Why Leasing Organizations Do not Like Hybrids and Electric Cars

Would you like to acquire an all-electric car or truck? Perhaps Electric cars can lease a single for a handful of years, as you may want a new Mercedes, Jag, or BMW? Well, consider once again my friend, it might not be that effortless, and there are already signs of a snag brewing in the sector. Okay so let’s talk about this shall we?

In the Wall Street Journal on November 14, 2011 there was an interesting article titled “Leasing Firms Shy From Electric Auto Rollout” by Joshua Mitnick. The write-up stated that leasing providers where unsure of the loss of value after the automobiles ended up in corporation rental fleets, and that it could be as high as 70% as opposed to 49% for regular gasoline cars.

On the second web page of the article titled “Leasing Firms Dubious of E-Car Strategy” it told of an Israeli electric vehicle enterprise attempting to get off the ground and compete, and why he required a leasing enterprise prepared to make the deal.

Nevertheless, in my humble opinion as an auto sector consultant I can keep in mind and possibly you are as well young to recall, but US Leasing companies along with car manufacturer’s in-residence leasing units at GMAC and Ford Motor Credit took a bath on the value losses at the end of the leases on SUVs, and Freightliner Trucks took it in the shorts on over-the-road trucks almost causing bankruptcy. So, this is a real concern.

Having said that, I know of an even larger concern, not talked about in this article, and that has to do with leasing providers signing on with person car or truck owners, let me clarify. You see, these electric vehicle batteries only final 5-7 years based on usage, and the batteries can expense a lot more than $7000.00 for instance for a hybrid like the Prius, so, for an all-electric car it could be almost double that or $14,000 so if the total price of the automobile is let’s say $33,000 which was indicated in that WSJ short article, then that is nearly one particular-half the total price of the car suitable there, 50% with no the regular depreciation associated with standard automobiles that are applied.

See that point, so, no wonder leasing firms in the sector are not prepared however to go out on a limb for all-electric vehicles or provide leasing for them, I would not either, it’s new and unproven technologies plus, there is no history of valuations to appear at however. Indeed, I hope you will please consider this from a financial risk standpoint – the leasing providers are proper, and really should be careful with their funds. Believe on it.


Leave a Reply