What am I missing? (EV Car Lease)

[slush]

I have never, ever, considered a car lease. So please scream at me if I'm missing something here.

I traded my gas guzzling DD sports car last summer for a Prius. Love it! My wife is driving a V6 that gets about 20mpg. I've been looking for a way out. She strongly wants something with modern safety features, such as side curtain airbags. I've tried to push for older Civics, or even the first-gen Honda Insights that I love, but this requirement has crushed those options.

So here we are, with a V6 gas guzzler that is driven about 5000 miles per year (~20mi per work day) almost entirely for work commuting. The Prius gets the majority of our luxury miles.  The alternative for leasing an EV has come up. As stated, normally wouldn't consider, except the incentives are ridiculous.

Current Car:
$11,500 Value
$1,000 Gas/Year ($3000 for 3 years estimated)
$500 Maintenance/Year
$4000 Estimated Depreciation over next 3 years

Leased EV:
$1000 Down + $1000 Taxes + $199/mo for 36mo ($9164 total price)
$0 Gas for 3 years (Assuming minimal electricity cost of charging)
$7000 In Rebates (State and Local, submitted after purchase/lease. I've confirmed all are still well funded. Does not include federal rebates that the dealer takes.)
Therefore, net lease cost of $2164 for 36mo

So, what am I missing here? I would have no intention of buying this car after the lease term. I could use the proceeds of the sell of the V6 and pay down a significant chunk of my mortgage or re-invest. If we need a second vehicle (hopefully not) after 3 years, could simply buy a used Prius outright then with the proceeds.

Any thoughts? Any hidden gotchas I don't know about? Am I being completely insane or are the rebates making this too attractive? I find this intriguing b/c the cost/mi and cost/mo are significantly less than our current car. I don't have to consider depreciation, which is especially attractive because I hope to move to a metro area in the next few years where we may only need one car.

[seattlecyclone]

I think it's wrong to assume zero charging cost, unless you've got some sort of free charging station already lined up at work or elsewhere. Electricity is cheaper than gasoline, oftentimes very much so, but it still costs money.

Even so, a total vehicle cost under $1,000/year is nothing to sneeze at.

[slush]

I had a feeling that was a mistake. It will be charged on a 120v line. I would not install a 220v at my house. So you're right, 8-10 hours of charging per night will have cost.

I am on an energy saving kick at my house, so I'm somewhat expecting I'll see no net electricity gain, but that's a different roll-up.

Btw - Seattle is the metro area I'd like to move to. So if we still had the EV, the many charging stations there would be a plus.

[Russ]

electricity cost will be about 1/3 of gas so you can add back in another $1k.
do the rebates still count if you just lease instead of actually buying the car?
will you be on the hook for any repairs during the lease? (I don't know how these usually work)

[slush]

Yes, the rebates would still count if I bought. The purchase price is ridiculous on these vehicles though. In the neighborhood of $32k (I would also get a $7.5k rebate on my taxes for buying. Doesn't seem mustachian to me.) NOOOO thanks. Also since I may not need a second car in the future (6mo-3yrs), this seems like a nice way to avoid depreciation while getting safety and saving a ton of money.

I don't know about repairs. I know maintenance is. I don't think repairs are on me. I am not a lease expert either. One reason i'm asking here. :)

If I was buying, I'd look for a Gen 2 or 3 used Prius instead.

[Russ]

No, I meant to make sure that the rebates weren't for buying only, so that you could still use them on the lease. Sounds like you can, cool

[slush]

Yes. Confirmed that the rebates work for lease vehicles too. It states it on their website and paperwork (State and County). Also being advertised/pushed as such by the dealership, of course.

[seattlecyclone]

One other thing to check on would be to see how your insurance rates might change. It seems likely that the lease terms would require you to take out full coverage on the leased car.

[Derek]

There is a big thing you are missing, you will not get the $7500 rebate, it goes directly to the lading company.  If you go to the Nissan website you can get the details:

Excludes taxes, title, and license. $1,999 initial payment required at consummation. (Includes $1,800 consumer down payment, $199 first month payment.) (INCLUDES $8,150 manufacturer's rebate applied to $199/Month lease. Offer valid only when financed through Nissan Motor Acceptance Corporation.) Subject to residency restrictions.

