A little while back, I asked DailyFinance's readers for their stories about buying vs. leasing cars. While many of their responses focused on fairly common concerns -- financing, mileage, long-term value, and so forth -- another trend quickly emerged. Many readers were traditionally car buyers, but switched to leasing because of another consideration entirely: rapid changes in technology. Several readers offered suggestions of ways to get the best technology -- and the best price -- through a lease
Stable vs. Unstable Technology
While nobody wants to get stuck with an outmoded car, the danger of driving last year's technology is increased when it comes to electric vehicles. With improvements in batteries and electrics constantly on the horizon, there is a very real possibility that this year's technological marvel will be next year's Betamax on wheels.
This concern definitely played a large part in "Mary's" decision to go with a lease. She wrote that "We always bought our cars new," but that she switched to leasing when got her electric Nissan Leaf. "Electric car technology is changing and so fast that we didn't want to be tied to soon-to-be-obsolete technology for the long term," she wrote. She has a three-year lease, and expects electric car technology to be "greatly improved" by the time it runs out. Next time around, though, plans to buy a hybrid crossover, based on the idea that the technology is "stable" and less likely to change as rapidly.
Getting Help From Car Companies
Future shock is nothing new when it comes to consumer purchases: Apple, for example, often finds itself on the sharp end of furious screeds about their incredibly short product cycle, which takes roughly six months to transform the hot new thing into an outmoded dinosaur. But, unlike Apple, car companies often have a hard time selling their unique value proposition. Put another way, electric car manufacturers can't rely on customer loyalty; they need to find some way to help car buyers overcome their worries.
It's not surprising, then, that so many car companies seem to be working around this technology concern. As "DElia3630" notes, she got a special deal on her electric car: "The deal was a special factory lease with a low out of pocket expense and a low monthly payment." Like Mary, DElia is wary of getting stuck with outdated technology. On the other hand, if electric car technology proves relatively stable, she explains, "I can buy the car at the end of the lease and take advantage of its popularity."
On Tuesday, Tesla Motors' Elon Musk offered another solution. Taking advantage of government incentives, the car company has structured a lease that -- it claims -- costs as little as $500 per month. The really interesting aspect of the lease, however, is that Tesla is pegging its cars' residual value to the Mercedes S-Class sedan, guaranteeing that the resale value of the Tesla Model S will be the same as the Mercedes. In other words, Tesla is effectively promising to protect its buyers from being financially undermined by advances in electric car technology.
Gas Prices: The Real Payoff
"John" also got a good deal on a Nissan Leaf lease. Because of a friend, he was able to get his car at $1,000 below invoice, and an added $7,500 government tax incentive helped seal the deal. The real kicker, however, was the gas bill. "I looked at my gas purchases in Quicken for the last year and I was spending over $250 to $300 per month in gas," he wrote. By comparison, he estimates that his electric car saves "over $200 per month in fuel."
Caveat Emptor: The Downside of Electrics
This isn't to say that leasing an electric is all rainbows and sunshine. John estimates that he also has to pay an extra $600 a year in insurance. Then again, with gas costs consistently high, an extra $50 per month in insurance pales beside his savings at the pump.
Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at email@example.com, or follow him on Twitter at @bruce1971.
Take the first steps to building your portfolio.View Course »