That might sound like an odd suggestion given my usual positivity towards alternate fuelled vehicles and the recent increase of new registrations in this category.
However, according to the February 2017 issue of What Car? Magazine, the top four worst depreciating cars are all electric powered and the top two are big sellers – the Nissan Leaf and Renault Zoe. After 3 years and average mileage, the Leaf is worth just 16% of its original price. As a comparison, the Nissan Qashqai keeps around 40% and the best cars for retaining value are over 60%.
Why are electric cars so poor in this regard? In short, it’s due to low demand on the used market which could be due to concerns on the part of buyers over the reliability of the new battery technology when the vehicle is out of warranty, future resale values and the usual worries over charging points and range. Also, by the time the car is 3 years old, there’s the possibility that recent battery upgrades will be such that the relatively new car will be obsolete. Why get a 3-year-old car with an 80 mile range when there’s a brand new, warrantied version that does 250 miles on a charge? All of this means that the used EV is not worth much in hard cash.
What’s the answer if your driving profile does suit current new electric vehicles? It could be leasing.
With a lease, someone else (the finance company) calculates the drop in value and your monthly payments meaning that the future value is irrelevant to the individual or business that takes the lease. Of course, the more value the vehicle is expected to lose, the higher the payments but that’s all in black and white from the start and you can work out your total cost of ownership including recharging to see if the move to green adds up.
The situation could change in a few years’ time as the reliability becomes known, the technology becomes cheaper and if the improvements in battery range become steps rather than leaps. However, the general advantages of leasing – cash flow and predictability will remain. For now, though it seems that leasing wins hands down for this type of vehicle.
If you’d like to know more about how vehicle leasing works and how it could work for you, please get in touch. If you think others would be interested in this article, please share it.