Lease or Buy

It never struck me as an issue that I would ever consider leasing a vehicle. On the stark advice from my father, I was never to lease a vehicle.  And so far I've not leased a vehicle.  But why should you lease or not?  There has to be at least one or two good reasons to lease, else no one would ever do it.  Or maybe people are just not well informed.  After all the odds of winning the state lottery are pretty steep and that hasn't stopped millions from playing.

Buy

I've purchased two cars new since I've been in able to purchase a car.  The first was a Scion xB 2004, the second was my Smart ED.  In between I've purchased several different used vehicles.  It never occurred to me to lease.

When buying a car, it's all yours (outside of the loan).  You can do with the vehicle as you will.  It's not a strong investment like a house, but all the money you put towards it, brings you closer to having a valuable item.  You have the option modify the vehicle, drive long distances, or not.  It's up to you (and your loan company) as to what you can do to the vehicle.

There are plenty of good reasons and arguments for buying a vehicle versus leasing.  But in at least one count, leasing might have an advantage.

Lease

I've read a great deal on leasing, but as I have never actually gone through with a vehicle lease I can't truly speak to the merits. I can however make the point that is continued from above.  You may want to consider leasing a vehicle in the case of an electric car.

The reason to lease an electric car is different from the reasons that you might lease another non-electric-only vehicle. Electric cars are "relatively" new to the market, and the technology in them is changing rapidly.  There's no absolute about whether the tech will improve definitively in the next 2 years or 10 years.  There's just not a whole lot of historical data publicly available to lean on.

When leasing a Smart ForTwo ED, you can expect to pay no more than $150 / month after $2k down.  That's roughly $7500 over 36 months for 30,000 miles.

So which do you choose if you're quite interested still, but not sure which is the better deal?

Why not have both?

Smart has made this decision easier for you.  So far Mercedes-Benz is the only company to offer a lease on the battery in an electric car.  They're also the only one's to offer a cabrio model.  But if you want to own the vehicle for the advantages of owning, but you're not sure about the battery tech and timing, you can lease the battery.

The technology in electric cars is changing quickly, and none so apparently as the cost and capacity of the batteries.  So to avoid the trouble associated with the potential for a poor decision, you can have both.  Additionally, since it's in both your interest and that of Smart for you to lease the battery, most dealers have been instructed to let you know that the battery lease on the Smart ED knocks $5000 off the purchase price.  That means that the base model is only $20k, and the cabrio is only $23k.  And if you finance externally, you can get up to $2k more off.

It stands to reason that in a few years when battery technology improves, with a Smart ED you could get a new more capacitous battery and pay nothing extra.

Conclusion

There's something that no car dealer will tell  you, even possibly those that sell electric cars.  The cost of an EV over the first 5 years is about 50% less to maintain than an gasoline car. But then you'd know that if you read last week's post.

For those who are skeptical yet still of the electric car, I'd recommend going with a lease.  But if you're like me and are quite sure that EVs will be around in 10 years.  I'd say get the leased battery only, and wait for the upgrades.

If you've fortunate like me, you also probably live in Silicon Valley and have access to the same dealership where I got my Smart ED.  I recommend Beshoff Motorcars and the Smart Center of San Jose.  They're quite laid-back and friendly.  Ask for Eric Johnson or Harry O'Leary