A reader just asked about our thoughts on depreciation of the LEAF. This topic is fraught with peril, as so much is unknown about the LEAF, but we have been known to go out on a limb periodically, so here goes.
A British company (Glass’s Auto Guide) has stated that the LEAF will essentially be almost worthless in five years or so, retaining only 10% of its initial value. Apparently Glass’ is the equivalent to Kelley Blue Book (KBB) in the US. They used some of the following ideas on which to base their analysis.
The used buyer doesn’t get the tax credit you got, so you will have to reduce your price to compete with a new LEAF
The fallacy in that statement is that it is likely in five years that a new electric vehicle (EV) buyer will not get a tax incentive from the government, or it will be significantly reduced. The current law as written states that the EV buyer will receive a federal tax credit of up to $7,500 until 200,000 vehicles are sold. Phase out of the credit begins in the second quarter after LEAF number 200,000 is sold. The credit then drops in half (50%). Six months later it drops in half again (to 25%). Exactly one year after the phaseout begins the credit is reduced to $0. Now no one knows how long it will take to sell 200,000 LEAFs. So in five years, their may still be some small credit available. But it is unlikely to be $7,500. The 2005 Toyota Prius had a tax incentive of up to $3,150 in 2005. It was $0 by October 2007. The tax incentive in the UK may be different, but we don’t live in the UK.
The battery will be worth nothing after the expiration of the warranty
I don’t buy this. Nissan is already negotiating with power generators (among others) regarding the use of used EV batteries for energy storage. Nissan has gone on record stating that the expected battery performance should be such that it would retain 70-80% of its original capacity in ten years. Mark Perry, Nissan’s Director of Product Planning has stated that Level 2 charging should see 80% capacity retention, with Level 3 DC Fast Charging bringing the expected life down to the 70% range. My thinking is this: if one uses the LEAF for short trips around town, this may still provide more than satisfactory performance for you. Should it not, in ten years you can trade the battery in to Nissan who will sell it to someone else as a storage device, and upgrade with (likely) third generation battery technology. Third generation batteries will offer one of two benefits – perhaps both: lower cost and/or longer range. This article is a great discussion of the potential re-use/recycleability of the battery, though the pricing model seems to be incorrect as it was written late last year.
One last thing
One point not referenced at all in the Glass’s Guide study is only the basis of market economics – the law of supply and demand. When gasoline prices skyrocketed in the US, a used Prius was selling for as much as a new one. No one can predict what gasoline prices will do from one month to the next. It is a certainty that prices will be higher ten years from now. A fully electric vehicle, capable of getting you to all of your errands around town safely and comfortably without fear of broken timing belts, water pumps or alternators, I’m sure will be worth something to you – or quite likely to someone else.
{ 3 comments… read them below or add one }
Thank you. Very informative.
Planned obsolescence is everywhere. The system is such that one or more parts of an object is designed to fail. The fix is not available, too expensive or too complex by design. Will the Leaf depart from this, or is it business as usual? If not, factor that into the savings over gas cars. Do we just pay our money and take our chance, wait and see, or?
Ron, Welcome to Living LEAF! We are glad that you found us, and we hope that you find the site informative. And while you may be right about planned obsolescence being in many places, I don’t know that the automobile industry is one of them. If you check out this link, you will find that Consumer Reports has asked their readers for input regarding high mileage vehicles, and if you scan some of the topics, you will see that there are many models from many manufacturers that have lasted well into the 300,000 to 500,000 mile range. Many of these vehicles were compact, inexpensive models. Foreign and domestic cars and trucks are represented. Also, an internet search of “high mileage (insert brand here)” will return a number of forums with information about that brands high mileage vehicles. If internet research is not an adequate measurement for you, just go into any manufacturer’s local dealership service department and ask to speak with the most experienced service technician in the facility. Ask them what the highest mileage vehicle that he has seen pass through his facility. You will likely be amazed at the response.
You will note that I did not specify just Nissan dealerships, or even just Japanese or import stores. All manufacturers have been capable of producing high quality automobiles and trucks for a very long time. As with anything else, the care and feeding that you provide your vehicle will be returned to you in a vehicle that may lost longer than you thought possible.