Conflicted - Price SO good that I should just buy instead?

[cornfieldcraig]

This is a long story, so I'll skip the details. Suffice it to say that I bought a 2014 BEV Giga + Tech + Parking + Heated Seats for $36,500 -- $29,000 after the federal tax rebate which I will undoubtedly qualify for in full. Due to a dealer screw-up, I have a second chance at leasing, this time at a rate lower than I was originally offered. $244/mo, nothing down, and 10k miles for 24 months, 62% residual. I'm the only person ever to buy rather than lease an i3 from this dealer.

I LOVE the car so far, but it's my first EV and hey, it's 70 to 80 degrees in Chicago right now. I've put about 15,000 miles per year on my VW Jetta TDI in the last couple of years, but expect to go a few miles less in the i3. So, I'll need to tack on say $55/mo in additional miles, bringing my lease rate to $300/mo. I know, most of you are thinking this is a no-brainer. Take the lease.

As I see it, the question is, will this car be worth $23,000 in two years? If less, I should lease. If more, I should buy. That's the point where the cost of the lease plus the repurchase would equal my purchase price, all taxes included. The residual value in the lease is just over $29,000, which coincidentally is what I'm paying for the car new after the tax rebate. That would suggest that I should buy and pocket a few grand after two years if I choose to sell. But a 2012 LEAF SL in very good condition and 28k miles looks to have a value of about $12-$13k. I chose the 2012 for this comparison because in two years, my new 2014 will look to be three years old, especially since the in-service date was 2014. Yet, this is comparing a very nice car with an everyday brand and no excitement to a BMW. I'm hoping, too, that BMWs batteries will age better than the LEAFs, but there's no data to support that hope.

So, whadya think? Will my BEV Giga be worth more or less than $23k in two years? Is it worth the gamble to just buy, given the extraordinarily low price I got?

 

[Jeffj]

In my opinion, you should buy the car. Here's my logic:
The $29K residual seems like a solid number at this point - Take the MSRP minus the incentives/tax breaks and then reduce the price by 1% per month thereafter. This is a pretty standard formula and is what Tesla is using to calculate residuals. Whether the values are actually supported by the market or not is a different story entirely. I suspect that the i3 will hold its value more than the first gen Leaf's, but all EV's (and all cars for that matter) lose a lot of their value due to not being "shiny and new". If you can buy the car today for what the residual will be in 2 years, then that seems like a no brainer. You get 2 years for "free".

If the car is working for you now, its likely that it will work for you in 2 years (or 3 years or 5 years). In other words, even though there are likely to be a lot more choices available in 2-3 years, that doesn't mean that you NEED them. You might want them, but you likely won't NEED them.

In my mind, it always comes down to the price/mile for the car. We tend to keep cars a long time, and personally I really like not having car payments for a while before I jump into a new car. In your case, say you get a 4 year loan (which should have a pretty low payment) and you keep the car for 6 years, your total cost/mile will be very, very low and you get 2 years with no car payment. Those final 2 years mean a lot of extra money ($7000-$10000 likely) in your pocket.

I understand people who lease (and the deals can be pretty amazing) and the desire to get something new every few years, but for me, the car is an appliance (albeit one that I enjoy a lot), and ultimately the cost/mile is more important to me than always getting the latest. Others are willing to make very different choices.

 

[epirali]

This is a long story, so I'll skip the details. Suffice it to say that I bought a 2014 BEV Giga + Tech + Parking + Heated Seats for $36,500 -- $29,000 after the federal tax rebate which I will undoubtedly qualify for in full. Due to a dealer screw-up, I have a second chance at leasing, this time at a rate lower than I was originally offered. $244/mo, nothing down, and 10k miles for 24 months, 62% residual. I'm the only person ever to buy rather than lease an i3 from this dealer.

I LOVE the car so far, but it's my first EV and hey, it's 70 to 80 degrees in Chicago right now. I've put about 15,000 miles per year on my VW Jetta TDI in the last couple of years, but expect to go a few miles less in the i3. So, I'll need to tack on say $55/mo in additional miles, bringing my lease rate to $300/mo. I know, most of you are thinking this is a no-brainer. Take the lease.

