Depreciation speculation

[TomT]

"In an effort" is even more damning and less confidence-inspiring than the quote I got in Phoenix from Andy Palmer, and which was repeated elsewhere... And what is the definition of "extremely hot climates?" Phoenix-like only? The supposedly much more temperate San Fernando Valley where I have experienced significant degradation? Reduced degradation everywhere but in climates like the PNW? Only time and accumulated experience will give us the real answer...

it has "significantly reduced degradation in hot climates..."

Not saying I don't believe you, but do you have a source for that? The latest I heard from Nissan was, "Changes in battery chemistry, however, have been made in an effort to make the battery more durable in extremely hot climates".

 

[DaveinOlyWA]

I think you need to start off with how much you want to spend on transportation before you consider depreciation. have you checked other options? Other than my 2004 Prius, I have lost my shirt on EVERY car I have ever owned with the exception of the two LEAFs...

Recent History;

2004 Prius; owned 30 months, driven 35,000 miles, purchased for $21,000. Wrecked. Insurance payout $22,350

2006 Prius; owned 47 months, driven 56,000 miles, purchased $26,562. Sold $14,000

2007 ZENN; owned 42 months, driven 14,500 miles, purchased $14,788, Sold $4500

2010 Prius, owned 43 months, driven 51,000 miles purchased $29,052 (deeply discounted as part of Prius Priority Purchase program plus one of last hybrids in WA State that was sales tax free. got it 05/2009. VIN 232 which means my LEAF was 2nd time I was first in state to get a specific car ). wrecked. Insurance payout (minus $500 deductible) $21,650.


as you can see, buying a new car and thinking you are getting ahead is a losers game. what is not mentioned is insurance, maintenance and fuel. Trust me, if you really want to figure out a good deal, you are far far far ahead with leasing a LEAF. I am running a one year experiment on TCO of a 2013 LEAF and an old old old gasser. (used to reduce TCO of gasser as much as I can to "level" the playing field)

details in blog

 

[forummm]

How is the charge network in your area ? Do you have decent coverage ?

There are definitely charging stations around, but I have never used any of them. I like the one in my garage just fine, and I never drive more than 70 miles in a day. I could drive from Atlanta to Nashville, and some other cities. But the freeway availability is pretty limited. It's not practical yet here for most trips. I'll just rent an ICE when I need to leave town until the network improves. We don't leave town much anyway, and usually fly when we do.

 

[forummm]

My Leaf has depreciated far worse than any car I have ever owned before. Just this morning, my local Nissan dealer only offered me $10,000 trade in for my 2012 Leaf with 29,000 miles. Less than 3 years ago, that same Leaf cost me $42,000 - $7500 tax rebate, so that's $1,000 per month of ownership!
After that wake up call, there is NO way I'm going to purchase a 2015 Leaf. Lease...maybe. But, even my salesman noted that the 2017's are going to have at least double the range, which will kill the resale value of Gen1 Leaf's. At least that news has helped me remove one option from my list of how to deal with my battery degradation:
1) Hang in there and hope I have another 11% degradation within the next 2 years (and Nissan removes the B0133 from my record) so I qualify for a new battery.
2) Bite the bullet and cough up the $5500 for a new battery now to get my range back to new.
3) Sell the Leaf privately and order a Tesla S in time to take the tax refund yet this year.

Dealer trade-in values can be absurdly below market, so it's not a great comparison. A dealer offered me $6500 for my 2010 Corolla LE w/38k miles. It sells for $12-13k on AutoTrader, and $11.5k on Craigslist. Even CarMax offered $9k. CarMax actually valued my 2014 at $19k ($5.5k more than I paid for it after incentives).

I don't think the 2015's will drop that much when the 2017's are available. The 2017's will provide more range--at a significant extra cost.

