Depreciation speculation

What do you think the 2015 Leaf S w/charge package (MSRP ~$32k) will be worth 5 years from today (2019)?

Factors possibly raising value:
+Federal tax credit probably goes away for Nissan (and Tesla, GM, Toyota, Ford)
+Many state tax credits probably go away (GA's probably next year)
+Gas probably gets a little more expensive
+Charging infrastructure expands
+Likely availability of range extending options for longer trips (like renting a little trailer full of batteries)
+Replacement batteries are probably much cheaper and/or higher capacity
+People get used to the idea that electric cars are "normal" and a reasonable transportation solution

Factors possibly decreasing value
+Some other manufacturers might still have the federal tax credit available
+Availability of ~$35k 200mi Tesla, enhanced range Leaf (~$32k 150mi?)
+Maybe there are maintenance/repair expenses we're not aware of that increase cost of ownership
+Unforeseen technological advances that make the Leaf much less attractive to the new cars
+Unforeseen standards development (such as the charging infrastructure being installed is not compatible with the 2015 Leaf)

Uncertain factors
+If 2017 Leafs with enhanced ranges are leased in huge numbers, they could hit the used market in large numbers in 2019. Or people could love them and keep them. Or purchases could be more popular than leases for the larger range vehicles.

The more I think about it, the more I think a 2015 Leaf is going to depreciate about as much as an average new car-- ~63% after 5 years (Source: Edmunds). The early Leafs are depreciating about that much (a little faster) but the expiring tax credits should boost those prices. I don't see the cost of a new 24kwh Leaf dropping more than $5k in 5 years from the effective price today ($32k-$3.5k incentives). Even Tesla doesn't expect the batteries to get more than ~$100/kwh cheaper in the short term than they are now with their new factory. The newer cars will have a longer range, but they will also be significantly more expensive than a used one. A lot of people will like the idea of a reasonably priced used car that is far cheaper to operate than an ICE.

New technology tends to depreciate faster than old technology. You'll find many people prefer to lease because of this. In a couple of years Leafs with 100 mile range will sell for same as Leafs today with 84 mile range. The Federal tax credit is politics. The tax credit may go away or may increase.
My bet is that it will depreciate faster than the average car unless gas goes up to $5 or $6 dollars per gallon.

Who cares?

Most cars depreciate in value, except the rare and exotic. The Leaf is neither rare nor exotic. You don't buy a car to save money, make an investment or anything like that. It drops in value, as expected.

Any speculation on depreciation would have to include an underlying assumption about fuel prices and availability. Otherwise it would be worthless. Cheap, widely-available gas equals low value, while astronomical fuel prices (due, for example, to the Persian Gulf being closed for oil traffic) could result in the car being worth more than it was when new.

2k1Toaster said:

Who cares?

Most cars depreciate in value, except the rare and exotic. The Leaf is neither rare nor exotic. You don't buy a car to save money, make an investment or anything like that. It drops in value, as expected.

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I bought a 2014 in part to save money. And it does. If it was going to be much more expensive than an ICE, I would have gone with an ICE, even though I prefer electric and want to see all new vehicles be electric in the near future.

The car isn't an investment. But buying one should involve a financial comparison to the other available transportation options. In my case it was cheaper to buy a new Leaf than to keep the 15 year old ICE. I'm evaluating whether it's cheaper to buy another Leaf instead of keeping a low-mileage 2010 Corolla. We don't take many road trips, so even with adding in car rental costs, it seems to be a better financial decision. I live in GA so that helps the math go that direction.

forummm said:

I don't see the cost of a new 24kwh Leaf dropping more than $5k in 5 years from the effective price today ($32k-$3.5k incentives).

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forummm said:

... In my case it was cheaper to buy a new Leaf than to keep the 15 year old ICE. I'm evaluating whether it's cheaper to buy another Leaf instead of keeping a low-mileage 2010 Corolla. ...

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The OP raises an interesting thoughtful quetion.
But these two statements are way off.

Only $5,000 drop in value in five years?
Where do you get an only $3,500 incentive deduction?
You think Nissan is going to sell that many cars?

Second statement might be correct.
But you considered only two alternatives.
A reasonably aged five to six year old low cost very efficient ICE is still way more cost effective than buying a brand new LEAF.

Don't get me wrong I love the LEAF and hope to be able to drive electric rest of my life.
But lowest Total Cost of Ownership for a new LEAF?
Unfortunately not.
Maybe a low cost used one, but definitely not a new one.
You have to evaluate all reasonable options when doing a fair economic comparison.

forummm said:

2k1Toaster said:

Who cares?

Most cars depreciate in value, except the rare and exotic. The Leaf is neither rare nor exotic. You don't buy a car to save money, make an investment or anything like that. It drops in value, as expected.

Click to expand...

I bought a 2014 in part to save money. And it does. If it was going to be much more expensive than an ICE, I would have gone with an ICE, even though I prefer electric and want to see all new vehicles be electric in the near future.