As I see it, the question is, will this car be worth $23,000 in two years? If less, I should lease. If more, I should buy. That's the point where the cost of the lease plus the repurchase would equal my purchase price, all taxes included. The residual value in the lease is just over $29,000, which coincidentally is what I'm paying for the car new after the tax rebate. That would suggest that I should buy and pocket a few grand after two years if I choose to sell. But a 2012 LEAF SL in very good condition and 28k miles looks to have a value of about $12-$13k. I chose the 2012 for this comparison because in two years, my new 2014 will look to be three years old, especially since the in-service date was 2014. Yet, this is comparing a very nice car with an everyday brand and no excitement to a BMW. I'm hoping, too, that BMWs batteries will age better than the LEAFs, but there's no data to support that hope.

So, whadya think? Will my BEV Giga be worth more or less than $23k in two years? Is it worth the gamble to just buy, given the extraordinarily low price I got?

I am leasing because I believe in 2 years there will be a range of 200 miles BEVs and that could significantly impact the price of correct EVs. But who knows right?

 

[spinball]

In Chicago, eh? Do you mind stating which dealer and what % off MSRP you were offered?

Did it take significant effort to talk them down to the agreed price? $244 with $0 down is quite a steal.

 

[Blue20]

Today is May 27. They are still 2014 MY around?!?

 

[epirali]

Today is May 27. They are still 2014 MY around?!?

Oh yeah, there are at least 50 or so around Maryland alone. And yet dealers apparently are unaware of the year or that they should really try to sell them!

 

[spinball]

Today is May 27. They are still 2014 MY around?!?

2014s don't seem to be uncommon at all from what I've seen. They didn't seem to sell very well. I think it's too cutting edge for most? Wait until there's a similar car with 200+ mi range--then you'll see the masses start to get interested!

 

[cornfieldcraig]

Valid points, all. I too view the car as an appliance. I want to enjoy it, but it has to be practical.

In looking at the 1% per month formula, I'm thinking that I'm effectively already a year into that formula, so 24 months from now, it's a 36% figure, so about $4000 more depreciation, bringing the expected residual to $25000. Here's something kind of funny. Cars.com says the residual on a 2014 BEV with a 24-month lease is 48%. How much is that? $23000. Exactly my break even point. I suspect that BMW has inflated the residual value to lower the lease rates so they can move the 2014s out.

Regarding the battery technology, I'm guessing that the order of magnitude upgrade is more than 2 years out. Samsung SDI is projecting 2019 for its 250Whr/Kg batteries.

Regarding the dealer: Naperville. Just a shade under 24% discount, excluding the federal tax credit. They burned through much of their 2014 inventory over the weekend. Some others were being sent to CA as a dealer transfer. They still show inventory online, but I would think that some of those are spoken for, too.

 

[spinball]

Thanks for the info on the dealer. I talked to two others in IL and they don't seem to be to that level of desperation at this point. I have all the time in the world, so I guess we'll see.

Wait a minute, that's Bill Jacobs? I did contact them. I guess I would have had to go down there in person on the same day I emailed them. Argh.

 

[cornfieldcraig]

It's entirely possible that the lease deal that I have been offered is a special case. It's a long story.

I'm still completely on the fence... but thanks for your input, folks.

 

[dutyfree]

This is a long story, so I'll skip the details. Suffice it to say that I bought a 2014 BEV Giga + Tech + Parking + Heated Seats for $36,500 -- $29,000 after the federal tax rebate which I will undoubtedly qualify for in full. Due to a dealer screw-up, I have a second chance at leasing, this time at a rate lower than I was originally offered. $244/mo, nothing down, and 10k miles for 24 months, 62% residual. I'm the only person ever to buy rather than lease an i3 from this dealer.

I LOVE the car so far, but it's my first EV and hey, it's 70 to 80 degrees in Chicago right now. I've put about 15,000 miles per year on my VW Jetta TDI in the last couple of years, but expect to go a few miles less in the i3. So, I'll need to tack on say $55/mo in additional miles, bringing my lease rate to $300/mo. I know, most of you are thinking this is a no-brainer. Take the lease.

