Five Reasons Leasing a New EV Makes More Sense Than Buying

Leasing a new battery-electric vehicle (BEV) can be a sensible financial decision for those who have decided to acquire one. We have facts to support this claim, not just opinions. BEVs differ from conventionally-powered and hybrid-electric vehicles in key ways that means leasing can work better for consumers. 

Sales growth for electrically powered vehicles in America has now stagnated for about five quarters. The EV market share of new vehicles sold leveled off at around seven percent after many years of rapid gains. This plateau came on the heels of shortages due to supply chain issues and forced closure of factories for health reasons. Those impacts had artificially constrained supply and made any vehicle a rapid seller. Now that EVs are available from inventory from all major brands (including Tesla), they are piling up, gathering dust, and starting to look like discount magnets to dealers and manufacturers. "Hey Tony, go tie some balloons to that 2022 ID.4."

Here are the reasons why leasing an electric vehicle can work well or better than buying one. 

1) EVs Are Driven Far Fewer Miles Than Conventionally-powered and Hybrid-electric Vehicles
Battery-electric vehicles have been proven by researchers to travel far fewer miles on average than conventionally powered and hybrid-electric vehicles. For example, a study by iSeeCars revealed that Volkswagen ID.4 owners only average 8,336 miles per year. Ford Mustang Mach-E owners only average 9,044. These EV miles per year numbers are dramatically less than the average for all cars. Driven miles are a key consideration when leasing. While many lease deals seem like a very good deal financially, over-driving the allowable miles on a lease can sabotage that good deal. Miles in excess of those permitted by the leasing agreement tend to rack up steep added costs for the lessee. Since EV owners use them to travel far fewer miles than conventionally powered and hybrid-electric vehicles, the lease agreement is much more likely to cover all the used miles. Check your contract for the allowable miles carefully. 

2) Leases Are a Hedge Against Steep Depreciation and Automakers Going Out of Business
While the shortages were impacting the market, used cars held their value very well. Much better than during normal periods in the used automotive market. However, that has ended abruptly, and EV owners are now finding that their EVs have lost ridiculous amounts of value in a very short time. We are in a correction period right now with new EV prices dropping sharply and incentives piling up. That has put downward price pressure on EVs. Leasing allows an owner to hedge against depreciation. Leases are, in effect, a fixed cost of ownership, and depreciation is set up-front. You know exactly what the residual value will be at the lease end. Most lease contracts allow the lessee to either turn in, or buy out the leased vehicle at lease end. If the residual value favors the lessee, they can buy the vehicle at a fair price. If depreciation means the cost is out of sync with the market, the lessee can simply terminate the lease according to its contract. 

In addition to hedging against normal depreciation, leasing helps ensure that an EV owner won't get stuck with an EV made by an automaker that has gone out of business. Fisker recently moved toward insolvency filings, leaving owners stuck with vehicles they may not even be able to find parts for. Losses by Rivian and Lucid are also quite concerning. Polestar has been separated from the Volvo brand in a move that may worry owners.

3) Leases May Favor Some EV Shoppers and Models When It Comes To Federal Tax Incentives
Investors.com calls the federal tax incentive on a leased vehicle “The EV Lease Loophole.” Some vehicles and some buyers may be able to leverage the $7,500 incentive even if they would not qualify if the transaction were a conventional purchase. The federal EV tax incentive is a nightmare of a social engineering project gone off the rails, but there is money there. Your dealer can help explain the specific situation, but the incentive will be applied at the time the lease is started. For many, leasing an EV may mean more incentives. Take a look at our top-of-page image for just one example. One word of caution - Be aware that some shorter-term leases advertised by manufacturers may not qualify. Again, speak to your dealer and read your contract.

4) People Who Lease EVs Have Zero Concerns About Battery Life
If you are thinking about leasing an EV you may have noticed the debate ongoing about EV battery life. Your author feels it is overblown. EVs come with long warranties on the traction battery, so simply don’t own one outside of that warranty. Problem solved. One simple way to accomplish this is to lease. No new EV lease is longer in duration than the warranty on an EV battery. By leasing, you ensure you will never be responsible for the cost of an EV battery replacement. 

5) Leased EVs are Future-proofed Against Important Technical Changes About To Happen
For those who will opt for a non-Tesla EV, roughly half the EV shoppers in America, a big technical change is about to occur. The port and plug used to charge the EV are going to change over the coming year or two. The old one is going away, and as we go forward, only the Tesla-style NACS charger will be used. That means the EVs with the older style are about to become obsolete. They will be stuck using adapters for the life of the vehicle. What a hassle. The adapters are already being recalled over safety concerns. Leasing an EV means you can just ignore this concern because by the time the change is fully underway, your lease will be up, and your next EV will have current-day charging technology, not the old abandoned standard that non-Tesla EVs are shipping with right now. 

The charging standard is not the only technology shift underway. Tesla is constantly changing up its battery technology and other designs. This is also true of other manufacturers such as Toyota who promises solid-state (better) batteries very soon. EVs are still experiencing a rapid pace of change. By leasing, you ensure that you are not stuck with yesterday’s tech. 

Conclusion - Lease, Don't Buy Your Next EV

If you are shopping for an EV today, slow your roll and put in more time than you normally would when car shopping. The EV incentives are crazy right now, but they are often regional and apply to specific trims and model years (new 2022 EVs were still gathering dust on lots when we checked today), and the lease deals may have a bit of fine print to examine closely. It’s worth it. The deals on EVs today are incredible. Whatever you do, don’t pay full price, and if you want to sidestep many of the pitfalls of EV ownership, lease one rather than buy one. 
 

If you recently scored a great lease deal on a new EV please tell us about it in the comments below this story. rt of miles driven by iSeeCars.com

Images of EV lease deals by John Goreham. Chart of miles driven by iSeeCars.com. Image of in-stock Ford Mustang Mach-E EVs by John Goreham.

John Goreham is an experienced New England Motor Press Association member and expert vehicle tester. John completed an engineering program with a focus on electric vehicles, followed by two decades of work in high-tech, biopharma, and the automotive supply chain before becoming a news contributor. In addition to his eleven years of work at Torque News, John has published thousands of articles and reviews at American news outlets. He is known for offering unfiltered opinions on vehicle topics. You can connect with John on Linkedin and follow his work at our X channel. Please note that stories carrying John's by-line are never AI-generated, but he does employ Grammarly grammar and punctuation software when proofreading.