Leasing discussion ("what % of people lease")

[SeanNelson]

90% of EVs are leases.

That seems awfully high to me - do you have a source for that?

 

[sparkyps]

90% of EVs are leases.

That seems awfully high to me - do you have a source for that?

This source suggests a slightly lower number

https://www.cnbc.com/2015/10/17/ric-cars.html

Excluding Tesla, lease penetration in the EV market is 75 percent in 2015 (it was above 80 percent in 2013 and 2014). In 2011, leasing represented just 27 percent of the market.

It's also the edge GM has over Tesla's Model 3. Once people take a look at the $650+/mo payments for 6 years vs under $300/mo for leasing a Bolt for 3 years they may decide the Model 3's advantages don't over come the substantial cost of buying. I don't believe the initial Model 3 configuration page offers a lease option, from screenshots at another site.

 

[SeanNelson]

This source suggests a slightly lower number

https://www.cnbc.com/2015/10/17/ric-cars.html

Excluding Tesla, lease penetration in the EV market is 75 percent in 2015 (it was above 80 percent in 2013 and 2014). In 2011, leasing represented just 27 percent of the market.

That's interesting - I had no idea it would be that high. I wonder how that compares to the proportion of ICE vehicles that are leased?

 

[dandrewk]

This source suggests a slightly lower number

https://www.cnbc.com/2015/10/17/ric-cars.html

Excluding Tesla, lease penetration in the EV market is 75 percent in 2015 (it was above 80 percent in 2013 and 2014). In 2011, leasing represented just 27 percent of the market.

That's interesting - I had no idea it would be that high. I wonder how that compares to the proportion of ICE vehicles that are leased?

I'd guess it's a lot lower for ICE, especially if excluding large fleet buyers.

Leasing and EV at this stage of their development makes too much sense to pass up. Three years ago would we have guessed we'd have a -choice- between two 200+ range EVs?

 

[LeftieBiker]

I think I read, a few years back, that about 35% of all new car "purchases" are leases.

 

[WetEV]

90% of EVs are leases.

That seems awfully high to me - do you have a source for that?

This source suggests a slightly lower number

My source isn't the best, was an email from a local high volume Leaf salesman. Thanks for finding a better percentage.

 

[GetOffYourGas]

That's interesting - I had no idea it would be that high. I wonder how that compares to the proportion of ICE vehicles that are leased?

I'd guess it's a lot lower for ICE, especially if excluding large fleet buyers.

I think I read, a few years back, that about 35% of all new car "purchases" are leases.

Guys, why are we "wondering" and "guessing"? The answer you are looking for is in the original link.

View attachment LeaseRate.PNG

View attachment EVLeaseRate.PNG

 

[TimBolt]

The Bolt is the first car I've leased since I can't take advantage of the $7500 federal tax credit, but that credit is available to the lessor (GM Financial). New York adds another $2k, which makes the lease reasonable at around $250/month.

In three years I'll probably lease another EV, it will be interesting to see the available range, cost, and charging infrastructure improvements.

 

[Anonymous]

When I leased the Chevy Volt in late 2013, the lessor, Ally Bank rolled the $7,500 into a monthly price savings for me!

Unfortunately, this time around, GM Financial rolled the $7,500 into the residual, which means I will not get any benefit from it, unless I purchase the vehicle after the end of the 3 year lease term!

I blew a cork when I discovered, undisclosed, that the GM lease includes a $400 end of lease fee, only waived if I lease another GM car! This fee was undisclosed by my Chevy dealer who specifically knew my previous Volt lease from Ally did not include this fee and I was being forced to lease from GM or walk away from leasing the car!

We eventually "settled" the issue by the dealer dropping the down payment price by $200.

 

[TimBolt]

Michael,

I'm no expert on leasing, but doesn't raising the residual by applying the $7500 tax credit lower the cost of the lease?

Maybe I'm missing something, but all I know is I'm leasing. $40k MSRP car for $250 a month, that doesn't seem possible unless that $7500 is being used to lower the lease cost.

 

[Anonymous]

Michael,

I'm no expert on leasing, but doesn't raising the residual by applying the $7500 tax credit lower the cost of the lease?

Maybe I'm missing something, but all I know is I'm leasing. $40k MSRP car for $250 a month, that doesn't seem possible unless that $7500 is being used to lower the lease cost.

I'm not expert either but when I object to the high monthly payment even with the $7,500 compared to my leasing costs on my 2013 Volt, they told me the $7,500 was rolled into a lower buyout payment if I choose to buy the Bolt EV later on. I may have the terminology wrong.

 

[SparkE]

I split the leasing discussion off from the "DC FAST CHARGING" thread.

