Electric Cars Value Tumble (WSJ)

[user 1096]

http://www.wsj.com/articles/resale-prices-tumble-on-electric-cars-1424977378?KEYWORDS=Nissan+Leaf

No mention of BMW, and brief mention of Tesla holding value; Leaf Plummets

 

[jadnashuanh]

This is really only an issue if you trade or lease your cars frequently. Especially with something like the i3, there really isn't much to wear out. I plan to keep mine a long time, and the depreciation curve flattens out by then.

 

[NormanF]

This is really only an issue if you trade or lease your cars frequently. Especially with something like the i3, there really isn't much to wear out. I plan to keep mine a long time, and the depreciation curve flattens out by then.

On one hand I do not want i3's to be affected by this. On the other hand I would love to be able to buy my i3 at the end of it's lease for less than the residual value I was given.

 

[jadnashuanh]

It could really make the second owner a good deal! But, then almost any used car is a better buy than getting it new. If you keep them long enough, it really doesn't matter.

 

[i3an]

Unfortunately, the news sections of the WSJ have been infected by the opinion pages that are wholly in the bag for the CO2 industry. Case in point: "...some worry the expensive batteries could have to be replaced" on two-year old Leafs — beware the anonymous "some", which is usually a doppelgänger for the journalist's (or her editor's) marching orders. Look, even Leafers know how long their batteries really last, so the WSJ (aka Rupert Murdoch of Fox News infamy) is merely propagandizing; I challenge Christina Rogers to open her journalist's notebook and produce a real quote from a real Leaf owner to substantiate that allegation.
I bought my beloved Honda Insight in the year 2000 and said at the time that I hoped it would become obselete in 5 years, and was very disappointed when it became more like 14 years for the i3 to come out. Now I decided to lease an i3 (rather than own) precisely because I expect that the technology/price/value of BEVs to improve so rapidly that when my lease expires the resale value of my i3 will have plummeted such that it will be BMW's problem, not mine. This is a feature, not a bug, of BEVs and all rapidly evolving technology — after all, who is bemoaning that their 3-year old iPhone has plummeted in value?

 

[pancakes213]

This is really only an issue if you trade or lease your cars frequently. Especially with something like the i3, there really isn't much to wear out. I plan to keep mine a long time, and the depreciation curve flattens out by then.

On one hand I do not want i3's to be affected by this. On the other hand I would love to be able to buy my i3 at the end of it's lease for less than the residual value I was given.

I'm a newbie to leasing. How would the residual value change at the end of your lease? I was assuming that if I'm given a residual value of $29k right now when I sign my lease, then that would be what I agree to pay after the lease if I want to purchase it.

 

[jadnashuanh]

I'm a newbie to leasing. How would the residual value change at the end of your lease? I was assuming that if I'm given a residual value of $29k right now when I sign my lease, then that would be what I agree to pay after the lease if I want to purchase it.

If the car is actually worth a lot less than what you your residual, if you wanted to buy it, you'd still have to pay the residual value unless you could negotiate with the dealer. But, in the time you had it, because they thought it would be worth more, you only are paying for essentially the depreciation, and would have had a bargain verses buying it, then trading it in. On the other hand, if it were worth more than your residual, you'd be getting a bargain if you bought it, even if you then sold it...you would have paid more for it during the lease, but may be able to make it up if you bought it and then resold.

So, when it is worth more than the residual...you've paid too much. ANd, the opposite, if it is not worth the residual. The 'winner' can flip-flop. It only comes out even if the guess is correct for all involved (well, the dealer is making money regardless).

Basically, a lease is a guess at what the depreciation will be, and you pay that plus a bit for profit. Who ends up the biggest winner, depends on how good the guess was. In the interim, you get to drive the car.

 

[Jeffj]

Slight correction. Its not the dealer making money on the lease, its the financing company (BMW FS, most likely). The captive financing companies (GMAC, Ford Credit, BMW FS, etc.) are typically the most profitable portions of an automaker, as their "product" is cash, and they make a lot of money with that cash. That's the real driver for why leasing has exploded in the last decade. Hard to say no to big profits, especially when the captive financing companies can cherry pick the best customers and therefore have the lowest risk on non-payment.

 

[NormanF]

Darn. I'm a lease newbie too. I was hoping that I would be able to buy the car at the end of the lease for a lower price without having to negotiate. Assuming that the i3 depreciates faster than BMW Financial thinks it will. This is also my first BMW so I do not know how well they hold their value. So basically I still have to buy it at the stated residual value on my contract unless I am somehow able to negotiate if the actual residual value is lower. To be honest I'm not that concerned. At least right now.

 

[rtanov]

Gotta love articles like this. And the cheap gas which made these great cars not very popular. Was just able to get a nice lease deal on our second i3

 

[WoodlandHills]

Darn. I'm a lease newbie too. I was hoping that I would be able to buy the car at the end of the lease for a lower price without having to negotiate. Assuming that the i3 depreciates faster than BMW Financial thinks it will. This is also my first BMW so I do not know how well they hold their value. So basically I still have to buy it at the stated residual value on my contract unless I am somehow able to negotiate if the actual residual value is lower. To be honest I'm not that concerned. At least right now.

