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So you’ve made the wise decision to go all-electric and get yourself your first EV. Nice. With plenty of options hitting roads in 2022 and even more electric vehicles on the way, you may wonder if it’s a wiser move to start with a lease, or go straight for the buy. Great question, and one that many EV drivers have pondered including myself. Let’s dissect this dilemma to help you determine what might be the best option for you.
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Electric vehicles: The lease versus buy dilemma
Perhaps it was the Tesla Model X Plaid, or that new Ford F-150 Lightning that caught your eye. Maybe its the mouth watering prices and lease options of Fisker’s two new upcoming EVs. Whatever your reason for considering a new EV, we’re glad you’re here.
So hopefully you’ve got a model or two in mind, or maybe you’ve already narrowed down your ideal EV and have configured it all the way down to its powertrain and interior trim color. As you anticipate a potential purchase and delivery date, you at some point might ask yourself, “is it better to buy this electric vehicle, or lease it?”
Before we dig in, let’s be upfront about the answer – its subjective. There is no cut and dry, end-all be-all solution. A lease has its perks to some, while an EV purchase has many benefits in its own right.
Our goal here is to explore the benefits (and faults) of buying and leasing to help you better determine what might be the smartest route for you as you budget for your shiny electric vehicle. Let’s start with the EV lease option.
Consider an EV lease
The depreciation of traditional combustion cars just by driving off the lot has previously offered enough incentive to consider a lease. That’s not quote the same situation for EVs, but leases do still have their own perks.
With a booming used car market alongside a growing electric vehicle segment, leases offer a less commitment than buying, especially cash upfront. Plus, you’re only tied to that vehicle for 36 months at most, so if you get sick of it and want to upgrade to the latest model, you can do that; it’ll just have to be pretty deep into your lease term.
Alternatively, if you love your leased vehicle and don’t want to part with it when your term is up, you usually have the option to buy it, unless you’re driving a Tesla, then that might not be so easy. To that end, there’s a chance you end up making three years of payments on a car with nothing to show for it at the end.
Even if you do buy your lease at the end of term, you may end up paying more in the long run rather than making monthly purchase payments to start. It’s all a bit relative to be honest.
Pros
- Usually pay a smaller downpayment, sometimes zero depending on the dealer
- Lower monthly payment compared to buying
- Things like routine maintenance and car washes can easily be negotiated into lease
- When your term ends, you can buyout, turn in, or trade up to a newer EV!
Cons
- Once you sign, you’re locked into lease term and it can be expensive to opt out
- You often times have to pay the entire remaining balance on the lease
- You usually don’t get to see the benefits of state or federal EV tax credits
- The lease company can collect on those since they own the EV, but you might be able to negotiate those credits into the lease to get yourself a lower monthly payment
- Some automakers do not offer leases in certain states or countries
- Limited mileage (usually up to 15,000 miles per year/45,000 miles per 36-month lease)
Consider buying an electric vehicle instead of a lease
Unlike the used combustion car bubble that will inevitably burst, EVs are built to hold more value over time. Since a majority of their parts are less mechanical and more computational, electric vehicles can be consistently updated using over-the-air (OTA) software updates.
This could entice potential electric vehicle customers to buy over lease, since there is less depreciation (at the very least slower depreciation) compared to gas cars. EVs new and old, remain high in demand.
While equity in a vehicle feels strange compared to the past, it could prove wise over time if you choose to buy an electric vehicle over a lease. That being said, it’ll cost ya… literally. An EV purchase usually requires a pretty significant downpayment to drive off in it. However, if you’ve got the cash, the more you pay up front the less you’ll pay over time. Plus you are paying toward complete ownership which is a huge perk.
Pros
- Paying to own means eventually having an EV with zero monthly payments and/or the opportunity to sell used for cash back in your pocket
- Battery electric vehicles (BEVs) and Plug-in hybrids (PHEVs) qualify for federal and state tax credits
- Resell the electric vehicle whenever you want after you buy, not locked into a lease term
- Unlimited mileage without penalty, drive as long and as far as you want
Cons
- (Possibly) more money up front and generally a higher monthly payment
- Must cover all maintenance out of your own pocket
So is it better to buy or lease an electric vehicle?
We already warned you above – we don’t have the answer. You tell us! It’s your decision after all. Now that you’ve measured some of the pros and cons of buying versus leasing an electric vehicle, you should be better informed to decide what option is best for you.
You still may not be totally sure, and that’s totally normal. We implore you to explore the growing world of EVs more. Here are some additional resources to help you see what’s out there, and whether it might be better to lease or buy.
Good luck!
EV lease resources
Resources for buying an electric vehicle instead of a lease
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