This first post is all that you need to read. Subsequent posts are about the writing of this document, some agreement and some dissent, etc. Copyright 2019 by Michael Cerkowski, aka LeftieBiker. Repost this freely but do not modify it without permission. It was written with significant input from the Leaf community on this site.
Given the substantial investment involved in buying or leasing a new EV like the Leaf, and the special circumstances involved in driving any EV, I felt that it would be a good idea to create a guide to help prospective Leaf drivers (and for that matter most other EV shoppers) decide whether buying or leasing makes more sense to them. First, definitions:
This is an easy one. Buying any car involves negotiating a final price “out the door” (including all charges and fees) for the vehicle, and then either paying with cash or check from one's personal funds, or arranging a loan, usually with the automaker's financing arm, sometimes through a third party bank or credit union. When buying a car you need to look at several factors that affect how much you will pay, in total, for it. I've already mentioned the final, “out the door” (or “OTD”) price. There is also the interest rate on the loan, which can have a large additional affect on the final cost of the car. Some manufacturers offer 0% interest rate loans as an enticement to buy, and these are usually worth using. Remember that a low monthly payment with a high interest rate (usually for 6 or more years) is not a good deal.
Leasing is a more complicated and tricky process. Until EVs became available to lease, leasing was used mainly by people who could either write the extra cost off as a business expense, or who wanted to drive a new car every two to three years, and didn't particularly care about the lack of ownership – it was essentially a rental for several years. Since the advent of electric vehicle leases, however, leases have acquired two advantages that were not there before, or didn't matter much. I'll get to that shortly. First, how does a lease work? When you lease a new car, you are agreeing to essentially pay the manufacturer for the depreciation of the market value of the car during the lease term, plus interest (called, confusingly enough, the “Money Factor” or “MF”). There are also fees for acquiring the lease, charges for dealer-installed options, and, if purchased, service contracts and extended warranties. Those last few are also involved if you purchase. At the time you lease, the leasing contract assigns a market value to the car at the end of the lease period. This value is called the “Residual” or “Residual value.” When the lease term ends, you have two or three options: you can buy the car for the residual value in the contract (sometimes but not always this figure can be discounted or negotiated), or you can turn the car back in to the leasing entity (usually a subsidiary of the auto manufacturer), at which time you are responsible for paying for any “excessive” damage, or odometer mileage in excess of the limit specified in the lease document. There is often a third option: asking for and receiving a lease extension, which is exactly what the name implies: an extension of the existing terms of the lease for an additional period of time. These extensions usually range from six months to one year, typically, although they can be shorter, and can usually be terminated by you, the lessee, at any time. Lease extensions can be very handy if, for example, your lease ends next month, but the car you want to lease won't be available for another 6 months.
SHOULD YOU BUY OR LEASE?
In the case of normal, internal combustion cars (aka “ICEs” or “ICEVs”), the answer is fairly simple. If you can write off a lease as a business expense, and like to drive a nearly-new car all the time, then a lease is the answer. (If you find that you really love your leased car, you can almost always buy it when the lease ends, for the residual price.) If you want to get the best value, and tend to keep cars for 5 years or longer, then buying is the better choice. In the case of EVs, though, things get more complicated. First, the US government has been offering a tax credit of up to $7500 when you purchase a qualifying electric vehicle. The catch is that you have to owe at least $7500 dollars in Federal income taxes, in a single year, to collect the full amount. If you owe less, then you receive whatever amount you owe in taxes. (There is a way or two around this, involving certain retirement accounts, but for most people what I just wrote applies.) Until recently, Nissan has been collecting the $7500 tax credit when a Leaf is leased (because NMAC, their leasing arm, is the actual “owner” of the car being leased) and applying all of it directly to the lease, as a “Capital Cost Reduction, which has the same affect as boosting the lessee's down payment by an additional $7500. This changed in 2018. Now, depending on the trim level, region, and how badly Nissan wants to sell that trim level in that region, Nissan gives you a “discount” of between $2000 and $9000, keeping the rest in the case of the lower amounts. Nonetheless, Nissan, GM, and other manufacturers are still usually passing on SOME of the Federal tax credit to reduce the cost of leases (GM also puts some of the tax credit into inflating the residual so you are paying less of the depreciation: this helps lessees who don't plan to buy the car later, and hurts those who do). So for someone who doesn't owe a huge amount in income tax (like many retirees and people of moderate income), this makes a lease more financially attractive. The other advantage of leasing is the ability to “trade up” a car with rapidly-aging technology for one with more advanced features and – usually most important - a larger battery pack with more range. And again, you still have the option of buying the car for the residual, with or without possible discounts, if you want to keep it. Financially, this option can be anything from “a great deal” to “very expensive” depending on the terms of the lease and any discount on the residual. Manufacturer incentives for buying, however, are often higher than those for leasing, especially in the case of Nissan.