The $8150 rebate includes the $7500 tax rebate.  Do not trust the dealer for info, they will lie to get you to buy it.  EV world wrote about this:

However, if you lease a Nissan Leaf, then the full tax credit offsets the amount you owe during the lease period. The credit gets paid directly to the lease financing company and is factored into the lease payment, so no need to worry about filing it on your own return. Thanks to the credit, Nissan offers a lease deal on the Leaf for $199/month, for 36 months, with $1,999 due out of pocket. Ford and Chevy are making similar offers on their electric vehicles. If you averaged in the required down payment, then your true lease payment would be $255 per month. If you spend over $250/month on gas with a traditional vehicle, then it’s possible you could wipe out the entire cost of the lease and added costs with the money you’d save on gas.

Sorry to deliver the bad news.

[slush]

Actually Derek, no bad news. I knew I wouldn't get the $7500 federal rebate. The $7k rebates I stated are $2500 state and $4500 county. I have verified these are paid out for leases. All I do is submit application and lease agreement and it's paid out to me as long as funding remains (both offices say there is a lot remaining). It's a "clean air" initiative.

Agreed on insurance rates, but since I have full coverage on my current vehicle that shouldn't net much cost (I have been meaning to investigate changing that coverage though). I will call my insurance company to verify.

The $199/mo lease term doesn't include state tax/title though. So it's actually $217/mo. (But I do pay that on my current car now, and I didn't include that above.)

[tennisray]

You got it.  Go for it.  I own a 2011 Nissan Leaf and it is a great car for me.  As long as you are SURE that the car will work for your commute, then get one.  The deals like this sound too good to be true, but they have been discussed plenty:

http://slickdeals.net/f/6559500-georgia-residents-make-money-and-lease-a-new-2013-nissan-leaf-s-for-235-mo-with-vpp-or-259-without-vpp

I think a lease is the way to go with EVs.  I wish I hadn't purchased mine.

My electricity charges are pretty negligible, relatively speaking. I average paying $1.60 for 100 miles.  I rarely get close to driving even 1000 miles/mo, so it is less than 15$ for me.

[slush]

I saw that on SD too. :)

It's the local rebates that make this a mustachian deal. The car I'm looking at is the cheaper (than Leaf) Fiat 500e. It has ~80mi range, and I only commute 20mi per day. It'll recharge at a rate of 3mi/hour on a regular 110v line while I sleep.

I'm calculating significant profit after 3 years, especially once factoring in depreciation. Hence the reason of this thread!

[Derek]

This is a great deal. If I could get such a deal in Missouri I would get it.

[Jamesqf]

I had a feeling that was a mistake. It will be charged on a 120v line. I would not install a 220v at my house. So you're right, 8-10 hours of charging per night will have cost.

A point here: the charging cost depends on the amount of energy going into the battery, not the charging rate, so 110 vs 220 makes no difference to charging cost.  (Aside from any cost for installing a 220 charger.)

[GregO]

Where do you live that you are eligible for so many rebates?  I live in California and there is a $2500 state rebate, but I'm not aware of any others.  But after reading your post, I am going to have to look into it too for my family.  I ran some numbers and it looks like we'd have to drive about 1,000 miles a month for it to pay off.  We drive close to that, but I'm not we will average that much for it to pay off in the end.  But it's definitely worth looking into.

As for your case.  It looks like it's a pretty good deal for you, but it looks like you should do more investigation into what it will take to be able to charge it.  You will have to look into it with your electric company to see how they bill you, because the cost will be significant.  And do a little research about how long you would have to charge the car if you only plugged it into a regular wall outlet and didn't install a 220V charger.  Your looking at close to 24 hours to fully charge the battery.

I think you're on to a good idea, especially with all those rebates.  But make sure you do a little research and know what you're getting yourself into.  It will require some changes, I figured that out when I looked into an EV a year or two ago.

[Tami1982]

Leased EV:
$1000 Down + $1000 Taxes + $199/mo for 36mo ($9164 total price)

Is the $1,000 sales tax?  I was pondering doing this as well.  In Washington there is no sales tax on EV which makes it even more appealing.

[CanuckExpat]

Hi Slush,

Sounds like you are considering the right things. It does sound like the rebates are what make this a good deal (the whole point of incentives after all). In terms of things you are missing, you might want to check if there are any hidden fees in the lease, or extra charges for driving "too many miles". The last point might not be as big a concern in a range limited vehicle, but it is worth it to know and check how it fits in with your usage.

I guess I'd have to say, did you also consider the cost compared to buying a (tandem) bicycle? :)

Other than that, good luck and hope it works out. Keep us appraised.

[wtjbatman]

It's the local rebates that make this a mustachian deal. The car I'm looking at is the cheaper (than Leaf) Fiat 500e. It has ~80mi range, and I only commute 20mi per day. It'll recharge at a rate of 3mi/hour on a regular 110v line while I sleep.

