how well will the leaf hold its value?

[dpodoll]

I think the technology in the LEAF is already very mature - the only wild card is a new battery. Even if a new technology is identified it will takes years to test and implement it. I'm sure Nissan has factored this into the lease terms since they know what is coming for the next three years. Lithium Air is the great hope but it doesn't exist in a demonstation vehicle.

The real issue in the lifetime of this car is the availabity of quick charge stations. If there are plenty of quick charge stations in the next two years the value of the LEAF will be very competitive with ICE. Especially as people realize $4 gas is here to stay.

If there is not a quick charge network the LEAF will be doomed to niche market and sales will soon peak and it will be the EV1/RAV EV all over again. :|

I think Nissan is pegging something like $15k residual after three years. This seems horrible? No?

My guess is they plan on putting a new $6K battery into it for resale at $21K which would end up being about half the cost of a new one

 

[surfingslovak]

My guess is they plan on putting a new $6K battery into it for resale at $21K which would end up being about half the cost of a new one

Possible, but not likely after three years. The new 6kW charger could bring more bang for the buck. Nissan may refurbish or replace batteries that have seen a lot of abuse, but I don't think that it will happen on a large scale. If the past is any guide, the 1st gen RAV4 EVs have fared very well in terms of resale value. Another thing to consider, the price of gas has more than doubled in California over the last ten years. The average price for self-serve regular was $1.776 in July 2001.

I think the lease is a sound and conservative choice. I also believe that the Leaf will hold its value, and it will likely hold it better than predicted. Everyone's situation is different, but it's a bet I'm willing to make and a purchase suited my present goals better than the lease I originally negotiated. If worse comes to worst, I will own the Leaf until it paid for itself in fuel savings and move on to something better. Provided, that there will be something better in the same price range.

 

[mdh]

My guess is they plan on putting a new $6K battery into it for resale at $21K which would end up being about half the cost of a new one

Possible, but not likely after three years. The new 6kW charger could bring more bang for the buck. Nissan may refurbish or replace batteries that have seen a lot of abuse, but I don't think that it will happen on a large scale. If the past is any guide, the 1st gen RAV4 EVs have fared very well in terms of resale value. Another thing to consider, the price of gas has more than doubled in California over the last ten years. The average price for self-serve regular was $1.776 in July 2001.

I think the lease is a sound and conservative choice. I also believe that the Leaf will hold its value, and it will likely hold it better than predicted. It's a bet I'm willing to make. If worse comes to worst, I will own the Leaf until it paid for itself in fuel savings and move on to something better. Provided, that there will be something better in the same price range.

Did you lease? Is there any negotiation room with Nissan? The residual seems so low that it mint make sense to do the lease and buy the car?

 

[surfingslovak]

Did you lease? Is there any negotiation room with Nissan? The residual seems so low that it mint make sense to do the lease and buy the car?

Yes, I negotiated a lease and ended up buying instead. The terms did not seem very favorable, and being an engineer, I would like to learn about the technology and tinker with the car, which is hard to do on a leased vehicle. Obviously, I'm absorbing more risk this way, but so far it's been worth it.

 

[LEAFfan]

I would be hesitant buying a used Leaf from Arizona!

Say what? Nissan extensively tested these cars and battery packs in AZ and they will be no different than a LEAF anywhere else. It all depends on how the driver takes care of it. THAT is the key. When the QC chargers become available, I plan on using them for some extended trips and there will be no battery pack degradation.

 

[kevintari]

This is an interesting topic. I still have to read through all of it, but the OP's initial post is why we leased ours for 36 mos rather than purchase. If it all goes well and we want to buy it out we'll gladly pay the small "leasing surcharge" and will still have gotten the rebate benefits, which to me is a worthwhile insurance policy.

Personally, I think that as with any technology there will be a lot of room for improvement and price drops in the next 3 years. We shall see.

