Report: Approximately 80% of Electric Vehicles Are Leased
Drivers are opting to lease new EVs rather than buy them outright, fearing that the technology of the vehicles will soon become outdated
With each passing week, more automakers are introducing new electric vehicles to their future lineups. Despite this rapid electric adoption, only about 1% of the global market has gone fully electric.
This statistic would suggest that people are not buying new electric vehicles, and this is indeed the case. Instead, motorists are leasing electric models.
Nearly 80% of electric vehicles are leased, rather than bought.
Similarly, 55% of new hybrid models are leased, rather than purchased outright. For comparison, the lease rate for the U.S. automotive market as a whole is right around 30%.
One of the major reasons why drivers are leasing electric models rather than buying them is the rapid rate of advancing electric technology. By the time a three year lease is up, the electric vehicle connected to that lease will undoubtedly be outdated.
“When there’s new technology coming out, and it’s coming out so rapidly, and you’re improving on it so constantly, typically people only want to lease it,” explains Steve Center, a vice president of American Honda Motor Co.
This consumer school of thought is also present for many other electronics. Smartphones generally become obsolete after three years, roughly the same time that a vehicle’s initial lease lasts.
The electric vehicle segment is projected to keep up its rapid rate of advancement in the years ahead. Battery prices have fallen by an average of 20% annually, making the production of electric vehicles less expensive and improving the charging times for those vehicles.
If you happen to be in the market for a used electric vehicles, then you’re in luck. EVs and plug-in hybrids are projected to maintain only about 27.3% of their initial value three years from now.
A comparable compact car is projected to maintain 35.6% of its residual value after three years. In fact, 2014 electric compact cars are currently offered for 23% of their original sticker price.
The market will be prime for used electric models when 2020 rolls around, as the leases for first wave electric models like the Chevrolet Bolt EV will be expired by then. Until then, if drivers want to experience the latest in electric vehicle technology, chances are that they will go with a leasing option instead of buying outright.
News Source: Bloomberg