Buy a Nissan Leaf for tax benefits?

[patdavidse]

New to the boards, new to all the idea's here, excited to get on board :)

Here is my situation...I have a small business, and I net about 90k per year from it. Because of the business I go to the post office each day to drop off packages, for which I usually use my truck (18mpg). The post office is 5.9 miles away.

So here is my thought - according to what I've read, I can claim 58 cents per mile since I'm self employed if I use my personal vehicle for company business. The company owns the truck (which I need to pick up pallets of the products I sell, and during the busy season for dropping off at the Post Office). Would it make sense to buy a used Leaf for my post office trips?

Here is my math:
Used Leaf: $4.5k (taxes, tag, etc. already included)
Total Driving per year for business: 4k miles - $2320 deduction
Total Gas Usage (Truck): $700

I have solar installed, and could use the electric I would normally sell back to the grid to power the car, bringing my cost per KwH to about 5 cents (what the power company would otherwise give me). This won't work all the time, but I'd estimate 80% of the time I could take advantage of extra power I'm already generating.

Does it make sense to buy a Leaf JUST for this purpose? On paper it seems like a pretty good return on my investment, I'm just not a tax pro so I'm not sure if I'm missing something.

Thanks!

[Syonyk]

Where on earth are you finding a used Leaf, with sales tax, registration, etc, for $4.5k?

Best I can find for something that isn't one wheel in the junkyard is about $6k, purchase price - though you certainly don't care much about battery capacity for that sort of round trip.

Seems reasonable enough to me, though.  I'd extend beyond that to "If the truck is a primary vehicle, you can save a ton with an EV in general."  We've got a truck and a Chevy Volt, and the Volt is tons cheaper to run than the truck.

And, uh, if you can get a used Leaf for around $4k, mind shipping a few my way?

[patdavidse]

Where on earth are you finding a used Leaf, with sales tax, registration, etc, for $4.5k?

Best I can find for something that isn't one wheel in the junkyard is about $6k, purchase price - though you certainly don't care much about battery capacity for that sort of round trip.

I've seen 2 on the last week on facebook (out of NY, so I'd likely have to use the truck to tow it home, I'm in northern PA) for under $4k. Once with 70k miles, one with 120k miles, both 2011s. I've seen niether in person, but the pictures looked pretty clean. You're absolutely right about battery capacity, I imagine the whole thing will rust apart before the battery won't get me my 12 mile round trip. I figured $500 should cover taxes and tags, hopefully that's not too far off :). I guess I should add another $150 / year or so for insurance, haven't looked into what the cheapest option for this car is yet.

Even if I spent $6k on a nicer, newer one to also use for my town trips, it still looks like a much greater than 10% per year investment.

Seems reasonable enough to me, though.  I'd extend beyond that to "If the truck is a primary vehicle, you can save a ton with an EV in general."  We've got a truck and a Chevy Volt, and the Volt is tons cheaper to run than the truck.

And, uh, if you can get a used Leaf for around $4k, mind shipping a few my way?

I agree, however my truck is a 2013. 6 years later, it has 33,000 miles on it. About 20k of those miles are these post office trips. I simply don't drive that much, I only got it because my driveway is 1+ mile long and tractor trailers can't make the turn in, so it's how I get pallets up here for repackaging and shipping. And during Christmas when my sales are 4x normal, it gets fully loaded up to go to the post office and drop off packages.

I wish I could say this was me saving up to retire early, but honestly that thought is brand new to me. I just don't have a ton of places to go that I can't get to on foot except groceries and the bank, and I'm good at stocking up so there aren't lots of those trips.

The payback on a brand new EV driving 2k miles per year is a very long time without lots of tax benefits added in, especially since I'd need a newer one to get any kind of distance (and I'm pretty far from civilization where I live, I'd need about 70 miles range for grocery store and town trips).


Thanks for the reply!

[Syonyk]

You need 70 miles round trip or each way?

It's doable on electric, but if you're going to be taking the car in the winter, you'd need 100-120 mile range to make it.  Winter is hard on battery range.

What about a used Chevy Volt?  You can get a 1st gen for $8k-$10k, with 30-40 mile battery range, then a ~35mpg gas engine for the remaining trips.  I don't know your truck details, but I've got a '97 F350 7.3 CCLB, and I ballpark my operating costs at $0.50/mi - the Volt is radically cheaper, even on gas.  We're not quite as rural as you (round trip to town is 20-30 miles depending on where in town we go), but the Volt is closer to $0.05/mi.  A pure BEV would be a bit cheaper, but the cost to acquire a long range one is far higher.

In addition to the savings on taxes, it'd be a ton cheaper to run than your truck for the times you could make the trip in the Volt, and you can stuff an awful lot in if the back seats are folded flat.

[patdavidse]

You need 70 miles round trip or each way?

Round trip, 35 each way.

It's doable on electric, but if you're going to be taking the car in the winter, you'd need 100-120 mile range to make it.  Winter is hard on battery range.

