Would it be a mistake to purchase (not lease) an EV?

[Ohmmm]

First, thanks for this forum and all that I've already learned about the FFE and electric cars more generally. Any advice on my situation would be greatly appreciated.

I'm in the market for a new car and am leaning towards a Ford Focus Electric. (The Leaf seems like a nice vehicle, but the FFE appeals to me more.) I was all set to buy one, until I read various articles saying that it would be better to lease an EV given expected improvements in technology, etc.

The quote for purchasing I'm considering right now is $21,300 after everything ($28,200 for an FFE sticker after incentive; add California's 9% sales tax on the pre-incentive price and DMV fees, then subtract $7500 + $2500 in federal and state credits). This seems like a reasonable price, especially given that the MSRP was nearly $40K about a year ago.

The price for a 3-year lease would total $9,000 ($11,500 in total payments minus California rebate).

So buying up front would essentially be paying $12,000 at the onset for the rest of the car. (The residual on the lease + sales tax would be about $5,000 more.) Is that a terrible idea? Will cars five years from now make today's EVs look like Model Ts? I'm used to keeping my cars for a while (the car that's being replaced is nearly 20 years old, for example). How long do you plan on keeping your FFE before replacing it?

Thanks!

 

[Gigi]

It may depend on your federal tax liability. If you have to give the feds more than $7,500 after deductions and other credits next year, then having this tax credit may make purchasing worthwhile. The federal credit doesn't roll over to the next year if you can't take all of it. It's use or lose, as I understand it.

I leased because my tax liability isn't that great. Leasing also affords me the opportunity of turning the car back in after three years and either buying or leasing another if something better comes along. Fortunately, the $5,000 Georgia state tax credit applies to leases as well as purchases and it does roll over for as many as four years, if I remember correctly.

This is my first experience with leasing a vehicle and my decision to do so was based on tax implications and being in the midst of rapidly changing technology. My past three cars, I have driven cars for more than 10 years and 220,000 miles each. If the FFE's technology is still cutting edge three years from now, I'll pay the residual and drive it 'till the wheels fall off. If in three years they develop a battery that charges quicker, weighs less, and goes further and they put more options on the car such as moon roof, memory seats, and a few other odds and ends, then I may want to take the upgrade and start the car payment cycle over again.

 

[v_traveller]

The quote for purchasing I'm considering right now is $21,300 after everything ($28,200 for an FFE sticker after incentive; add California's 9% sales tax on the pre-incentive price and DMV fees, then subtract $7500 + $2500 in federal and state credits). This seems like a reasonable price, especially given that the MSRP was nearly $40K about a year ago.

The price for a 3-year lease would total $9,000 ($11,500 in total payments minus California rebate).

Wow. Got mine exactly a year ago... Back then for me, leasing was a no-brainer since the purchase and lease incentives were identical, but now with that $6K rebate on a purchase only, I'd strongly suggest you buy it. If my beloved FFE got totalled today (and I survived), that's what I'd do. If there's something better for you in three years, I don't think you'll have a problem trading in the FFE for $12K ($21K - $9K), especially when everyone that leased a 2014 will have residuals of $14K-$16K. Sweet!

 

[michael]

I would still lease.

Ask yourself...is there any EV you might have bought three years ago that you would still want to keep in preference to getting something new at today's prices?

Suppose you had purchased an FFE three years ago...today you can buy essentially the same car, brand new for $21,300 (using your own numbers). Wouldn't you rather do that than keep the old one? I doubt you could sell a three year old FFE for that much. There's one on ebay right now 2012 with 10K miles, $19.9K OBO. No takers.

Remember that each time you turn-over the car, the government throws $10K at the deal. And every time Ford cuts the price or throws cash at the deal the value of used cars goes down. And while Ford has failed to improve the FFE over that time, Nissan and Chevy have made moderate upgrades.

 

[Ohmmm]

Thanks everybody for the advice.