 

[forummm]

I think you need to start off with how much you want to spend on transportation before you consider depreciation. have you checked other options? Other than my 2004 Prius, I have lost my shirt on EVERY car I have ever owned with the exception of the two LEAFs...
...
as you can see, buying a new car and thinking you are getting ahead is a losers game. what is not mentioned is insurance, maintenance and fuel. Trust me, if you really want to figure out a good deal, you are far far far ahead with leasing a LEAF. I am running a one year experiment on TCO of a 2013 LEAF and an old old old gasser. (used to reduce TCO of gasser as much as I can to "level" the playing field)

details in blog

In my case, I ran the numbers with insurance ($15/mo more--actual quote), energy (actual calculations from current Leaf and MPG from the ICE), etc, including rental ICE for long trips (using actual 5 years of road trip history). I used estimates from Edmunds and others about the projected depreciation for the ICE and the Leaf and for repairs. I used the actual maintenance schedules for the ICE and Leaf with actual (ICE from my past expenses) and expected (Leaf) costs for those items. And the predicted depreciation for the Leaf from places like Edmunds ($15k value in 2019) was actually less than what I used in my calculations ($11k private sale value in 2019). I even included the opportunity cost of funds (cash sitting in the garage instead of being invested). The Leaf came out ahead by $1k/year TCO over 5 years. It helps that the great deal I got (invoice less holdback less dealer fee), plus incentives, made the net cost only a few grand more than I sold my ICE for. And I could invest the ICE $ and borrow the Leaf $ at 0%.

 

[keydiver]

My Leaf has depreciated far worse than any car I have ever owned before. Just this morning, my local Nissan dealer only offered me $10,000 trade in for my 2012 Leaf with 29,000 miles.

Dealer trade-in values can be absurdly below market, so it's not a great comparison.

Yes, I realize that, but it didn't stop my dealer from insulting me that way. KBB says $13-$14,000. They evidently either REALLY don't want to sell me a 2015 LEAF, or they were trying to steal my trade-in. Either way, they have lost my business. You would think that the dealership that sold me the Leaf for $42,000 out-the-door would appreciate a repeat customer a little more.

 

[TimLee]

...They evidently either REALLY don't want to sell me a 2015 LEAF, or they were trying to steal my trade-in. Either way, they have lost my business. You would think that the dealership that sold me the Leaf for $42,000 out-the-door would appreciate a repeat customer a little more.

The dealer business model is badly broken.
Has become very short term focused on short term profit maximization on each piece of every transaction.
They do not want to sell the used LEAF.
They will send it to auction and want to make $2,000 at auction therefore they offer you an amount that is substantially below auction.
A large % are being exported.

I agree it is short sighted.
But the dealers are going for high volume, and make most of their $ on used vehicle sales.
And they hold a hard line on used prices.
But the market will not support that with a used LEAF.
So they do not want it on the lot.
No profit in it and a bad use of the parking spot.
With the high volume need, many dealers are VERY short on parking.
The dealer I use, 80% of the time they are double parked.
Hard to safely drive around the one lane narrow openings to get through the lot to the DCQC.

 

[Levenkay]

They do not want to sell the used LEAF.
They will send it to auction and want to make $2,000 at auction therefore they offer you an amount that is substantially below auction.
A large % are being exported.

This is the second time someone's remarked about the export of large (well, relative to the tiny LEAF market) numbers of used LEAFs, and it's got me curious as to where the US taxpayer subsidy that went into the production of each one goes in this case? Is there an export duty that recaptures it?

 

[TimLee]

This is the second time someone's remarked about the export of large (well, relative to the tiny LEAF market) numbers of used LEAFs, and it's got me curious as to where the US taxpayer subsidy that went into the production of each one goes in this case? Is there an export duty that recaptures it?

No.
The US does nothing to recapture the cost of what it subsidizes.
Takes a "if you do the right thing it will work out in the long term" strategy.
Turned out to be the absolutely right thing to do when the Democratic Congress and President Truman decided to help rebuild Japan and Germany after World War 2, against the staunch objections of the Republicans who wanted to leave Germany left hobbled as a third world destitute country.
(Which as a 57 year old born in the US person I only learned about a few months ago. :? )
Proved to be the right choice that time.

