3 ms·

Hate to say it but this is part of the problem. There's nothing sustainable about these manufacturer/government sponsored lease deals. California is the biggest

by tinbad 10y ago

Hate to say it but this is part of the problem. There's nothing sustainable about these manufacturer/government sponsored lease deals. California is the biggest offender with the largest incentives and unreal regulations. A car is a long term consumer good, the energy that goes into building one outweighs the 2-3 year leases these cars are offered at loss prices. What happens when these leases are up? Most owners will walk, because why pay big bucks to buy out the car if you can get into another one for $50/month. These cars will end up being bought back en masse by the manufacturers and it's a big question what will happen then. Very likely to be scraped and, again, lots of energy wasted. All thanks to Californias EV credit system. Edit: lol downvote all you want, the reality won't change. If you understand the economics of these leases (see my other comment) you'll see it too...

usefulcat 10y ago
That makes no sense. Why would the lessor scrap the car rather than sell it at the end of the lease?
- tinbad 10y ago
  Let me explain how these leases work, MSRP for OPs Chevy Spark EV is in the 25k ball park, lessen the 7k government incentives is 18k. If OP is paying 80/mo (we don't know if that payment includes sales tax but let's say even if it doesn't) that's 2880 paid over a typical 3 year/10k mile a year lease. So now the balance on the car is 15k. Looking at cars.com a comparable EV Nissan Leaf (Spark EVs haven't been around for that long) 3 years old with 30k miles are going for 7-10k range. Now who do you think pays for that difference? And that's even assuming these cars all can be sold. Scraping is a bit extreme but is definitely not unheard of. The issue with EVs is that where most ICE cars can be sold at auction and exported to other countries, EVs aren't desirable to that market since there's a lack of infrastructure for them to be usable in, let's say, Latin America or Africa.
  - ZeroGravitas 10y ago
    I don't follow the maths. A leasing company has a vehicle that they've got 15K "left" to pay off on, and they can only sell it for 10K so they'll just pay money to scrap it instead? How does that make sense for them? If there is some monetary incentive for them to do this, you've not outlined who is paying it to them. And even if it exists, that's the problem, not the up front incentives.
    - tinbad 10y ago
      In the case of these ultra cheap EVs the bank is the financing arm of the manufacturer. Of course no normal financial institution will take such a loss but because of CAFE regulations the only way they can kee selling high profit margin, gas guzzling SUVs is by offering these 'highly sponsored' EVs.
  - epistasis 10y ago
    Are you saying they would rather "scrap" the car than get the $7k -$10k? Why in the world would that happen? Secondly, OP is subtracting the $2,500 rebate from the car payments he's making, so the manufacturer is actually getting ~$6k instead of $3k, which is a significant chunk of the difference between residual and current resale value.
    - tinbad 10y ago
      Yes scrapping is a bit extreme and I'm sure someone will buy them for way below the residual value but I just used it to get the point across of the economics of these cheap leases. It just doesn't add up.
      - mywittyname 10y ago
        > It just doesn't add up. Yes it does, you're just a variable: California requires car companies to sell a certain number of EVs in order to sell other cars in the state. So companies take their cheapest model, convert it into a passable EV, then their financing arm offers nice incentives to get them out the door and the parent company eats the difference as a cost of doing business in California.
        tinbad 10y ago
        Exactly, what I mean by doesn't add up is not sustainable long term. I really wonder in 1-2 years from now when all these EVs flood the market. 3 year old Leafs already sell for 6-7k, crazy!
        NotSammyHagar 10y ago
        California is not the only electric car market, I think they will phase out the subsidies there over time. They were jump starting the market in a useful direction. That's all that these rebates are trying to do. In July 2012, even the tesla model s had not come outer - that is slightly more than 4 years ago. Look at all the choices now! It's amazing to me how well cali rules plus the us tax subsidies kick started the market. People buy teslas, leafs, i3s everything in my northwest state and we don't have a state rebate or requirement like California. Leafs were ~$250/month here. You see tons of them; when they increase the range a bit, I predict sales will really go up.
tigeba 10y ago
Not commenting on the merits of CA or Federal tax credits, but these cars end up getting sold as used cars in states that don't have tax credits. They still have value and are definitely not being scrapped.
heygrady 10y ago
Your argument is pretty thin. I would imagine the best way to alleviate your concerns would be to require aggressive recycling programs for an EV. Long-term, the sale of these cars is allowing the EV market to mature. Already the price of the batteries has gone way down. The nextgen EVs coming out this year and next with 200+ miles of range were only made possible by this "unsustainable" consumer good. Maybe my 2012 EV with 75 miles of range is already in a land-fill somewhere. But a car like a Tesla S keeps its value surprisingly well and should last for quite a while. The Chevy Bolt is a compelling car that someone could own for a decade. Your main complaint is that the cars are evolving so fast that there are better options available every time your lease is up. Big deal! I think the battery is the most hazardous component. It's also the most valuable from a recycling perspective. Firstgen EVs are not popular in the aftermarket: http://blog.caranddriver.com/tesla-aside-resale-values-for-electric-cars-are-still-tanking/ http://blog.caranddriver.com/tesla-aside-resale-values-for-e... Battery recycling is an emerging market as well: http://www.greencarreports.com/news/1093810_electric-car-batteries-what-happens-to-them-after-coming-out-of-the-car http://www.greencarreports.com/news/1093810_electric-car-bat...
- tigeba 10y ago
  I would argue that aftermarket prices are artificially low for EV's because of the tax credits. There are quite a few dealers in my area that sell used Nissan Leafs as fast as they can get them in, they are really nice cars for the price. We also happen to have better than average charging infrastructure and most of it is free currently.
- tinbad 10y ago
  You're comparing a 100k luxury Tesla with a $80/month lease. Yes I understand the EV market is maturing and will find more niches while it develops but least not ignore the reality of the $49/month EV (yes you can lease a Golf EV at my local VW dealer for that little). See my other comment on how these leases work and why they're not economically sustainable. There's also the issue of California's EV credits that force every manufacturer to have an EV. Why do you think Fiat sells the 500 EV? Not because the couple thousand they sell a year are worth it economically, I can say that much.