Gigi: I do have over $7500 in federal tax liability, so I will be able to take full advantage of it. I have to say, that Georgia tax credit is pretty impressive.

v_traveller: Thanks for the input. Not that it affects the final decision, but the way the dealer explained it to me, the $6K incentive applies to both purchases and leases. It's just that for leases, there's a $10,750 incentive right now, which is the original $6K plus $4750 of the federal tax rebate, with the leasing company taking the rest. (From reading through the forums, though, it looks like people have been getting nearly $11K in incentives for leases since last fall, while the $6K for purchasing is fairly new.)

michael: Interesting points. Let me try to answer your question.

Suppose you had purchased an FFE three years ago...today you can buy essentially the same car, brand new for $21,300 (using your own numbers). Wouldn't you rather do that than keep the old one? I doubt you could sell a three year old FFE for that much. There's one on ebay right now 2012 with 10K miles, $19.9K OBO. No takers.

Unfortunately I wasn't following the EV market three years ago, so I'm not sure what I would do. Given that the price of an FFE has fallen by nearly the amount of a lease, it certainly seems like the right thing to do would have been to lease then. As for resale of the FFE in three years, shouldn't the right benchmark be $12K, not $21K, since that's what I'd need to make it a better decision than leasing right now? Of course, I'd be intending to keep the car for my own use, and not try to turn a profit.

More generally, I wonder how long the argument that it's better to lease electric cars will last. If I lease, in three years, will people still be saying, "It's better to lease since technology is still improving?" I'd rather not go through too many more lease cycles that way.

Still thinking about it. I guess I'm hoping that it's the kind of decision where if I tell people I purchased, they'll say, "Interesting, that's not what I would have done", instead of "Geez, what a moron."

 

[michael]

As for resale of the FFE in three years, shouldn't the right benchmark be $12K, not $21K, since that's what I'd need to make it a better decision than leasing right now? Of course, I'd be intending to keep the car for my own use, and not try to turn a profit.

More generally, I wonder how long the argument that it's better to lease electric cars will last. If I lease, in three years, will people still be saying, "It's better to lease since technology is still improving?" I'd rather not go through too many more lease cycles that way.

Still thinking about it. I guess I'm hoping that it's the kind of decision where if I tell people I purchased, they'll say, "Interesting, that's not what I would have done", instead of "Geez, what a moron."

The 21K referred to the person who bought three years ago when the sticker price was 40-odd K. My point was that very car isn't now worth the $21K for which one can apparently buy a brand-new one.

Similarly, the 12K would apply to someone buying today for someone looking at the car which you can now buy for $21K. Do you think a three year old car that when new was a 70 mile car will still be worth 12K then? I sure hope not....I hope we can all buy 150 mile cars in three years and nobody wants a 70 mile (less three year's degradation) car.

At least that's the way I'm looking at it.

 

[WattsUp]

Still thinking about it. I guess I'm hoping that it's the kind of decision where if I tell people I purchased, they'll say, "Interesting, that's not what I would have done", instead of "Geez, what a moron."

Fwiw, I purchased my 2013 FFE a little over a year ago now. When I ran the numbers, it came out costing me (per month) about the same as I had been shelling out to drive my 2000 Honda Accord ICE around (meaning, the total cost of ownership divided by the number of years of ownership). The Accord, even after 14 years, was still costing me well over $300/month ($25000 purchase price, $2000/year gasoline) -- and that's not including maintenance. (I'm leaving insurance costs out for the purposes of this comparison.)

I computed my cost to purchase and drive an FFE for an "example" 5 year period of time. Assuming $10K of state and federal incentives and $10K saved on gasoline (over the 5 years), that lopped $20K off the overall cost (compared to continuing to drive my Accord). In the end, the monthly cost for the FFE came in around the same as my Accord. That was my decision moment... I was not going to lose anything, but would gain an EV.