So why not just turn your i3 back to the dealer at the end of the lease and then buy a used one off sombodys lot for less than the residual? This is not an ICE where careful engine break-in is key to longevity: with no oil changes to miss nor transmission to beat on, EVs will make wonderful used cars.

 

[Blue20]

hmmm.... $10K for a 2012 Leaf. searching thru used card section on Craiglistslist, I don't see any listing even close to this price.

 

[NormanF]

Darn. I'm a lease newbie too. I was hoping that I would be able to buy the car at the end of the lease for a lower price without having to negotiate. Assuming that the i3 depreciates faster than BMW Financial thinks it will. This is also my first BMW so I do not know how well they hold their value. So basically I still have to buy it at the stated residual value on my contract unless I am somehow able to negotiate if the actual residual value is lower. To be honest I'm not that concerned. At least right now.

So why not just turn your i3 back to the dealer at the end of the lease and then buy a used one off sombodys lot for less than the residual? This is not an ICE where careful engine break-in is key to longevity: with no oil changes to miss nor transmission to beat on, EVs will make wonderful used cars.

I'll worry about it in two years. And I have REx so there are oil changes.

 

[WoodlandHills]

I have the REx too, and given how infrequently the REx runs and how far apart the oil changes are a skipped service will make no difference in the life of the Rex. As long as there IS still oil in the REx as it sits for months at at time w/o ever running it will be fine for many years of inactivity to come.

 

[psquare]

I have the REx too, and given how infrequently the REx runs and how far apart the oil changes are a skipped service will make no difference in the life of the Rex. As long as there IS still oil in the REx as it sits for months at at time w/o ever running it will be fine for many years of inactivity to come.

Speaking of REx oil changes: I went for the service package, which cost me £375 incl VAT and includes all oil replacement, servicing for the REx. The car requires only 2 services over 5 years.

 

[jadnashuanh]

Personally, if I had a REx, I'd change the oil annually, regardless of hours of use, or, sooner, if the computer said to.

 

[cab]

I have a loaded 2012 Volt (MSRP was just over $45K)...now 32 months old with about 31K miles. A local Chevy dealer has my EXACT car (same color, options, 30k miles, everything) for $19,577 AND it is a certified pre-owned with a 12mo/12k warranty. Essentially, a "max price" scenario (i.e. dealer, certified, loaded car, etc.). The residual on my lease (which is up in July) is something ridiculous like $27,500. By the time I turn in my car, I would expect it to be offered for $18K or so as a dealer CPO. There will be a lot of the "cheap lease" cars coming off lease here this Summer.

One thing which has definitely impacted Volt resale is the $5K price drop for the 2014 models. I doubt we'll see that with the i3.

As to my next vehicle, there are three likely contenders: BMW i3, new 2016 Volt OR an ultra-cheap used Volt...it is hard to deny the appeal of the latter for a fraction of the price of an i3 rex.

 

[jadnashuanh]

A used car is almost always more bang for your buck. You may give up the latest features, but someone else has eaten the depreciation, which can be huge. The longer you keep a car, the less of an impact depreciation has, but if you like to replace them before the warranty expires, leasing can be your friend with the down side of a perpetual car payment.

 

[imolazhp]

Here is my question...

BMW has already announced that they have created a battery pack that is the same size as the current pack in the i3, but has DOUBLE the capacity (and thus double the range). So... If they decide to put this battery in say the 2016 BMW i3, what happens to the values of the 2014's and 2015's? EV owners typically (not always though) research, research, research before committing to a vehicle. So will everyone that bought instead of leased 2014's and 2015's be left owning less desirable used EV's? And thus not be able to resale them for what they would have had battery technology not improved?

This is part of what has kept me from buying an i3. Here is the link to the article about "The Thing" http://blog.caranddriver.com/meet-bmws-silent-700-horsepower-tesla-killer-its-called-the-thing/ 5th paragraph, "...a battery with twice the storage capacity of BMW’s current plug-in hybrids (while maintaining the same physical size), and ..."

Surely I am not the only person that has thought about this.

 

[jadnashuanh]

If the current vehicle meets your commuting needs, do you really care if the new one has so much more capacity? To recharge it would either take twice as long, or, you'd be paying to have a bigger on-board charging circuit and a major upgrade to your EVSE (and many houses won't support that without major costs)...doubling it will mean more weight and costs. I looked at the i3 as a product that will have an extended service life - very little actually wears out, and it's not like the body is going to rust away, or you get a hole in the quarter panels. Unless you're one that always has to have the latest and greatest, I do not see any major safety improvements coming, so I plan to keep mine for longer than my normal purchases. When it gets old enough to consider a battery replacement, I'm sure that there will be options, and there will always be some turn-in value of the existing battery pack. Then, it will be a decision to either buy a whole new vehicle, or upgrade the existing one and, when you keep them long enough, the resale value tends to level off.

There's lots more that can go wrong on an ICE and maybe more reason to consider replacing them more frequently.