Should you buy or lease an EV?

Thinking of going green with buying or leasing an electric car? While EVs have a higher purchase price than their gas counterparts, you may be wondering is it better for you to buy or lease an EV?

Should you buy or lease an EV? Whether you choose to lease or buy an electric vehicle, making the right decision is entirely based on your personal needs and situation, and both options come with a different set of advantages and disadvantages. 

There are some key differences between buying and leasing an EV. Read this brief guide to help you make a decision that works for you the best.

The main reasons to lease an EV:

Depreciation 

EVs depreciate fast. If you take a look at the used prices for Nissan leaf or BMW i3, you will find they are more affordable in the resale market. Overall, most EVs tend to depreciate faster than their comparable gas-powered vehicles. This is because the older models suffer from an accelerated depreciation rate while the manufacturers upgrade these models every few years with better battery range and performance.

Lower Monthly Payment

With leasing, you are locked into a fixed residual which is set by the auto manufacturer based on estimated resale value. Therefore, you are paying for the EV’s expected depreciation. But if you are financing an EV, you can owe more on your loan than what your vehicle is worth due to the fast depreciation. You can expect your monthly payments to be lower than if you chose to finance the same EV.

Battery

Leasing an EV gives you the option to enter into a new lease and change with a brand new electric vehicle that has a fresh battery. While we all know that the battery of an EV can be degraded from every charging and usage, leasing not only gives you access to a new battery but also to the latest features and upgrades.

Mileage Restriction

Since EVs have a limited range compared to conventional vehicles, it’s unlikely you’ll exceed the mileage restriction in your lease contract.

Purchase incentives

By buying a new electric vehicle priced at $50,000, you can claim the full $5,000 federal rebate and recover 10% of the purchase price. While leasing the same electric vehicle for 48 months with an estimated residual value of 30%,  that makes the recovery increased to 14.2%.

The main reasons to buy an EV:

The only and the most beneficial reason to buy an EV is that it gives you maximum flexibility. Although you may face a depreciation hit, no one will penalize you for damage, mileage restriction, or modifications to your EV. Also, if you don’t like your new EV, you have the flexibility to sell it or trade-in for another car. In addition, if you own a business, there’s a zero-emission business tax write-off for zero-emission vehicles including electric cars, hybrid-electric cars, and hydrogen fuel cell cars. Canadian businesses can write off 100 percent of the purchase price in the year the car goes into service, up to $55,000.

In the end, you’ll need to crunch the numbers and figure out the best for yourself. While leasing offers protection from long-term depreciation and benefits from the incentives, buying gives you more freedom to control how long you want to own the car.

Learn more about the benefits of buying from Carnex. We believe that all clients deserve to know the good and bad of what they’re buying. Because we wanted to know these when we bought cars. That’s why at Carnex.ca, we will proudly display every detail every step of the way. Browse all the best cars, automobile buying tips, auto insurance, young drivers, driving techniques, auto industry trends from Carnex Blog.