 

[OrientExpress]

When you lease, the 3 main things (there are other things too) to take note of are the Money Factor (interest), the Capital cost (what the cost of the item is after discounts, incentives and down payments) and the residual (what the item is worth after the lease term is up)

In the case of the Leaf, Nissan money factor is pretty competitive, and the federal tax credit, and dealer discounts are very good. The biggest thing that Nissan did to keep the lease payments within reason is to value the residual optimistically at around $15K. I'm sure this was a best guess on their part, and an used as an incentive to make the lease payments affordable. I am looking forward to see how the actual residual plays out in 3 years.

 

[mdh]

When you lease, the 3 main things (there are other things too) to take note of are the Money Factor (interest), the Capital cost (what the cost of the item is after discounts, incentives and down payments) and the residual (what the item is worth after the lease term is up)

In the case of the Leaf, Nissan money factor is pretty competitive, and the federal tax credit, and dealer discounts are very good. The biggest thing that Nissan did to keep the lease payments within reason is to value the residual optimistically at around $15K. I'm sure this was a best guess on their part, and an used as an incentive to make the lease payments affordable. I am looking forward to see how the actual residual plays out in 3 years.

your posting is rather thought provoking. I was thinking the $15k residual shows they don't have confidence in the resale value of the car? Did you lease or buy?

 

[OrientExpress]

your posting is rather thought provoking. I was thinking the $15k residual shows they don't have confidence in the resale value of the car? Did you lease or buy?

Exactly, they have no idea, in fact no one does at this point, so in order to get the cars out into consumer hands, they absorb the risk of what the residual may be. I doubt that Nissan is making very much if any on the sale of the first batch of Leafs. But given how well they have been received that is why the price on the V1.5 cars is going up. Nissan is trying to find how far they can push the price to find demand equilibrium.

 

[kevintari]

When you lease, the 3 main things (there are other things too) to take note of are the Money Factor (interest), the Capital cost (what the cost of the item is after discounts, incentives and down payments) and the residual (what the item is worth after the lease term is up)

In the case of the Leaf, Nissan money factor is pretty competitive, and the federal tax credit, and dealer discounts are very good. The biggest thing that Nissan did to keep the lease payments within reason is to value the residual optimistically at around $15K. I'm sure this was a best guess on their part, and an used as an incentive to make the lease payments affordable. I am looking forward to see how the actual residual plays out in 3 years.

your posting is rather thought provoking. I was thinking the $15k residual shows they don't have confidence in the resale value of the car? Did you lease or buy?

If they're wrong and the Leaf ends up keeping a high resale value in 3 years, the leasees are gonna be happy!

 

[smilingbee]

When you lease, the 3 main things (there are other things too) to take note of are the Money Factor (interest), the Capital cost (what the cost of the item is after discounts, incentives and down payments) and the residual (what the item is worth after the lease term is up)

In the case of the Leaf, Nissan money factor is pretty competitive, and the federal tax credit, and dealer discounts are very good. The biggest thing that Nissan did to keep the lease payments within reason is to value the residual optimistically at around $15K. I'm sure this was a best guess on their part, and an used as an incentive to make the lease payments affordable. I am looking forward to see how the actual residual plays out in 3 years.

your posting is rather thought provoking. I was thinking the $15k residual shows they don't have confidence in the resale value of the car? Did you lease or buy?

If they're wrong and the Leaf ends up keeping a high resale value in 3 years, the leasees are gonna be happy!

Actually, the buyers would benefit more than the leasees from higher resale value in 3 yrs. At the end of 3 years the leasees will have the option to buy or return or the car. If they return the car, the leasees would have paid for depreciation that never happened. Alternatively, they could exercise their option to buy, but then the leasee loses what they paid for the "option" they gained via leasing.

(edited to correct a mistake I wrote about the lease-then-buy scenario)

 

[surfingslovak]

Actually, the buyers would benefit more than the leasees from higher resale value in 3 yrs. At the end of 3 years the leasees will have the option to buy or return or the car. If they return the car, the leasees would have paid for depreciation that never happened. Alternatively, they could exercise their option to buy, but then the leasee loses what they paid for the "option" they gained via leasing.

