independent in terms of being isolated from instability in gas prices, utility prices, and even in times of natural disaster. Full payment is always better than auto-loan if you are prudent with finances. I.E if you take a loan, you are factoring the EMI hence your savings will remain as is. However if you manage well, you can buy the car with cash and at the same time put aside the notional EMI as savings and investments. The other factor to consider is what return your cash is giving. If this more than auto-loan interest rate post taxes, you should opt for loan. For example if auto-loan is 10% and you are getting a return of 15% after taxes on investment then loan is better. Company Car lease depends on terms. More often you get break on taxes on the EMI component. But you have to buy at the end of lease period and re-register the car in your name, so there is additional cost. Some companies give lease at very favourable rates. Plus if you leave the job lease has to be broken and it becomes more expensive. I am here to provide awesome guidance on leasing a van or car for your business. Talk about the benefits and the drawbacks.  Cash is king and if you can buy a van outright that will always be the best deal. Most people cannot do that and so leasing is the next best option in terms of business. "With a gross income of $ 95,000 per year, and a net savings rate of over $ 18,000 per year, a budget of $ 3,600 per year for automobile interest and depreciation is not irresponsible. But poor car choices, poor car maintenance habits, and driving habits that risk totalling cars are irresponsible.  Also, not fully understanding a lease deal is irresponsible. The ""great lease deal"" might be encouraging you to make a different ""poor car choice"" than you made last time.  A ""great deal"" on a bad car is not really a great deal.  Also, depending on the contract and your driving habits, you might have a surprising cost at the end of the lease." In many (most?) cases, luxury cars are leased rather than purchased, so the payments on even an expensive car might not be as high as you'd expect. For simplicity, take a $100,000 car. If you were to buy that in cash or do a standard five-year auto loan, that would be incredibly expensive for all but the wealthiest of people. But a lease is different. When you lease a car, you are financing the car's depreciation over the lease term. So, let's suppose that you're signing up for a three-year lease. The car manufacturer will make an estimate of what that car will be worth when you bring it back in three years (this is called the residual value). If this number is $80,000, that means the lessee is only financing the $20,000 difference between the car's price and its residual value after three years - rather than the full $100,000 MSRP. At the end of the lease, he or she just turns the car back in. Luxury cars are actually especially amenable to leasing because they have excellent brand power - just because of the name on the hood, there are many people who would be happy to pay a lot for a three-year-old Mercedes or BMW. With a mid- or low-range car, the brand is not as powerful and used cars consequentially have a lower residual value (as a percentage of the MSRP) than luxury cars. So, don't look at an $80,000 luxury car and assume that the owner has paying for the entire $80,000. Look at the basic cost of the lease.  Option 1: keep the car for three years. Pay for repairs during that time then sell it for $7,000. Option 2: Sell the current car for $10,000. Lease a new car for three years. Assume no need for repairs during those three years. At the end of the three years return the car in return for $0. Cost of option 1 is $3000 plus repairs.  Cost of Option 2 is 36 months x monthly lease cost. The first $83 of the monthly lease cost is to cover the $3000 fixed cost of option 1. The rest of the monthly lease cost is to cover the cost of repairs. Also remember that some leases have a initial down payment due at signing, and penalties for condition, and excess mileage. The lease company may also require a higher level of insurance for the lease to cover their investment if you have an accident.  Plus If you fall in love with a different car two year from now, or your needs change you are locked in until the end of the lease period.