But... that's not even considering selling the FFE at the end of the 5 years. If I do that (for which I guessed a sale price of $10K might be a low-ball estimate) I realized that I could actually come out ahead in terms of monthly cost (compared to continuing to drive my Accord).

I did consider a lease, but at the time it seemed to be wash compared to buying, plus the lease would limit my mileage. I also just have a bias towards owning things, rather than renting them. It may be irrational. In any case, I decided to purchase. Aside from missing out on the recent $6000 incentive (I did receive a $2000 incentive at the time, but can't win them all), I have been very happy with my decision.

My next car will be electric too. Good-bye ICE.

 

[WattsUp]

I hope we can all buy 150 mile cars in three years and nobody wants a 70 mile (less three year's degradation) car.

Lots of people always want used cars, and always have. High school and college kids, people looking for some cheap reliable wheels, etc..

The thing about used EV is that, once people realize that electric cars, even aged ones, are supremely more reliable and way cheaper to operate than aged ICE cars, I think they will come to be preferred in many cases... meaning, for people whose lifestyles fit the EV range. I'm hoping many people will come to see electric cars, including used ones, as the bargain they are... since the typical daily range for most drivers is 30 miles or less.

I mean, if I were a student, I think I would jump at the chance to have an EV as my around town wheels. No gas. No maintainence.

 

[michael]

I mean, if I were a student, I think I would jump at the chance to have an EV as my around town wheels. No gas. No maintainence.

My experience is the opposite. At first my daughter was very excited about driving the FFE, but she found she couldn't change plans, go somewhere because a friend called. She almost ran out of power twice, now doesn't want to drive it at all.

Similar story a friend's son. He's a total technophile and environmentalist. I tried very hard to pitch the FFE to him. He went with a Volt instead for the same reason....gave him the freedom to be spontaneous. Kids don't want to be confined.

By contrast the FFE works for me because I have a fairly well defined commute, and I'm willing to put up with the rare necessity of finding a place to charge out in the wild.

 

[WattsUp]

My experience is the opposite. At first my daughter was very excited about driving the FFE, but she found she couldn't change plans, go somewhere because a friend called. She almost ran out of power twice, now doesn't want to drive it at all.

Well... for kids that stay within a 30-mile or so radius of home then. But, I guess all kids are different. (I would also think parents might "like" to have their kids drive a car with a limited range.)

When I was in college it was rare than I went more than 15 miles away.

 

[Ohmmm]

Thanks, michael and WattsUp. Yes, I'd think that parents would view a limited range as a feature, not a bug. Maybe parents of teenagers should be the target market for used EVs.

I think I share WattsUp's bias towards owning things. I agree it may be irrational (as WattsUp said); I'm just hoping in this case it isn't too irrational if I decide to go that route.

One general question about leasing: Often people say you shouldn't lease if you plan on driving a lot of miles, which of course makes sense, since you have to pay extra for them. What about if you drive fewer miles? If you only drive 6,000 miles a year, for example, are you paying for depreciation that you aren't using?

Thanks for the discussion!

 

[jmueller065]

One general question about leasing: Often people say you shouldn't lease if you plan on driving a lot of miles, which of course makes sense, since you have to pay extra for them. What about if you drive fewer miles? If you only drive 6,000 miles a year, for example, are you paying for depreciation that you aren't using?

Yes, you don't get any credit at the end of the lease for unused miles.

 

[dmen]

I would (and did) purchase too.

I bought at full $41000 just before the first $2000 incentive came out (d'oh!), when no one had them on the lot so you pretty much had to ask for it to be ordered or traded, and pay what they asked. I qualified for full tax credit and took IL's $4000 rebate, for a total of $11500 back. Trade in pretty much covered sales tax, so it's costing me about $29000. I knew full well I wasn't getting a great deal but I needed a new car then, and I was ready to switch to electric. I have to try hard to drive 8000 miles a year. I expect the car to be usable for me for 100,000 miles, or 12.5 years. That ends up like $193 per month of ownership, though it feels like a lot less since I'm now paying $20/mo for electricity vs $130/mo for gas. With current incentives it'd be that much better- I'd pay 31000 before rebate/credit, or 20000 after, and be paying 133 per month over life of ownership. And I've definitely thought about the teen car option. My son will be of driving age right around the time I expect my car's range to be down to 80-90%, and I think being limited to ~55 miles round trip is not a bad thing for a teenager.

