Saturday, May 23, 2015

Used LEAFs For Cheap. So What's Wrong With That?

Recently an article was published at HybridCars.com  about the low prices we are seeing for used Nissan LEAFs.  Now some viewed the article as a statement of how poor an investment the Nissan LEAF with the low "value retention" is without even mentioning the huge differences in maintenance and fuel against a gasoline based car or the value of incentives, both financial and personal,  for driving an EV.

To me this article is great news especially for the budget minded household that is looking for insurance against the possible rise in fuel prices. To further the cause, WA State is proposing to make used EV purchases tax free as well as long as they are less than 5 years old. There is a spate of EVs coming off leases and the price difference can be small after all incentives are applied making the used LEAFs a very tough sell.

Annual improvements complicates the matter further. Many feel that Nissan has been sitting on its heels in EV development but that is not really the case. The LEAF's basic platform has remained the same but several things around it have been modified or changed to better suit the wants of the current EVer.  MY 2013 had several major changes including more efficient heating, faster charging, Model S trim, and likely better battery chemistry. This has caused the 2012 MY LEAFs to be offered at bargain basement prices. A dealer in OR has 5 under $10,000.   (Oops, he sold one. Only 4 left at that great price!)

But 2013's can be had for a great price as well so its very much a buyers market!

Now several states have great incentives but all are focused on the new car market. The problem with that is the biggest area of improvement for both efficiency and emissions is likely to come from the middle income bracket and down.  It is this segment of the car buying public that is usually buying used, older cars which almost always means less maintained (likely more emissions per mile in states without regular smog checks)  higher miles (increasing maintenance costs) and simply less efficient (lower MPGs which results in higher per mile costs)

But Nissan has realized that cheap used LEAFs have tilted the market so has started offering $5,000 incentives to purchase at lease end. Now, this becomes a no brainer to the person on a budget with modest driving needs especially when a replacement battery a few years down the line might be as low as a 4 year gas bill even when considering the currently depressed gas prices. But even that might not be enough.

There have always been rumors of when Nissan would start bumping up the battery capacities but none as specific as the ones that started circulating this week.  Several unverified sources have come out to announce that in a few months the 2016 LEAF will come out in 30 kwh sizes for the SV and SL trim with the S keeping the 24 kwh pack.  Prices have not been mentioned but I am guessing SV/SL prices will see no more than the usual year to year price increase of a few hundred or even less.

But that means the S will have to come in at a lower price to remain competitive which will really make the used LEAF market very attractive. All of a sudden, the only "no brainer" decision is what EV to buy?  

Many feel that the 30 kwh bump is not enough (its the 2 percenters doing most of that talking) but in my World, its huge!  This adds roughly 2 dozen different destinations to my work itinerary including the dreaded "Grays Harbor EV charging desert"  (FYI; the Chevy dealership in Aberdeen now has the lone charging station for the area meaning it is no longer hopeless but since its an L2, it does not work for my time stressed employment purposes)  Also keep in mind that a larger capacity pack makes one time at a fast charger that much more productive. With the rate of charge slowing down as the SOC increases, this potentially could mean only charging the lower part of the pack to maximize the time on the road.

But the real story here is what price will the S trim come in at?  My prediction is just about the same or maybe a few hundred less BUT fast charging and upgraded L2 now will be standard, effectively taking that extra cost of the equation.  The S with the charge package has been a huge hit especially among the bargain hunter crowd and Nissan wants to make sure that continues.

So where does that leave the thousands of used LEAFs that will be hitting the market very soon?  Now, Nissan has not said a word about the 2016 so in reality, its all rumors but it all makes sense. Nissan starts the $5,000 incentive on lease buyouts knowing that the higher capacity LEAFs will sway fence sitters to turn in their current vehicles.  They probably are not very happy about someone spilling the beans before the lease incentive had time to gain traction  so the next step I am guessing is a price cut on replacement batteries.

So now back to the used LEAF dilemma.   Recently,  2013's with under 30,000 miles are popping up in the $10-12,000 range. The 2016 LEAF will probably drive that price down, so if one could get one for say $9,000 how does that compare to a used car?

Well, I did some shopping this week (mostly due to random slack times at work which means I was on the clock but still waiting on clients or something) and I found a few things.

Despite very low gas prices, economy cars are EXPENSIVE.  It did not take me long to realize I had to lower my expectations to find a reasonable comparison. I was looking for economy cars that averaged at least 30 mpg, 2013 or newer under 30,000 miles.  Other than the bottom of the line sh** boxes, there was very little in the "under $10,000" range.

So for comparison purposes, I will use a compilation of  a 4 door sedan compact with 30 mpg and 30,000 miles on the odometer. Prices ranged from $11,000- $13,900.  To drive 15,000 miles a year that would run $1500 a year with gas at $3.00 (its $2.88 here)

If getting the LEAF at the same $11,000  fuel prices if charging strictly at home would be no more than 3 cents a mile here (I average under 2 cents for home charging only)  or $450 a year which means an annual "cash back" of $1000 from the Oil Company!!

So the only missing part from this "no brainer" calculation is how much will replacement packs cost in the future?

OK, so remember you heard it here first!

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$3999 for 30 kwh replacement by 3rd Q, 2017.   What does that mean? That means that after 4 years, you will have broken even in "fuel cost" verses and somewhat equivalent economy car and likely to still have what current LEAFers have with 80 miles of range!!

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Just a prediction!. No verifiable info

**********EDIT   3/12/16 ***************

Just a few notes to add;

* the 30 kwh version was NOT extended to the S which sucks meaning you have to pay an extra few grand to get the SV/SL which includes features you may or may not want

** gas prices have plummeted which might make a difference to some but not to me. Although "experts" predict prices will stay low for years, I personally don't trust them and besides, its nowhere near the 70 cents a gallon it would have to be to match the efficiency of a LEAF anyway

*** Still nothing on the sales tax waiver for used EVs in WA State yet and it looks like it was taken off the table.... Bummer

**** Not everyone is completely relying on gas prices to stay low because highly efficient gassers with low mileage still command a premium price!

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