Leasing has swiftly taken over the electric-vehicle market. Nearly 80% of new EVs bought at dealerships are now leased, according to Edmunds data cited by The Wall Street Journal.
That’s up from 16% at the beginning of last year, per Edmunds. And it’s at least triple the industry average, which sits around 20%. One caveat: since we’re talking about EVs bought at dealerships, these figures exclude direct-to-consumer EV makers like Rivian, Lucid and (most importantly) Tesla. Tesla tends to push leases less than many conventional brands, too. Since it makes the three best-selling EVs on sale, the full-market figure is likely considerably less than 80%.
Still, the rise of leasing is among the strangest dynamics in today’s EV market, and the long-term impacts could be immense.
Of course they are! I wouldn’t lease an ICE vehicle but there are several strong reasons to lease an EV right now:
First and foremost, leasing a vehicle brings the $7500 federal tax credit back to a lot of vehicles that no longer qualify when buying under the new rules about where the car is built and where the battery components come from. Some manufacturers are building plants in the US and everyone is changing where they source their batteries so in the long run this will be less of an issue, but for now it’s a strong reason.
Second, I have no real confidence in what the vehicle will be worth once the loan is paid off. With an ICE car I can have some reasonable estimations for different mileages and ages, within a few thousand dollars. Although fears of reduced battery ranges seem overblown, it’s hard to get a handle on what buyers would feel a 6-year-old Blazer EV with 65,000 miles on it will be worth. It’s even harder when newer EVs are less expensive. Tesla significantly dropped the price of popular models like the 3 and Y seemingly on a whim, single-handedly dropping the values of used vehicles for both their own models and other brands. This left many buyers underwater on their loans and was one of the direct reasons Hertz sold off a large part of their Tesla fleet. I’ll let the bank take the risk there. Plus, with a bunch of EVs coming off lease in a few years used prices will probably stay low.
Third, there are some amazing lease deals right now. I was not aware of this, but from the article:
For example, you can get a base-model Hyundai Ioniq 5 for $159 a month with $3,999 down. A Kia Niro EV can be had for $149 per month for 24 months with $3,999 due at signing.
I’m not in the market for a new car right now, but this actually has me wondering if I should sell my current vehicle because even paying off the loan I’d have more than enough for that down payment and it would dramatically reduce my car payment and fuel costs.
Plus the rate of technology change. I considered leasing for the first time ever, because EVs are so new and the technology is rapidly changing. I ended up deciding Tesla is getting mature enough to buy.
If I were to buy from a legacy manufacturer, I see that most are really on their first generation, their first attempts at an EV, so likely have huge changes coming soon. For example, why would I buy with the old charging connector when they’ve announced they will start using NACS next year? I’m not buying into that, but I may choose to lease it for a few years then upgrade to something better
TLDR: Tesla doesn’t bother selling trough dealerships. Dealers surprised they don’t sell a lot of tesla’s
It really made the most sense for me. Essentially long term rent a car and when the term is up, either technology has progressed to where the features of a new model are vastly superior, so give it back to the dealership, or there is still limited supply (I’m in a small EV market in Canada) and tech is more or less the same, then I buy it out.
Seemed like a fairly significant reduction of risk in getting an EV and a win win either way.
Why is lease financing strange here?
I was thinking the same thing… new technology that people don’t trust, so they lease it rather than own it and potential get stuck with a massive repair bill.
For more fiscally conservative people, it’s generally a worse financial decision. This is especially true if you just return your lease at the end without doing the leg work to leverage any equity your car might have (or might not have).
In the EV realm, though, the decision is less clear. Banks are still figuring out how to quantify depreciation, so sometimes lease rates are ridiculously low or ridiculously high (I leased a $40k Bolt for $284/mo for 36 months and 10k miles per year). Also, the tech is both newer and changing faster than normal cars, so people are more hesitant to sink that much money into owning something that may or may not be worth it in the end.
Which EVs are the least anti-consumer at the moment? I want into the club, but I hate telemetry and subscriptions and those stupid touchscreens. Really what I want is an electric 20 year old civic; just a car to do car stuff.
If you want something like that, you will have to go back to an original Leaf which has no range.
That’s disappointing. Oh well, I guess I’ll just keep my current car out of the landfill.
If I remember correctly, the gen 1 kona electric had no inbuilt internet connectivity (atleast in the Indian model). Maybe you can see if that is true for your region
You might look at the Bolt/Bolt EUV. It does have a touchscreen but also physical knobs and buttons for things like climate and volume, normal door handles, etc. I really liked it except that the cup holder was slightly narrower than standard, meaning it couldn’t hold my water bottle, and the DC fast charging was pretty slow by current standards (takes close to an hour to go from 10-80%) so I wouldn’t want to take it on a road trip.
I think there was a connected service through an app, but I was in a rental so I never set it up and the car worked fine. It seems like it’s optional, and while it would’ve been some nice features like getting the climate controls running before getting in the car, it wasn’t necessary.
