The electric vehicle market has excellent opportunities for buyers looking to score a deal. Lease specials on some EVs offer super-cheap payments for nicely equipped models, while the pre-owned market presents some fantastic values. A lot of buyers are torn between a new lease or a pre-owned purchase, but luckily for them, we’re here to help.
After all, buying a brand-new EV—either financing or with cash—may not be the smartest move when so many savings are available through other means. Most of the rebates and discounts are focused on the lease programs and the fact that EVs depreciate (right now, anyway) at a much more accelerated rate compared to their ICE counterparts.
A lease allows a customer to score a brand-new car at very affordable payments while hedging against the future resale value. Some of the staff here at InsdieEVs have scored some great deals on the Chevrolet Blazer EV and Kia EV6. Plus, the technology at work here could evolve significantly in the years to come, so it may not be a bad idea to be flexible when it comes time to look at what’s next.
However, leasing isn’t for everyone and some buyers may not want to get into the constant cycle of payments, or they may not fit the profile of a driver that stays within the mileage uses of most leases. Of course, there are many EV shoppers that could go either way, and that is where things get tricky.
While there isn’t one right answer and it often depends on the budget and goals of the buyer, I’ve handled several cases recently where customers asked my team to explore both new lease deals and pre-owned options.
While the lease payments were super tempting, most of these clients ended up opting for a pre-owned car. I’ll lay out the math as to why they chose this path with a recent case.
Below is a grid of lease deals on a Hyundai Ioniq 5 Limited we did for a customer in NY. We shopped a zero down, 10,000-mile lease for both 24 and 36-month programs with all tax and fees included.
The cheapest payment we found was $642 per month on a 36-month program. That is a total lease cost of $23,112—not bad at all for a car with an outstanding electric range and a retail price of almost $60,000.
We also found one customer a deal on a Certified 2023 Ioniq 5 Limited with about 11,000 miles on the clock.
This customer wasn’t going to have to pay sales tax on this purchase due to trade equity, but the total cost came out to $39,000. That’s about a $20,000 savings in depreciation compared to the new MSRP. While electric vehicles are depreciating at an accelerated rate, the biggest drop happens within the first year or two.
This customer was hedging that the used '23 Ioniq 5 was unlikely to drop in value by another $20,000 over the next three years, and it probably isn’t. Even if it lost an additional $15,000 in value, that still puts them about $8,000 ahead when compared to the lease.
This same scenario played out two other times when I was working on deals for both an EV6 and a Volkswagen ID.4. There, the projected depreciation drop on a used model was likely to be less than the fixed total cost of leasing a new car.
Granted, this comparison requires a bit of guesswork as there isn’t data for the value of some five-to-six-year-old EVs, since many of these models haven’t been around that long. And the auto industry is, in many ways, struggling to properly value used EVs.
But it’s probably safe to say that the deprecation curves generally follow the same pattern as ICE cars, in that the worst drop happens within two years, and then it levels out a bit. Furthermore, if you did choose to buy instead of lease, and then held onto that car for a while, the greater financial value you’d get out of that purchase.
For buyers who value lower payments—and having a car that’s always in the warranty period—leasing would be the way to go. Others may prefer the flexibility of ownership that a pre-owned purchase offers since they can trade in later or hold onto that car however they like.
If you are shopping for leases with EV models, make sure to check out the selection of similar pre-owned options. That may end up being a better bang for your buck in the end.
Tom McParland is a contributing writer for InsideEVs and runs AutomatchConsulting.com. He takes the hassle out of buying or leasing a car. Got a car buying question? Send it to Tom@AutomatchConsulting.com.