Yes, I agree with this view and this was one of the reasons why I rejected the lease I originally negotiated. While I do believe that leasing makes a lot of sense for a car like the Leaf, I felt that Nissan's terms were simply too unattractive. If I factor in the money saved by not paying for the additional cost of the lease, the Leaf would have to fetch about $12.5 or $13K for me to be on par with a lease turn-in. That's still a lot of money, but to put it in relative terms, it's about what my coworker paid in fees and taxes for his M3. The M3 is a fine car, and I'm not trying to draw any comparisons, but my friend's gas mileage can be in single digits, and in purely economic terms, the Leaf makes sense, even when compared to present-day hybrids.

Could the resale value be zero in three years? Yes, it could, but this is an unlikely scenario. Could the resale value be above $20K? Maybe, but that's unlikely as well. As long as there is an $7.5K federal tax rebate and Nissan prices the Leaf at around $35K, it's really a $27K car. Cheaper if there are State rebates. Used Leafs will have to compete with new Leafs and potentially other vehicles, although Nissan is very competitive and it might take a while for other manufactures to catch on. 

If you assume a 65% residual on a $27K car, then a three-year old Leaf could go for $17K. The closest thing to the Leaf are the 1st gen RAV4 EV and the Tesla Roadster. I believe that the residual for a three-year old Roadster is about 70%. The RAV4 EV had a much higher resale value, it was reportedly close to MSRP, but that's probably due to the fact that Toyota stopped making them.

It looks like Nissan has built a fairly comfortable cushion into the lease, and that's probably a fair thing to do. I don't think that this signals lack of confidence, if you lease, they have to carry all the risk - on top of their R&D costs. Barring a revolutionary shift in battery tech, the big uncertainty in my mind is the size of the EV market. I think that this is what Orient Express alluded to. Toyota made a bet with the Prius, and it worked out beautifully. I'm appreciative of what Nissan has done, and I hope that their bet will work out as well.   

 

[kevintari]

If they're wrong and the Leaf ends up keeping a high resale value in 3 years, the leasees are gonna be happy!

Actually, the buyers would benefit more than the leasees from higher resale value in 3 yrs. At the end of 3 years the leasees will have the option to buy or return or the car. If they return the car, the leasees would have paid for depreciation that never happened. Alternatively, they could exercise their option to buy, but then the leasee loses what they paid for the "option" they gained via leasing.

(edited to correct a mistake I wrote about the lease-then-buy scenario)

Explain?

If I have a residual buy-out value of 15k at the end of my lease, and the market value of the car ends up being 18k (for example), and I buy it, I just came out 3k ahead, even with the small extra cost of leasing along the way.

 

[kevintari]

Actually, the buyers would benefit more than the leasees from higher resale value in 3 yrs. At the end of 3 years the leasees will have the option to buy or return or the car. If they return the car, the leasees would have paid for depreciation that never happened. Alternatively, they could exercise their option to buy, but then the leasee loses what they paid for the "option" they gained via leasing.

But if you cose to buy the car at the end, you would be doing so below market value- so it nets out. Either way you're paying the same gross MSRP for the car whether you buy upfront or lease ans buy. The gamble is whether or not you think the car will be worth keep in 3 years vs. being committed to 5 (assuming a 60 mo finance).

 

[surfingslovak]

I just came out 3k ahead, even with the small extra cost of leasing along the way.

Yes, that's the idea, limited downside and potentially good upside with low overhead. I would have leased as well, but I balked when I saw the money factor they built into the lease, the acquisition and disposition fee on top of the low residual. This adds $2K to the total cost of ownership and the dealer would not negotiate. It's easy to get low-interest financing these days, and I felt that I could sell the car more easily than bother with lease transfer if I didn't like it. I've heard that NMAC, Nissan's financial arm, does not let you off the hook if you transfer a lease, they will keep you on as as secondary guarantor until the end. That was the final straw. Perhaps I was misinformed, but given this data, I decided to reject the lease.