The thing is, sure you can get the newest tech every 3 years with a new lease and probably pay only marginally more than you would by buying and sticking with today's tech. But a big part of my motivation in going electric is wasting as little as possible- not just money but resources. Replacing a perfectly good car just because there's something better out there is the definition of wasteful. If 60-70 mile range doesn't really work for you, you should wait til the range you need is available and affordable. But if it does work for you, then you probably don't need a 150 mile range EV in 3 years. And no one but Tesla is making even the faintest whispers of affordable 150 mile range being on the horizon/next 3 years.

 

[WetEV]

I would (and did) purchase too.

Me do. Twice, as of today. (But yes, a Leaf both times). In a different place, or with different needs, a FFE would have been the choice, and/or a lease. I like both cars.

A lease is probably more expensive, and lower risk. If risk bothers you, lease. What if... better batteries are available? What if I need to dump the car at end of lease because I've lost my job? Etc.

And no one but Tesla is making even the faintest whispers of affordable 150 mile range being on the horizon/next 3 years.

Nissan is as well. There are apparently test cars running around. A survey to owners asking what they would pay for double the range. And other hints. I'm not sure exactly what to make of it all.

 

[EVA]

Oddly, I did it both ways, purchased the first FFE and then leased the second one. I absolutely lean the purchase don't rent or lease direction.

I went into the first purchase considering 0% financing for 60 months, a bunch of money off due to incentives, and the $7500 federal tax credit and a rebate in Illinois. The final cost was within spitting distance of the Focus Titanium we bought a year before.

An accident made me rethink the whole equation. Nobody was seriously hurt when my son totaled the car. So we now needed to get a new FFE. We loved the car that much, we were going to buy it again.

Went to the same dealer and looked at both buying and leasing. At that time the lease deals were way better and the real deciding factor was the question of resale and battery technology in three years.

For me, lease has been a much smarter way to go. If you think about it, we are all early adopters of this technology. There was a lot of progress in the past three years, there will be a ton of progress in the next three years. There will also be a lot more competition in this area than before. I'm not expecting a huge change in battery technology, just more efficient everything, and more charging stations. In three years, my current FFE will probably not be worth much money. With a lease, I don't care. If something new and better comes out in three years, I can get one of those. If cars are the same, then I can just get another FFE. Pretty simple to me really.

 

[michael]

Another point in favor of leasing....just yesterday my wife was involved in a fender-bender type accident. Repairs will be a few $1000 covered by the other person's insurance and the car will be OK...but....now the car has an "accident indicator" on the Carfax. It's resale value has dropped like mad. Not my problem...it's going back after the lease. But if I owned it, I would be stuck with a car that's hard to sell.

 

[Ohmmm]

Okay, just to close the loop, I ended up buying it. It was probably the heart overriding the head on that one. Still, I figure if I keep the car for at least 6 or 7 years, buying or leasing will be about the same, and any longer it will be better to have bought.

So far, I love the FFE. So many features (I haven't even discovered them all), so quiet, so smooth while driving. After having had a gas-thirsty car for the last 16 years or so, it's refreshing to have zero tailpipe emissions.

Why doesn't Ford try to sell more of these? At their current prices, I think it competes extremely well with the LEAF. Ford could be selling five times as many as they are.

 

[EVA]

Congratulations Ohmmm - the car is a lot of fun to drive. I bet you become more Zen like driving and make your passengers happier in the car. Shooting for the 100% regen at every braking will make everybody happy.

Never look back on your choice to purchase. Enjoy the car.