RANGE LOSS: THE ELEPHANT IN THE ROOM
The biggest pitfall for prospective EV drivers is one that you will rarely hear mentioned in a dealer showroom: range loss. Why is this such a pitfall? Mostly because of two factors: Winter range reduction, and battery pack degradation. Winter range reduction is due to cold weather and is temporary, while pack degradation is permanent and essentially irreversible. The biggest mistake that people make when buying or leasing an EV – ANY EV, but especially those with actual driving ranges of less than 100 miles in average conditions – is not realizing how much EPA-estimated range they need for their lifestyle, especially in the Winter. They also fall victim to a factor that they usually don't even know about: battery degradation. The EPA deserves a large portion of the blame here, for not giving cold weather range estimates as well as their best case rating, and for not mentioning that all EVs lose range to some degree over the years.
The first (and many subsequent) Leaf owners, having been told that the car would have a range of “100 miles” by salespeople, were treated to a rude awakening from the EV dream when they discovered that not only was the actual driving range (including highway driving and heater use) only about 75-85 miles at most, but that the Range in Winter, again driving on the highway and using the heater, was about half that. Later, as the cars lost that new car gleam (and sometimes even sooner) Leaf drivers in warmer climates began to discover that their cars' battery packs were degrading (losing capacity) at an alarming rate, as indicated both by the capacity “gauge” on the dashboard and by actual available driving range. The capacity bar display, which consists of 12 tiny capacity bars adjacent to the 12 much larger charge level bars, began to show missing capacity as soon as a few months after purchase in hotter states like Arizona, but then also began to show missing capacity bars in states like California, Florida, New Mexico... Those original battery packs, which I later dubbed the “Canary” packs, proved to be a disaster for many Leaf owners in all but the coolest states. Nissan subsequently improved the heat tolerance of the packs in Leafs manufactured in April of 2013, and again for the 2015 model year. They also implemented, while a class action lawsuit on the problem was being initiated, a battery capacity warranty that has provided some, but by no means all, owners of degraded Canary pack Leafs with new replacement batteries. From Spring of 2013 through 2015(when the more heat-resistant “Lizard” pack was introduced), battery degradation became a serious issue mainly for Leaf drivers in Hot local and regional climates, with range loss elsewhere being acceptable. In 2016, with the introduction of the 107 mile EPA-rated 30kwh pack, range worries eased – at least until some 30kwh Leaf drivers began to see indicated capacity loss not unlike that of the first 24kwh Canary packs. Nissan claims that this is not, in fact, actual capacity loss, but is an error in programming of the Battery Management System, or “BMS”, that leads it to gradually begin to underestimate capacity over time. Nissan has issued a software “fix” for this, and it does increase the capacity estimate to what would be typical for a pack with no abnormal degradation. Some owners/lessees of 30kwh Leafs agree that their driving range has been restored, while others do not. Time will give a more definite answer. It should be noted that Leafs have, overall, experienced much greater capacity losses over the years than Teslas and Volts... <Cite for other brands/models?>
WHAT ABOUT THE 2018 LEAF?