I've read the same, which made me think I'd need something much newer to get to town and back, especially in cold weather (which here in PA is really only 3-4 months of the year).

What about a used Chevy Volt?  You can get a 1st gen for $8k-$10k, with 30-40 mile battery range, then a ~35mpg gas engine for the remaining trips.  I don't know your truck details, but I've got a '97 F350 7.3 CCLB, and I ballpark my operating costs at $0.50/mi - the Volt is radically cheaper, even on gas.  We're not quite as rural as you (round trip to town is 20-30 miles depending on where in town we go), but the Volt is closer to $0.05/mi.  A pure BEV would be a bit cheaper, but the cost to acquire a long range one is far higher.

In addition to the savings on taxes, it'd be a ton cheaper to run than your truck for the times you could make the trip in the Volt, and you can stuff an awful lot in if the back seats are folded flat.

I did consider the volt, however a few things slowed that train of thought:

My first concern was the storage, I need to be able to fill it up with packages. I've never seen a volt or leaf in person, it just seemed like the leaf had more space in the back, and easier to load / unload with the hatch back.

Doesn't the gas motor still need regular maintenance? Oil changes, transmission fluid, coolant, etc.?

The mileage that I use the truck per year (when it isn't actually needed) is probably half my yearly mileage (excluding my post office trips). So the potential savings, even at the 1000% increased operating expenses of my truck, would only equal about $500 per year (or in that ballpark) using your numbers. I don't track my truck expenses well enough to break it down by mile, but you're estimate seems fair.

[JLee]

Also check with your state if there are any other incentives -- e.g. in New Jersey, you do not have to pay sales tax on an EV but you do on a hybrid.

[patdavidse]

Also check with your state if there are any other incentives -- e.g. in New Jersey, you do not have to pay sales tax on an EV but you do on a hybrid.

Thanks for the tip, I did check it out in my research, and the only incentives I could find are for new vehicles (up to $2k), but I couldn't find anything in PA for used ones.

[SweatingInAR]

I am by no means a tax expert, but this sounds like a great idea to me!

I've seen 2 on the last week on facebook (out of NY, so I'd likely have to use the truck to tow it home, I'm in northern PA) for under $4k.

Be careful if you plan to tow a Leaf behind a truck. Read the manual (or other forum posts) about it. Electric vehicles don't have a true 'neutral' and usually have an important footnote about towing. (edit: looks like the consensus is that a 2-wheel dolly is sufficient. https://www.mynissanleaf.com/viewtopic.php?t=8353 )

The only risk I see is that you'll wish you got an EV with longer range!!  A Leaf is perfectly capable of pulling a small trailer, which may be able to carry your pallets if they aren't too heavy. Especially if it's a 1 mile driveway. I use my trailer all the time to pick up things that won't fit inside, or that would damage the interior.

[patdavidse]

I am by no means a tax expert, but this sounds like a great idea to me!

Be careful if you plan to tow a Leaf behind a truck. Read the manual (or other forum posts) about it. Electric vehicles don't have a true 'neutral' and usually have an important footnote about towing. (edit: looks like the consensus is that a 2-wheel dolly is sufficient. https://www.mynissanleaf.com/viewtopic.php?t=8353 )

The only risk I see is that you'll wish you got an EV with longer range!!  A Leaf is perfectly capable of pulling a small trailer, which may be able to carry your pallets if they aren't too heavy. Especially if it's a 1 mile driveway. I use my trailer all the time to pick up things that won't fit inside, or that would damage the interior.

My plan was to rent a 2 wheel dolly from Uhaul. Worst case I can borrow a car trailer, just would prefer to not tank my gas mileage towing a giant trailer in addition to the car lol.

The towing would be awesome, however the pallets are typically in the 1800lbs range. Adding in another 500lbs for a basic trailer, and the sharp grade up my driveway and who knows. If I own one I can certainly give it a go and see how it works out.

Looking on the Leaf Facebook page, it appears that aftermarket batteries are in the works for late this year from a company called Fenix Systems. I doubt I'll need them, but it's nice to know that someone is working on it in case I want to restore it to full life someday since the internet seems to think Nissan won't ever replace the battery for a reasonable price.

[SweatingInAR]

I am by no means a tax expert, but this sounds like a great idea to me!

Be careful if you plan to tow a Leaf behind a truck. Read the manual (or other forum posts) about it. Electric vehicles don't have a true 'neutral' and usually have an important footnote about towing. (edit: looks like the consensus is that a 2-wheel dolly is sufficient. https://www.mynissanleaf.com/viewtopic.php?t=8353 )

The only risk I see is that you'll wish you got an EV with longer range!!  A Leaf is perfectly capable of pulling a small trailer, which may be able to carry your pallets if they aren't too heavy. Especially if it's a 1 mile driveway. I use my trailer all the time to pick up things that won't fit inside, or that would damage the interior.

