Study: Poor EV Resale Value May Spike Lease Prices


A recent study by J.D. Power’s Automotive Leasing Guide indicates that poor residual values of electric vehicles (EVs) could lead to an increase in lease prices. This is due to the depreciation of EVs, with used EVs rapidly losing value over the first few years of ownership. The guide projects cuts in residual values for EVs across the board, potentially raising lease costs in the future.

Why does it matter?

The lower resale value of EVs poses a threat to the overall adoption of electric vehicles. Consumers are becoming more aware of the depreciation of EVs, with the average price of a used EV falling significantly year-over-year compared to combustion-powered cars. This depreciation could dissuade potential buyers from investing in new EVs and lead to higher lease prices in the coming years.

Leasing an EV is currently a low-risk option for buyers, allowing them to try out an electric car before committing to a purchase. Automakers are offering attractive lease deals, making it an ideal time to enter the EV market. However, as residual values decline, lease prices could rise, impacting the affordability of leasing EVs.

How is it going to shape the future?

The study highlights the importance of understanding depreciation and residual values when considering leasing or buying an EV. With projected cuts in residual values for EVs, lenders may adjust lease prices accordingly, potentially making leasing more expensive in the future. Consumers who opt for leasing can avoid the direct impact of residual losses and benefit from incentives offered by automakers and lenders. Additionally, leasing allows drivers to test the waters of EV ownership without committing to the full purchase price, transferring long-term ownership risks to the lender.

In conclusion, the poor resale value of EVs may have a ripple effect on lease prices, influencing the affordability and accessibility of electric vehicles in the market. By staying informed about residual values and leasing options, consumers can make informed decisions when navigating the evolving landscape of EV adoption.