Do you commute 20 miles one way or 20 miles total? 20 miles total you're looking at around 7 hours of charge time which is obviously doable if you sleep like a normal person. 40 miles a day? That's over 13 hours of charging! Yikes! Better make sure it's plugged in as soon as you get home, and stays plugged in.

I'd love to get an EV to save on gas, but with my 50-60 mile commute, and working 12 hour shifts... it's literally impossible for me to recharge my car in the time I have available with a standard outlet. And I only rent, so I'm not exactly going to pay to install a fast charger in my landlord's house :)

[slush]

Hi Everyone! Thank you for your replies. Here is the update. I got the car! I went to the dealership convinced I was missing something. We ran the numbers multiple times, and the only "gotcha" was a return fee on the lease of $400. I didn't account that the $1k down included first months lease fee, so it was a wash.

To the WA poster, I have a friend in Seattle who is looking into similar deals but cannot find quite the same match...yet.

They also have rebates on the 220v car charger. So I purchased one of those and am going to have a contractor friend wire in a line in my garage. So now I can get 4hr full recharging. SCE also has a deal that if you put a meter on this one line, only for EV charging, they will only charge you $0.11 per kWh. That's lower than my Tier 1 charging.

So basically, all of the numbers in my above posts were accurate. The only risk at this point is that the rebates actually come in. I am submitting paperwork today, and should have checks in my mailbox soon.

I still can't believe leasing could be mustachian (cycling would be better, but not an option for me). I project a net operating savings of $1600 over 3 years, plus the sale of the existing vehicle of ~$12k, plus the depreciation I will be able to avoid (~$4k). I love it! Also, I should note, the car is a complete blast to drive. It's a single speed transmission, super impressive torque, and it's fairly roomy for the two front seats despite it's size.

[kudy]

What state are you in?

[slush]

California

[payitoff]

thanks for this thread! imight revisit leasing options because of this, plus i love the Prius trunk space,

[slush]

I love our Prius but we paid cash. Generally I would not recommend a lease. As noted earlier, this deal seemed to be the exception.

I'll keep you all updated. I'm just waiting for rebate checks now.

[TreeTired]

Therefore, net lease cost of $2164 for 36mo

If that calculation is accurate, then you are paying $60 per month!!  What can you lease for $60 per month?   Any fuel savings over $3.25  (or whatever) per gallon equivalent will be pure gravy, and your cost of electricity should be far lower than that.   It appears they went a little overboard on the incentives.   I would LOVE to own a Tesla.  I hear they are freaky fast -  like 12.5 secs 110 mph  in the  1/4 mile, which beats just about everything on the road except supercars.

[arebelspy]

Hmm.. I have no place to charge one (have a condo with a parking spot, no garage), otherwise I'd very much like to do something similar.

Very well played.

[slush]

An update for those interested.

All rebates have been processed and proved to be legit! I've switched my electricity plan for cheaper off-peak / higher on peak usage. I've been on a conservation kick, and our electric bills are down 66% year over year. I pay $0.025/mi if charged off peak, and $0.035/mi at regular rates. This is usually $2.50 per 100 miles, one full charge for me. Everything has pretty much fallen into place as I lined up in my trade study above, so I'm content with the decision! Each trip I get a report on my mpg-e, i regularly get 135-144 mpg-e. :)

Selling the old car was the kicker. I found that most people are broke, so selling anything over $10k is a waste of time. I didn't want to accept half now and take payments for the rest. I ended up settling at Carmax for only $10k, but the math still showed net gain for me.

[TomTX]

I had a feeling that was a mistake. It will be charged on a 120v line. I would not install a 220v at my house. So you're right, 8-10 hours of charging per night will have cost.

I am on an energy saving kick at my house, so I'm somewhat expecting I'll see no net electricity gain, but that's a different roll-up.

Btw - Seattle is the metro area I'd like to move to. So if we still had the EV, the many charging stations there would be a plus.

I know you went ahead later, but wanted to be clear for other readers:

Virtually all houses in the US with electricity already have 240V*, it would be cheap to add a dedicated 240v/40A breaker and outlet in the garage. Should be a few hundred dollars for an electrician. Or DIY with a buddy who has put in a breaker before.

*If you have central air conditioning, you have 240V. If you have an electric water heater, stove, dryer or central heat, you have 240V. Even if you don't have these, you probably still have 240V available in the breaker box.

[slush]

You're right. I actually did put in the 240v line with a 40amp breaker with the help of a friend. It was easy. It cost me around $150 for materials. I ran it through a conduit as I have a finished garage.

[BigRed]

Which California county are you in that has a $4500 rebate for EV?

[slush]

It's actually a section of LA County. See PM.