More People in the US are Leasing Electric Cars Than Buying Them
【Summary】A new report from Bloomberg New Energy Finance revealed that a whopping 80 percent of EVs in the US are leased.
Leasing may not seem like a rewarding option for individuals who depend on their car every day. However, times are changing; and so are the ways people own vehicles.
A new report from Bloomberg New Energy Finance revealed that a whopping 80 percent of EVs in the US are leased. For plug-in hybrid units, roughly 45 percent are purchased (55 percent leasing rate).
Why are US-based individuals more inclined to lease an EV, when cost of ownership for such cars is reasonable and economical? Find out below.
Benefits of Leasing EVs
For tech-savvy individuals, leasing offers a plethora of advantages and benefits. At the moment, automotive components related to EVs, such as power cells, driverless platforms and charging capabilities, are rapidly being developed. Because of this, such technologies present in EVs on the road today will quickly become obsolete.
Furthermore, rapid technological development can contribute to a decrease in cost for automotive parts. For EVs, batteries are roughly 20 percent cheaper to acquire today, compared to five years ago – according to Bloomberg analysts.
"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," said Steve Center, vice president of American Honda Motor Co., at the 2017 New York Auto Show.
"Think of your cell phone."
Leasing rates for EVs range between $100 to $800 per month, depending on the type of unit, model, package deal and other terms of the agreement. Since EVs are prone to going obsolete after three years, purchasing one (and keeping it current) would end up costing substantially more money.
The numbers aren't even close. In nine years, a private EV owner would have spent more than $90,000 on three separate car purchases (at a rate of $30,000 per unit). Over the same period, an individual leasing an EV would have spent $37,800 (at a rate of $350 per month).
It is also important to highlight that some EV leasing package deals come with lucrative perks, which can offset maintenance and cost of ownership.
Curbing Depreciation and EV Regulations
Taking the information above into consideration, it turns out that opting to lease an electrified car is a very cost-effective solution for avoiding depreciation.
According to Black Book, a company that specializes in automotive analytics and reports, EVs sold in 2014 come with a staggering 23 percent depreciation rate. By comparison, gas-powered cars hold a 41 percent depreciation rate (over the same period).
"The lease rate for the country's entire fleet hovers around 30 percent. (There's one blank spot in the data: Tesla does not divulge how many of its vehicles are leased, and since it sells its cars directly rather than through dealerships, the company doesn't have to)," explained Kyle Stock from Bloomberg.
Lack of supporting regulations in the US surrounding EVs are contributing to this unforeseen trend. Current guidelines that are designed to provide thousands of dollars in savings (federal and state incentives) for future EV owners failed to include pre-owned vehicles.
Michael Cheng is a legal editor and technical writer with publications for Blackberry ISHN Magazine Houzz and Payment Week. He specializes in technology business and digesting hard data. Outside of work Michael likes to train for marathons spend time with his daughter and explore new places.
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