Why Leasing an Electric Car May Be Best
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For most American car shoppers interested in a pure electric vehicle (EV), the technology can present a host of unfamiliar considerations. For that reason, CR believes leasing, rather than buying, makes the most sense. Here are a few reasons:
Newest tech. Leases have limited ownership periods, usually between two and four years, giving shoppers access to the latest technology because they can turn in the EV at the end of the lease for an upgrade. EV owners are more likely to be technology enthusiasts than the typical new-car buyer is, says Ed Kim, vice president of industry analysis at automotive consulting firm AutoPacific, so they’ll want the freshest tech. As with almost any lease, payments are lower than a regular monthly payment for a vehicle purchase.
Tax credits. Another appeal is the availability of tax credits, whether federal or state. Still, shoppers who choose to lease an EV need to pay particular attention to those because it’s the leasing company, not the consumer, that’s entitled to the credit, says Mel Yu, a CR auto analyst. “They often pass the credit on to the consumer, and that’s reflected in a reduced cost for the lease,” he says. “But they aren’t required to do this, so shoppers should confirm before signing any paperwork.”
Depreciation. That’s the value a car loses over time. It’s a factor for any car buyer, but it hits EVs harder. Yu says EVs depreciate faster than regular cars because tax credits effectively lower the original price of the car, but leases typically factor that into the payment equation. “A vehicle usually loses around 50 percent of its value in three years,” says Yu. “Buyers can owe more on their loan than the vehicle is worth.” As with any lease, there are restrictions, such as how many miles can be driven and how much wear and tear can be inflicted.
Editor's Note: This article also appeared in the September 2019 issue of Consumer Reports magazine.
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