Almost 80 per cent of US EV drivers lease their vehicles
The market for plug-in vehicles in the United States is dominated by leases, as many EV drivers opt to not buy their vehicles. According to a Bloomberg report, these drivers are often choosing to lease their cars because they believe upcoming models will exceed today’s vehicles in technology and value.
Jeffrey Jablansky, who leased a Chevy Bolt early last year, told Bloomberg he did not consider buying the car.
“I just think in three years I’m going to be delighted at what else is available,” said Jablansky, who writes about cars as a freelance journalist. “And we’re going to laugh one day that we used to plug cars in for eight hours at a time.”
Instead Jablansky leases his Chevy Bolt for $220 per month.
Excluding Tesla owners, the company is not required to divulge leasing data as it sells its cars directly and not through dealerships, US drivers lease almost 80 per cent of battery EVs and 55 per cent of plug-in hybrids. The lease rate for the entire US fleet of vehicles is about 30 per cent.
“When there’s new technology coming out, and it’s coming out so rapidly, and you’re improving on it so constantly, typically people only want to lease it,” Steve Center, a vice president of American Honda Motor Co., told Bloomberg at the 2017 New York Auto Show.
Tim Fleming, analyst with Kelley Blue Book says he believes EV drivers put a high value on driving the latest thing. “Let’s put it this way,” he told Bloomberg, “you don’t buy an EV to save money.”
Jablansky says he may buy his Chevy Bolt outright when his lease is up, but only if GM hasn’t come out with anything better by then.
Overall demand for battery-powered vehicles is low. Only 1 per cent of the global auto market is comprised of EVs and the number is even smaller in the United States.
Despite the recent pledges by automakers to build more EVs, Bloomberg says car companies are not concerned about cultivating a secondary market for EVs. Sales of new models are important to them in that they allow the automakers to hit fleet-wide efficiency mandates.
As for used battery-powered vehicles, demand is even less than new as federal and state incentives are not available to buyers of pre-owned EVs, despite plummeting costs.
EV compact cars sold in 2014 are now worth only 23 per cent of their original sticker price. This is compared to 41 per cent for the equivalent combustion vehicles, according to Black Book, an auto analytics firm.
For example, a 2015 Nissan Leaf with just 5,500 miles on it sells for an average of $11,995, less than one-third of its original price, even though the battery is under warranty until 2023.
Bloomberg says that is the amount the average US driver in the average US vehicle spends on gas alone over an eight-year period.
Arguments can be made for buying a secondhand EV, including higher reliability as plug-ins have fewer moving parts and consumer electricity prices are more stable than gasoline prices. Even older EVs can update their software, allowing for enhanced efficiency.
But, auto engineers admit they don’t know how well the first wave of plug-in cars will age.
“The buyer of a used EV today is as much an early adopter as the buyer of a new EV was in 2011,” said Nicholas Albanese, an analyst with BNEF.
With factories scaling up production and engineers perfecting the packaging of cells, battery costs have dropped about 20 per cent annually in the past five years.
“If you look at what can happen across the lifetime of a lease, you’re really talking about doubling the range of these vehicles,” Edmunds analyst Jeremy Acevedo told Bloomberg.