As a long term strategy, the results are still out.

 

[blimpy]

Currently a 2011 Leaf SL can be purchased for about $12,000 Retail. ( nominal 35K milage)
each 10,000 miles of battery left on the warranty is worth maybe $1000 ( so for 10k mile car add maybe $2000)

so you can figure the 2 year depreciation at about 50%
3 year at 50-66 % depending on mileage.

Nobody knows yet what happens to the cars once there is no warranty left on the battery.

One of the reasons for this high depreciation, is a constant influx of lease returns onto the market.
These cars are now being sold at auction, with the higher milage cars going to mom and pop used car lots.

I am buying one precisely because the major depreciation is done.. and these cars will last 50 years.

Because the Nissan/Dealers have profited from all the government incentives ( pure profit)
the cars have be Paid Down 50% by the time they reach the used market.

Some dealers don't want them one their lots, because of the high profit margins selling leased cars.

Nobody really knows what your leaf will be worth in 5 years... but it will not be much in cash.. but it will be
HIGH in remaining service life. The only way to justify the high cost going in.. is to keep the car for decades !

Unless the computer stuff becomes unserviceable... the car will go for freaking ever.

Of course, if they battery packs become unobtanium all bets are off. Ask an electric RAV-4 owner about that. :!:

 

[minispeed]

Here's another few things to consider. If the 2nd gen battery is so good and the leaf continues this sales streak for another year Nissan may chose to put a 2nd gen battery in certified pre owned leafs giving more range. This would probably only be if the 2nd gen BEV ranges are so good that the resale value of 1st gen are way below the lease return estimates they made.

They may make this battery available to customers but it would probably be at a much higher profit than the current $5500 offer for a lizard battery. That could make it too costly for you or a used car dealer to replace it just to increase resale.

If Nissan finds a buyer for good condition 1st gen batteries in other applications (grid storage or re furb for smaller lighter 3rd world cars) this could make a program like that work.

 

[TimLee]

... If the 2nd gen battery is so good and the leaf continues this sales streak for another year Nissan may chose to put a 2nd gen battery in certified pre owned leafs giving more range. ...

Very unlikely.
More likely the next generation LEAF configuration is substantially changed and earlier LEAFs never see higher capacity battery option.
Just like the 2013 on board charger higher speed was an entirely different configuration with zero reverse compatibility.

 

[DaveinOlyWA]

... If the 2nd gen battery is so good and the leaf continues this sales streak for another year Nissan may chose to put a 2nd gen battery in certified pre owned leafs giving more range. ...

Very unlikely.
More likely the next generation LEAF configuration is substantially changed and earlier LEAFs never see higher capacity battery option.
Just like the 2013 on board charger higher speed was an entirely different configuration with zero reverse compatibility.

what about a battery that has the same range but double the cycle life? I think that is or should be Nissan's goal

 

[TimLee]

what about a battery that has the same range but double the cycle life? I think that is or should be Nissan's goal

Hopefully we may already have that in the 2015 heat resistant chemistry "lizard" battery. Time will tell.
18 months in Phoenix should tell us a lot.

 

[Valdemar]

I've been randomly checking what KBB thinks about my car's value, and over last 3 months or so it didn't change much hovering around 12k for private party. Is the deep dive over until next less expensive model is available?

 

[forummm]

I've been randomly checking what KBB thinks about my car's value, and over last 3 months or so it didn't change much hovering around 12k for private party. Is the deep dive over until next less expensive model is available?

The used values have been depressed by all the tax credits and the Nissan price cut. You can get a brand new 15 S w/QC for $13k in Georgia, $12k in Colorado, $15.5k in CA, etc with 0% financing for 3 years. The old ones have to be cheaper than that.

I think that the old ones will stay around where they are now, but slowly declining like all cars do. The longer range options will be more expensive, so that will already be priced in for the old models. I wonder if the new ones get really popular, whether that will increase the value of the old ones since people will be more used to the idea, there will be more charging infrastructure, etc. And once the tax credits expire, that should increase values for the used cars as well.