The North American Auto Dealers Association (NADA) just released their figures concerning the Chevy Volt and Nissan Leaf, and found the resale value of both cars was about 40% of their original values after 3 years of ownership. To compare, the Toyota Prius retained almost 55% of its value in the same timeframe.
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| (the Mitsubishi Car-Shaped Object - oddly absent from residual value reports) |
These value figures are misleading. It's hard to ignore the effect that a federal tax credit of $7500 off a new purchase does to the used value of a car, yet the NADA guide does not factor this into their equations. Also, both Leaf and Volt have seen their base prices slashed by $5000 or more since being introduced in 2011.
Calculations...
The base price of a 2011 Nissan Leaf was $32,780. If it retains 39% of that value after 3 years, the residual value of a used example today should be about $12,780. In my research, that number is a little low, but it's in the ballpark.
But what if you subtract the $7500 tax break towards purchase? You're left with an MSRP of $25,280. That's about 50% residual value. What if we factor in today's reduced prices? In that calculation, the 2011 Leaf has a relative value of more than 57% of the new 2014 model.
Conclusions
57% residual value over 3 years is good enough for second place in the Hybrid car category, ahead of the Toyota Prius and just behind the Lexus CT200h. That's not just respectable, it's impressive, considering the size and nature of the EV market.
That said, I still believe that purchasing an electric car, rather than leasing, is the wrong move. Lease deals are very good right now. We also still do not know the long term reliability of these cars, though it should be quite good. Finally, in the few years since their release, electric cars have gotten markedly better in each calendar year, at the same time that their prices have dropped, a trend that should continue.
Leasing the car protects the lessee from unknown long term reliability, while allowing us to reap the benefits of improved technology a few years down the road. It's also cost-effective, with the current deals available.
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| (haters gonna hate) |
I have mixed feelings on the lease programs. On one hand I like buying my cars outright to avoid financing costs but on the other I can see the advantages to leasing a vehicle that hasn't had a chance to "stand the test of time" so to speak. I also read up on the government credit and outside of the chance that it won't get renewed for the next tax year, there is a phase out of the credit once a manufacturer sells 200,000 units so the deals now definitely won't last forever.
ReplyDeleteI agree in most cases, and it may yet turn out that these cars are a good long-term investment. I personally think there's too much advancement coming in the next few years to commit, and the lease deals are too good to ignore.
DeleteAs for the tax credits, they certainly won't be around forever, but I think they were intended to bridge the affordability gap while economies of scale ramped up. If we get another substantial price drop from manufacturers - and GM says that we should in the case of the Volt - then the tax breaks will have done their job.
The issue I have with the leasing option is that the good deals aren't always available based on geographical area and the trim level you want. The LEAF entry-level S-trim leases for $1999 down and $199/month were not available to me in the Kansas City area and with an SV trim. My solution was to buy a 2012 off-lease SL for < $20K. My reasoning is that the high depreciation is gone and I have a lot of life left in the battery for my purposes (89% battery health per LEAF Spy and 12 bars). Now my commute is less than 12 miles one-way and I have a free-to-me EVSE at work, so I can suffer quite a bit of battery degradation before it affects my commute. So admittedly that won't work for everyone.
ReplyDeleteI can say personally that the lease deals can take a lot of legwork to get. I got competing quotes from about 5 different dealers on the same spec car, and prices were all over the place, thousands of dollars apart. I had to drive 45 miles to get the best deal, but it was worth it.
DeleteThe dealers most willing to negotiate are those with many on the lot, and with sales people who know plug-in cars.