The car isn't an investment. But buying one should involve a financial comparison to the other available transportation options. In my case it was cheaper to buy a new Leaf than to keep the 15 year old ICE. I'm evaluating whether it's cheaper to buy another Leaf instead of keeping a low-mileage 2010 Corolla. We don't take many road trips, so even with adding in car rental costs, it seems to be a better financial decision. I live in GA so that helps the math go that direction.

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It was not cheaper to buy a Leaf than a 15 year old ICE. Assuming your ICE was paid off (who does 15yr loans?!) your only ownership costs would be maintenance, insurance, and gas. Whatever the cost of the Leaf ($20K?) that's a lot of gas and maintenance. Insurance was most likely lower with the clunker.

If the car needed a new engine and tranny for $6K dealership ripoff prices, you still come out ahead financially with the old car.

People talk themselves into buying cars because it will save them money all the time. Car salesmen love these people. It is perfectly OK just to want a different or another vehicle and buy it. But don't do it thinking it is going to save you money unless it is a great deal and a rare case of saving.

My Prius up until this year had appreciated in value since I bought it (used during the "they gonna kill me" scare) even with the addition of 60K miles. It is now worth $300 less than I paid at CarMax which means I can probably still get more than I paid for it private party. My DeLorean doubled in value at least the second I bought it, because I got a great deal from someone in financial distress.

2k1Toaster said:

forummm said:

2k1Toaster said:

Who cares?

Most cars depreciate in value, except the rare and exotic. The Leaf is neither rare nor exotic. You don't buy a car to save money, make an investment or anything like that. It drops in value, as expected.

Click to expand...

I bought a 2014 in part to save money. And it does. If it was going to be much more expensive than an ICE, I would have gone with an ICE, even though I prefer electric and want to see all new vehicles be electric in the near future.

The car isn't an investment. But buying one should involve a financial comparison to the other available transportation options. In my case it was cheaper to buy a new Leaf than to keep the 15 year old ICE. I'm evaluating whether it's cheaper to buy another Leaf instead of keeping a low-mileage 2010 Corolla. We don't take many road trips, so even with adding in car rental costs, it seems to be a better financial decision. I live in GA so that helps the math go that direction.

Click to expand...

It was not cheaper to buy a Leaf than a 15 year old ICE. Assuming your ICE was paid off (who does 15yr loans?!) your only ownership costs would be maintenance, insurance, and gas. Whatever the cost of the Leaf ($20K?) that's a lot of gas and maintenance. Insurance was most likely lower with the clunker.

If the car needed a new engine and tranny for $6K dealership ripoff prices, you still come out ahead financially with the old car.

People talk themselves into buying cars because it will save them money all the time. Car salesmen love these people. It is perfectly OK just to want a different or another vehicle and buy it. But don't do it thinking it is going to save you money unless it is a great deal and a rare case of saving.

My Prius up until this year had appreciated in value since I bought it (used during the "they gonna kill me" scare) even with the addition of 60K miles. It is now worth $300 less than I paid at CarMax which means I can probably still get more than I paid for it private party. My DeLorean doubled in value at least the second I bought it, because I got a great deal from someone in financial distress.

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Normally you'd be right. But in this weird world of tax credits (and the extra $5k in GA) the numbers are different. I used a 5-year ownership period. The new Leaf (S w/charge) was $13.5k after credits and rebates. We also have the EV utility rate plan (about one cent per mile, including taxes--which beats the 20 cents per mile with the guzzler). And since I got a 6 year 0% loan, but get the tax credits in full upon filing, I get to invest that money for a few years, so the opportunity cost of the funds is actually negative for 3 years. The Leaf will be under warranty while the occasional repairs to the old car will keep adding up. At the end of 5 years (assuming you "buy" both at year 0 and "sell" both after year 5 to compare true costs of owning) the total cost of ownership was higher for the old car. I included insurance, taxes, and everything. I was shocked too. You could argue that my estimation that I could sell the Leaf at year 5 for $12k is a bit off. But when the tax credits expire (based on current law and sales rates, within the 5 years) I think that's a reasonable number, give or take a few grand. And the oldest used Leafs are selling for around that now even with the tax credits in place.

In GA it's almost a guarantee that it's cheaper to lease than have an ICE, especially for those lucky to have VPP. But I think the math is even better to own if you don't have VPP--especially if you want to keep the car forever.

I'd expect the used market for the 2016 and earlier to drop like a rock if the 2017 comes out with ~2x the range. Already the 2011's that had a sticker price of $35k can be had for $13-15k after only 3 years. Even if you factor in the tax incentives that is close to a 50% drop in 3 years. It is likely another ~10% per year after that, with a possible bigger step down if 150 miles becomes a standard expectation.

Moof said:

I'd expect the used market for the 2016 and earlier to drop like a rock if the 2017 comes out with ~2x the range. Already the 2011's that had a sticker price of $35k can be had for $13-15k after only 3 years. Even if you factor in the tax incentives that is close to a 50% drop in 3 years. It is likely another ~10% per year after that, with a possible bigger step down if 150 miles becomes a standard expectation.