When battery capacity was increased from the original 24kwh to 30kwh in 2016, it was done by packing lithium cells more densely into the same space in the car. Many had hoped by this time that Nissan would begin to install a “Thermal Management System” in the car, to cool the pack when hot, instead of just warming it when it is very cold, which is the present setup. They chose not to do so. When the 2018 40kwh Leaf was announced, a TMS was again expected – and again not implemented. Instead, the passively air-cooled pack now has 25% more capacity installed in a housing only very slightly (about 5mm) larger than the 30kwh pack, with a little less space for air to flow above the pack. Many of us find this concerning, but have leased or purchased a 2018 Leaf anyway. My own capacity loss, as measured by the LeafSpy app, has been about 5.5% over six months, as measured last November (readings from the BMS often stop updating in Winter weather.) Others have measured significantly less capacity loss over roughly the same period. At this point we just don't know how fast capacity loss, which does tend to be higher in the first year, will occur in the 40kwh Leaf battery pack.
WILL YOU WANT TO BUY OR LEASE?
Quite a few people have bought a 2018 leaf, and don't regret it. If you live in a cool climate, don't need (and likely won't need in the future) a range of more than about 70 miles in Winter or 100 miles in Summer, and don't really care about emerging technologies that may be available in future EVs, then buying makes sense. Nissan offers an 8 year / 100,000 mile capacity warranty on the 2018 that essentially guarantees roughly 66% of original capacity or the battery gets replaced for free during that period. If you are still wary of possible substantial capacity loss, feel that the driving range of the current Leaf is adequate but not generous, or if you think that the Leaf is the best EV for you now, but may not or probably won't be in several years, then I strongly suggest that you lease. Finally, if you plan to take many long trips that will involve multiple DC Fast Charges, I suggest you either wait for the ePlus version of the Leaf, or buy or lease a Chevy Bolt. Why? because the 40kwh Leaf, even with the latest firmware to ameliorate the “Rapidgate” charging issue, gets the battery too hot in multiple fast-charging sessions for its long term health.
In short: if you are confident that a 2018 Leaf is right for you, don't live in a particularly hot climate, and understand that real world (and especially Winter) range is often much less than the EPA rating, then buying will save you money. If you want to play it safe and reserve the option of switching to another car in three years, and understand that this 'safety net' will cost you more than buying, then I strongly suggest you lease a Leaf. Likewise I suggest that you lease, not buy, if you live in one of the hotter regions of the US. If you live in one of the HOTTEST regions, then I strongly suggest you lease or buy a Bolt or Tesla, which both have an effective Thermal Management System.
SHOULD YOU DRIVE AN EV AT ALL?
While the driving range of most EVs has improved dramatically in the last couple of years, it still remains less than many people typically drive. If you regularly need 150 miles of range, year round, don't buy or lease a Leaf - look at the Bolt or Model 3 instead. If you regularly need 200 or more miles of year round range, then an EV is not presently a good choice for you. A Plug-In Hybrid Electric Vehicle (PHEV) is a much better choice, as the driving range (including use of the gasoline engine) is the same or even greater than that of typical ICE cars. Driving an EV as your sole or main vehicle also means that you must have access to a charging station at home, and if you are commuting more than 80 miles or so, at work as well. Public charging alone is NOT sufficient for most people, and relying on it for all of your charging puts additional strain on a still-inadequate charging infrastructure.
WHAT SHOULD YOU LOOK FOR AS OPTIONS?
Until 2018, Nissan always equipped the (2013 and newer) Leaf SV and SL trim levels with their excellent “Hybrid Heat Pump” heating system, and all Leafs with heated seats (later front seats only) and heated steering wheel. No longer. If you live in a region where it gets even CHILLY in the Winter, make sure that the Leaf you buy or lease has the “Cold Weather Package”! Not only do the heated seats and wheel (all trims with Cold Weather Package) make the car much more comfortable to drive and for front passengers to ride in, but the heat pump (SV and SL with Cold Weather Package) significantly increases the driving range in cold weather above roughly 32F. Do NOT assume that what you are told about this option by salespeople is correct: it has not been installed in as many Leafs as should have been the case (and it can't be added by a dealership), and some salespeople are misleading potential Leaf buyers and lessees about the importance, or even the presence, of this important option package.
Scarlet Ember 2018 Leaf SL W/ Pro Pilot
2009 Vectrix VX-1 W/18 Leaf modules, & 3 EZIP E-bicycles.
BAFX OBDII Dongle
PLEASE don't PM me with Leaf questions. Just post in the topic that seems most appropriate.