My plan was to rent a 2 wheel dolly from Uhaul. Worst case I can borrow a car trailer, just would prefer to not tank my gas mileage towing a giant trailer in addition to the car lol.

The towing would be awesome, however the pallets are typically in the 1800lbs range. Adding in another 500lbs for a basic trailer, and the sharp grade up my driveway and who knows. If I own one I can certainly give it a go and see how it works out.

Looking on the Leaf Facebook page, it appears that aftermarket batteries are in the works for late this year from a company called Fenix Systems. I doubt I'll need them, but it's nice to know that someone is working on it in case I want to restore it to full life someday since the internet seems to think Nissan won't ever replace the battery for a reasonable price.

Sounds like a great plan!

I agree that 1800lb is too much for a FWD economy car on a hill ;-)  I get nervous about being able to stop 1000 lb on flat ground!

It looks like you have done oodles of research into this already, so you probably know the rest of this. Regardless, it's relevant, so hopefully it helps someone on the internet:
If you're negotiating price, a handy bargaining chip is to have the seller include their level 2 (240V) EVSE (charger). You should keep the Nissan branded level 1 EVSE in the trunk, and charge at home on 240V if possible. 120V charging is ~78% efficient while 240V charging is ~90% efficient.

A level 2 EVSE should run $200-500 new. If you can do your own electrical work to add a 240V circuit, it's very inexpensive. If not, maybe you have an electric clothes dryer outlet that you can share with the car? Or just live with the 120V charging for a while.

As a second car, 120V charging isn't so bad. The car gains ~4 miles of range per hour of charging. My Leaf is my only car, so I opted to use 6kW charging. A 1 hour bathroom and snack stop at my house can get me 24 miles of range.

[patdavidse]

It looks like you have done oodles of research into this already, so you probably know the rest of this. Regardless, it's relevant, so hopefully it helps someone on the internet:
If you're negotiating price, a handy bargaining chip is to have the seller include their level 2 (240V) EVSE (charger). You should keep the Nissan branded level 1 EVSE in the trunk, and charge at home on 240V if possible. 120V charging is ~78% efficient while 240V charging is ~90% efficient.

A level 2 EVSE should run $200-500 new. If you can do your own electrical work to add a 240V circuit, it's very inexpensive. If not, maybe you have an electric clothes dryer outlet that you can share with the car? Or just live with the 120V charging for a while.

As a second car, 120V charging isn't so bad. The car gains ~4 miles of range per hour of charging. My Leaf is my only car, so I opted to use 6kW charging. A 1 hour bathroom and snack stop at my house can get me 24 miles of range.

I did actually think about that and I'll need to do more research. My electric rate is only cheap if I stay within what my panels can produce. As soon as I start pulling from the grid, the cost goes way up. So while fast charging is great if I need it, the slow charging wouldn't be pulling as much juice all at once so I'm much more likely to stay within what my panels are producing if I only charge it during peak sunlight hours, using the slower charging method. Using only 12 miles of range should mean just a few hours on the 115v charger to get it back up.

With my electric monitoring it should be fairly easy to automate the charging at the outlet level, only supplying charge while I'm producing excess electric. Selling back to the grid at 5 cents per KwH is a loosing proposition given the investment I have in the panels. I'd rather use it then give it back if I can make it productive. It's silly to waste it on a less efficient charging method, but that'll be the most cost effective method I'm guessing.


I've already got 240v out in the garage for the welder, so I'll probably test out both and see what works out in my favor.

I also just found one under 5k, 2012, 61k miles with 12 bars on a replaced battery under warranty. Seems these things are silly cheap around my parts :)

[BicycleB]

If it's as cheap as you say, I think you'd save hundreds of dollars per year. I wouldn't have guessed it was that cheap, but maybe it is. If you do it, let us know, eh?

If I understand correctly, the $2320 can be deducted from your income, but the tax savings would be 2320 x your marginal tax rate. If your marginal federal tax rate is 24%, for example (I speculate, not knowing your filing status, retirement investments etc), tax savings might be about $557.

I don't know exactly how the 5 cents/kwh translates to miles driven, but supposing 2.9 cents/mile to make an example (5% of your earlier deduction rate), "fuel" cost from forgone solar income might be 2320 x 5% = 116. That would produce the following savings:

 700
-116
-----
 584 gas savings
 557 tax savings
-----
1041 savings subtotal

But you still have car costs from the Leaf. At a guess:

180 cost of capital (4500 x 4%)
150 insurance (sounds low to me, but I take your word for it)
100 tires & repairs (just spitballing, maybe I'm guessing high)
  50 registration (may not apply in your state, just using the number from my state)
____
480 costs subtotal

Presumed profit:
1041
-480
-----
$521/year

Maybe work the example with more exact numbers from your case?

Consider though that if your situation changes, you may spend the money and not get permanent benefits. Then perhaps you would lose money instead of gaining. I guess it depends on how long you will drive it as you currently plan, as well as whether the costs are as low as you plan. Good luck!!