by tinbad 10y ago

usefulcat 10y ago

That makes no sense. Why would the lessor scrap the car rather than sell it at the end of the lease?

tinbad 10y ago
Let me explain how these leases work, MSRP for OPs Chevy Spark EV is in the 25k ball park, lessen the 7k government incentives is 18k. If OP is paying 80/mo (we don't know if that payment includes sales tax but let's say even if it doesn't) that's 2880 paid over a typical 3 year/10k mile a year lease. So now the balance on the car is 15k. Looking at cars.com a comparable EV Nissan Leaf (Spark EVs haven't been around for that long) 3 years old with 30k miles are going for 7-10k range. Now who do you think pays for that difference? And that's even assuming these cars all can be sold. Scraping is a bit extreme but is definitely not unheard of. The issue with EVs is that where most ICE cars can be sold at auction and exported to other countries, EVs aren't desirable to that market since there's a lack of infrastructure for them to be usable in, let's say, Latin America or Africa.
- ZeroGravitas 10y ago
  I don't follow the maths. A leasing company has a vehicle that they've got 15K "left" to pay off on, and they can only sell it for 10K so they'll just pay money to scrap it instead? How does that make sense for them? If there is some monetary incentive for them to do this, you've not outlined who is paying it to them. And even if it exists, that's the problem, not the up front incentives.
  - tinbad 10y ago
    In the case of these ultra cheap EVs the bank is the financing arm of the manufacturer. Of course no normal financial institution will take such a loss but because of CAFE regulations the only way they can kee selling high profit margin, gas guzzling SUVs is by offering these 'highly sponsored' EVs.
- epistasis 10y ago
  Are you saying they would rather "scrap" the car than get the $7k -$10k? Why in the world would that happen? Secondly, OP is subtracting the $2,500 rebate from the car payments he's making, so the manufacturer is actually getting ~$6k instead of $3k, which is a significant chunk of the difference between residual and current resale value.
  - tinbad 10y ago
    Yes scrapping is a bit extreme and I'm sure someone will buy them for way below the residual value but I just used it to get the point across of the economics of these cheap leases. It just doesn't add up.
    - mywittyname 10y ago
      > It just doesn't add up. Yes it does, you're just a variable: California requires car companies to sell a certain number of EVs in order to sell other cars in the state. So companies take their cheapest model, convert it into a passable EV, then their financing arm offers nice incentives to get them out the door and the parent company eats the difference as a cost of doing business in California.
      - tinbad 10y ago
        Exactly, what I mean by doesn't add up is not sustainable long term. I really wonder in 1-2 years from now when all these EVs flood the market. 3 year old Leafs already sell for 6-7k, crazy!
        NotSammyHagar 10y ago
        California is not the only electric car market, I think they will phase out the subsidies there over time. They were jump starting the market in a useful direction. That's all that these rebates are trying to do. In July 2012, even the tesla model s had not come outer - that is slightly more than 4 years ago. Look at all the choices now! It's amazing to me how well cali rules plus the us tax subsidies kick started the market. People buy teslas, leafs, i3s everything in my northwest state and we don't have a state rebate or requirement like California. Leafs were ~$250/month here. You see tons of them; when they increase the range a bit, I predict sales will really go up.

tigeba 10y ago

Not commenting on the merits of CA or Federal tax credits, but these cars end up getting sold as used cars in states that don't have tax credits. They still have value and are definitely not being scrapped.

heygrady 10y ago

Your argument is pretty thin. I would imagine the best way to alleviate your concerns would be to require aggressive recycling programs for an EV. Long-term, the sale of these cars is allowing the EV market to mature. Already the price of the batteries has gone way down. The nextgen EVs coming out this year and next with 200+ miles of range were only made possible by this "unsustainable" consumer good. Maybe my 2012 EV with 75 miles of range is already in a land-fill somewhere. But a car like a Tesla S keeps its value surprisingly well and should last for quite a while. The Chevy Bolt is a compelling car that someone could own for a decade. Your main complaint is that the cars are evolving so fast that there are better options available every time your lease is up. Big deal! I think the battery is the most hazardous component. It's also the most valuable from a recycling perspective. Firstgen EVs are not popular in the aftermarket: http://blog.caranddriver.com/tesla-aside-resale-values-for-electric-cars-are-still-tanking/ http://blog.caranddriver.com/tesla-aside-resale-values-for-e... Battery recycling is an emerging market as well: http://www.greencarreports.com/news/1093810_electric-car-batteries-what-happens-to-them-after-coming-out-of-the-car http://www.greencarreports.com/news/1093810_electric-car-bat...

tigeba 10y ago
I would argue that aftermarket prices are artificially low for EV's because of the tax credits. There are quite a few dealers in my area that sell used Nissan Leafs as fast as they can get them in, they are really nice cars for the price. We also happen to have better than average charging infrastructure and most of it is free currently.
tinbad 10y ago
You're comparing a 100k luxury Tesla with a $80/month lease. Yes I understand the EV market is maturing and will find more niches while it develops but least not ignore the reality of the $49/month EV (yes you can lease a Golf EV at my local VW dealer for that little). See my other comment on how these leases work and why they're not economically sustainable. There's also the issue of California's EV credits that force every manufacturer to have an EV. Why do you think Fiat sells the 500 EV? Not because the couple thousand they sell a year are worth it economically, I can say that much.