 

[LeftieBiker]

GM is pocketing the $7500, giving the lessee $2500 in capital cost reduction, and applying $5k to the residual, raising it. This slightly lowers the cost of leasing, but essentially GM is keeping that $5k, and then charging you a second $5k if you are foolish enough to want to buy the car after leasing it. It sucks.

 

[PackardV8]

under $300/mo for leasing a Bolt for 3 years

Whoa! Both at the dealer and on the GM site, the lease payments I got were more than $400 a month and with the $4500 down payment, it worked out to almost $600 a month in real net dollars.

If I could have leased for less than $300, I'd have done it, but no one offered me that deal.

jack vines

 

[DucRider]

GM is pocketing the $7500, giving the lessee $2500 in capital cost reduction, and applying $5k to the residual, raising it. This slightly lowers the cost of leasing, but essentially GM is keeping that $5k, and then charging you a second $5k if you are foolish enough to want to buy the car after leasing it. It sucks.

Only if you choose GM Financial as your leasing company. There are other options (but with much higher payments since they assign a realistic residual).
And they are not "keeping" it twice. You avoid paying the $5K as part of the real depreciation (as you should), but pay it ONLY if you choose to purchase at the prearranged inflated residual value. If the market price is significantly less (likely), you are free to negotiate or turn it back in and buy a used Bolt for true market value.

It is interesting that the local dealers are reporting that with the Bolt the % of leases and purchases are nearly reversed - over 60% are purchasing the Bolt where the usual number for EV's approaches 70% leases.

 

[LeftieBiker]

And they are not "keeping" it twice. You avoid paying the $5K as part of the real depreciation (as you should), but pay it ONLY if you choose to purchase at the prearranged inflated residual value.

They "keep" $5k from the Federal tax credit - as they have the legal right to do. They then "charge" you another $5k if you buy the car off lease. So while they may not be "keeping" $10k, they are still "getting" $10k from the feds and the lessee if the lessee buys the car. The semantics matter surprisingly less than the actual economics, here. And the lease vs buy figures you mention would appear to confirm that the GMAC leases are not great for most people who want to drive a Bolt. Those who want nothing more than to rent the car for 39 months do get a better deal - if they can stand the seats. It seems to me that GM never wanted this car to be a runaway success.

 

[GetOffYourGas]

And they are not "keeping" it twice. You avoid paying the $5K as part of the real depreciation (as you should), but pay it ONLY if you choose to purchase at the prearranged inflated residual value.

They "keep" $5k from the Federal tax credit - as they have the legal right to do. They then "charge" you another $5k if you buy the car off lease. So while they may not be "keeping" $10k, they are still "getting" $10k from the feds and the lessee if the lessee buys the car. The semantics matter surprisingly less than the actual economics, here. And the lease vs buy figures you mention would appear to confirm that the GMAC leases are not great for most people who want to drive a Bolt. Those who want nothing more than to rent the car for 39 months do get a better deal - if they can stand the seats. It seems to me that GM never wanted this car to be a runaway success.

If you run the math, what happens is this. If you lease and return, it ultimately doesn't really matter which way they applied the $7500. What matters is your total cost. That's easy to calculate and only tangentially related to MSRP, credits, etc.

If you lease-to-own, then the story is different. Of the $7500, you basically get $2500 upfront, and $5000 is applied to the residual. If you buy the car after 36 months for the agreed residual, then you ultimately get $2500 and GM got $5000. That's a poor deal. But GM is getting $5000 once, not twice. They got it from the tax credit. You are paying $5000 "more" because you did not get the tax credit. GM managed to get $45k for a $40k car. You paid $37.5k, and Uncle Sam paid $7500.

Hopefully this story doesn't ever play out. I would hope that GM would either give you the $5000 off the residual or that you would just return the car and buy another off-lease Bolt. GM hopes that you simply lease a 2021 GM vehicle.

 

[TimBolt]

My understanding is that the residual price in a lease isn't necessarily the price you'd need to pay to keep the car.

If Chevy thinks a Bolt will be worth $25k in three years, but the real market value is less, a lower purchase price can be negotiated with the dealer.

Many car manufacturers pump up leases with unrealistic residual values, which helps drive lease activity, but comes back to haunt the manufacturer at lease-end.

I doubt my Bolt is going to retain 60% of its original MSRP at the end of my three year lease. I'm pretty sure that GM also knows that this is a wildly optimistic residual value.

 

[asterix2112]

I thought of leasing, but the $7500 tax CREDIT plus the dealer taking $5500 off the MSRP brought it down enough where buying made sense. Now I can keep the car 4-5 years and it will have some residual value (maybe $6-$8k). Probably a wash, but now I don;t have to worruy about mileage (I drive a lot) and HAVING to turn it in on a specific date.

 

[LeftieBiker]

Residual values do get renegotiated at lease end - sometimes, with some manufacturers. You can't count on it happening.