As I see it, the question is, will this car be worth $23,000 in two years? If less, I should lease. If more, I should buy. That's the point where the cost of the lease plus the repurchase would equal my purchase price, all taxes included. The residual value in the lease is just over $29,000, which coincidentally is what I'm paying for the car new after the tax rebate. That would suggest that I should buy and pocket a few grand after two years if I choose to sell. But a 2012 LEAF SL in very good condition and 28k miles looks to have a value of about $12-$13k. I chose the 2012 for this comparison because in two years, my new 2014 will look to be three years old, especially since the in-service date was 2014. Yet, this is comparing a very nice car with an everyday brand and no excitement to a BMW. I'm hoping, too, that BMWs batteries will age better than the LEAFs, but there's no data to support that hope.

So, whadya think? Will my BEV Giga be worth more or less than $23k in two years? Is it worth the gamble to just buy, given the extraordinarily low price I got?

I am leasing because I believe in 2 years there will be a range of 200 miles BEVs and that could significantly impact the price of correct EVs. But who knows right?

That's what I thought when I leased my first EV back in 2013, now is 2015, there is no sign of "affordable" 200 miles EV.

 

[Dyefrog]

I am leasing because I believe in 2 years there will be a range of 200 miles BEVs and that could significantly impact the price of correct EVs. But who knows right?[/quote]

That's what I thought when I leased my first EV back in 2013, now is 2015, there is no sign of "affordable" 200 miles EV.[/quote]

Your wait may be over. Here's some specs lifted from Tesla site link dated 5/25/15.
Model 3 set for March 2016 release

One morsel of information that Tesla has let slip about the Model 3 is that it is expected to be released in March 2016. Of course, one should be prepared to take this information with a massive dose of salt, as the Model X has already been delayed on numerous occasions. The demanding nature of designing, manufacturing, testing and ultimately releasing a roadworthy vehicle can lead to delays with the best will in the world, and there have been all manner of delayed releases of gas guzzling vehicles in the dim and distant past.
The Model 3 will be 20 percent smaller than the previous Model S, while the price tag that Tesla has set for the vehicle is also expected to be significantly smaller than previous releases. The Model 3 is expected to range between $30,000 and $35,000 in price when it is released, although Tesla has declined to confirm these figures itself.

Early specifications related to the vehicle suggest that this entirely electric car will be capable of travelling between 200 and 300 miles on a single battery charge. Tesla is currently developing its battery charging facilities in order to ensure that consumers wishing to travel via electric vehicle are able to enjoy this process as conveniently as possible.

 

[Jeffj]

March 2016 is when Tesla is expected to release the first design models of the Model 3, not the production date. We've seen the Model X design models for well over a year and production is still at least a few months away.

While I greatly admire Tesla, they are finding out that building a new car takes a long, long. long time. They have a track record of missing every date that the state for virtually all models that they have made or are working on. The Model X is going to be 2 years later than the often quoted first promise date.

I have no doubts that Tesla will make the Model 3, and that it'll be great. It just won't be available until 2018 (IMHO).

 

[Dyefrog]

Totally agree that 3/16 is extremely ambitious given their track record, however, even if they can start the roll-out similar to the Model S alpha, beta, founders, signature, production series, it may cause buyers to hold off purchasing the competition. If those specs make it to production, given that the next generation of i3 isn't scheduled till 2020?, I don't see how the i3 is even a player. Even the Leaf is claiming 200+ mile range in 2017. The only trump card the i3 holds is non-corrosive body/frame at that point (compared to the Tesla). I really wanted to buy the i3 but I just can't justify it based on this albeit "teaser" info. I'm in no hurry so unless some deal of a lifetime falls into my lap, I'll just get sucked to the sidelines for now.

 

[spinball]

There's always something better coming. The i3 is available today and with all details known. I would bet on 2018 for the Model 3 and even then it will probably start off in small numbers with a lot of people waiting for it.

My guess is the Model 3 will price out similar to the i3 unless you want a stripper. No one knows if any part of the i3 will be refreshed by 2018--Maybe they'll update the batteries with a more range but not change the overall design?

I'd like to check out the 2016 Volt too but even that won't be available widely until the end of this year.