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$35K car, minus $7500 rebate minus state rebates ($6000 here) makes it a $21.5K car. Expect a 20% to 30% drop as soon as you drive it off the lot as with any new car, and you are left with $15K to $17.2K for a same year used vehicle. $13K to $15K seems very reasonable for a used Leaf.

Early adaption is rarely about making money. There might be a time when Gen1 Leafs fetch a pretty penny to the collector, but chances are rare since they sold enough of them to not cause that problem.

forummm said:

Normally you'd be right. But in this weird world of tax credits (and the extra $5k in GA) the numbers are different. I used a 5-year ownership period. The new Leaf (S w/charge) was $13.5k after credits and rebates. We also have the EV utility rate plan (about one cent per mile, including taxes--which beats the 20 cents per mile with the guzzler). And since I got a 6 year 0% loan, but get the tax credits in full upon filing, I get to invest that money for a few years, so the opportunity cost of the funds is actually negative for 3 years. The Leaf will be under warranty while the occasional repairs to the old car will keep adding up. At the end of 5 years (assuming you "buy" both at year 0 and "sell" both after year 5 to compare true costs of owning) the total cost of ownership was higher for the old car. I included insurance, taxes, and everything. I was shocked too. You could argue that my estimation that I could sell the Leaf at year 5 for $12k is a bit off. But when the tax credits expire (based on current law and sales rates, within the 5 years) I think that's a reasonable number, give or take a few grand. And the oldest used Leafs are selling for around that now even with the tax credits in place.
In GA it's almost a guarantee that it's cheaper to lease than have an ICE, especially for those lucky to have VPP. But I think the math is even better to own if you don't have VPP--especially if you want to keep the car forever.

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How much range do you think that car will have when its 5 years old ?
That GA heat might do bad things to your battery by then.

lizzzzzzzzzzzzzzzzzzzard battery..... heat proof!

(we'll see in 5 years)

Moof said:

I'd expect the used market for the 2016 and earlier to drop like a rock if the 2017 comes out with ~2x the range. Already the 2011's that had a sticker price of $35k can be had for $13-15k after only 3 years. Even if you factor in the tax incentives that is close to a 50% drop in 3 years. It is likely another ~10% per year after that, with a possible bigger step down if 150 miles becomes a standard expectation.

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I think the 2016 and earlier will drop some, but not dramatically. They will have to charge more for the 2017s if they have an extra ~$6k in batteries in them. The used 2011's dropped in price in part because the new vehicles dropped by about $10k ($6k MSRP price cut plus $3.5k rebates).

2k1Toaster said:

$35K car, minus $7500 rebate minus state rebates ($6000 here) makes it a $21.5K car. Expect a 20% to 30% drop as soon as you drive it off the lot as with any new car, and you are left with $15K to $17.2K for a same year used vehicle. $13K to $15K seems very reasonable for a used Leaf.

Early adaption is rarely about making money. There might be a time when Gen1 Leafs fetch a pretty penny to the collector, but chances are rare since they sold enough of them to not cause that problem.

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Yeah, for me the S w/charge math looks something like $29k (purchase)-$3.5k (NMAC) -$7.5k (federal) - $5k (state) = $13k. I think it will be worth more than that for a few years and maybe even stay steady as tax credits expire. CarMax said my 2014 is still worth about $5k more than I paid for it.

KJD said:

How much range do you think that car will have when its 5 years old ?
That GA heat might do bad things to your battery by then.

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No idea. It will be at least 9 bars due to the warranty. But the heat really isn't that bad in GA. And I mostly keep it mid-charged.

forummm said:

KJD said:

How much range do you think that car will have when its 5 years old ?
That GA heat might do bad things to your battery by then.

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No idea. It will be at least 9 bars due to the warranty. But the heat really isn't that bad in GA. And I mostly keep it mid-charged.

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According to the battery degradation model, Atlanta is in almost the same climate zone as Los Angeles.

I went ahead and bought a 2nd Leaf and sold the ICE. ICE free! Even my lawn mower is electric.

forummm said:

I went ahead and bought a 2nd Leaf and sold the ICE. ICE free! Even my lawn mower is electric.

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Congrats on breaking the oil addiction.

You have an advantage living somewhere with good state incentives, that will help out in the long run for sure.

I think your statement in the first post about depreciation being about the same as a gas car is about right and your 2015 battery should be much better than my 2012.

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

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.

Exactly! Nissan was badly wrong the first time so I'm giving them no slack until we have a track record!
Also, they have not said that the lizard is "heat proof", just that it has "significantly reduced degradation in hot climates..."
Time will tell!

braineo said:

lizzzzzzzzzzzzzzzzzzzard battery..... heat proof!
(we'll see in 5 years)

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TomT said:

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

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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".

kubel said:

TomT said:

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

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Not saying I don't believe you, but do you have a source for that?
...

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I think TomT and several others were told that by Nissan personnel at a dinner in Phoenix in August 2013, discussed extensively in MNL thread at that time.