Nissan Leaf – Lease vs Buy : A purely financial comparison

•August 5, 2010 • Leave a Comment

Here is some math to help you decide – purely based on financial sense. The calculations are for the SV model.

Let us consider two cases.

Buy Out : Here, after 3 years of leasing, you decide to buy out. The residual is paid using a 2 year loan. In the buy scenario, a loan for 5 years is taken. The large downpayment is to it equivalent to the lease case and includes the 7,500 that would be got back in tax credit. So, the final row shows the total money paid out after 5 years.

Sell Off : In this case, after 3 years of leasing, you return the car to the dealer. In the buy scenario, a loan for 3 years is taken. After that the car is sold off for exactly the residual of the lease scenario – to help us compare apples to apples. Again, the final row shows the total money paid out after 3 years.

Ofcourse, we don’t know the residual. So in this I calculate the “break even” residual for the two cases. If the residual announced by Nissan is lower than the one calculated below, leasing is better. If the residual is higher buying is better. The other variable is the interest rate. I’ve used the national average insterest rate from Yahoo finance.

Note that I’ve not taken sales tax into account. For one thing, it varies from state to state, for another – whether the tax is on lease payments or the entire MSRP depends on the state as well. Ofcourse, in WA, there is no sales tax on EVs. Another thing I’ve not included is disposition fee.

Don’t know whether to buy GM Volt or Nissan Leaf ?

•July 12, 2010 • Leave a Comment

This year we have 2 electric cars with a slightly different philosophy making debut. Nissan Leaf is a pure Electric with nominal 100 mile range. GM Volt has a 40 mile electric range but has an onboard generator that keeps moving the car using our old enemy, petroleum.

What should you buy ?

Here is a simple chart to get you started.

How much money does it take to cover entire US with chargers ?

•July 7, 2010 • Leave a Comment

To cover the entire US (area=3,794,101 sq miles) with one charger every 15 miles (i.e. 225 sq miles), requires 17,000 chargers. Even at $50K per charger that is less than $1B ($850M). Compare that to $4.8B that was paid in tax credits for Ethanol in 2009 alone.

In one stroke this would ger rid off the “range anxiety” FUD.

Congress should start thinking along these lines – instead of granting money to install thousands of chargers in one city. They should first start with free ways – install one fast charger every 15 miles – in the nearest gas station or rest area. Once this is done, they can branch out to highways and other roads to cover the entire country.

Debunking The 50% Coal FUD

•July 2, 2010 • Leave a Comment

One constant criticism that I see every where about Electric Vehicles is that “Coal accounts for about 50% electricity generation”, with the implication being electrification of transportation is useless. Like this one today.

Behind the hype on Tesla

There’s a big problem, however, with the imagery. Wind power represents about 3% of electricity production in the United States. Coal accounts for about 50%. So while Tesla drivers may pat themselves on the back because their cars don’t emit foul greenhouse gases, half the electricity needed to charge the batteries that make the cars run comes from burning coal.

If this country were to embrace electric cars in a big way, we’d probably make our emissions situation worse, not better, for all the coal we’d need to burn — unless alternative forms of electricity generation suddenly put coal out of business, which isn’t going to happen.

Let us look at this from the point of view of CO2 emissions. We have two big sources of emissions.

– Transportation
– Power generation

To reduce emissions we need to cut down emissions from both these sources, as well as from other sources. It will take decades to actually do this transition from fossil fueled cars to electric cars and from coal power to nuclear/renewable even if we start the transition in earnest today. That is why we need to start both the transitions now.

We can’t wait for that 50% of coal power to get greened before starting transition to electric vehicles.

Ofcourse, the states where electric cars will likely become popular first, are also states which have much greener power. Like my state of Washington. Even in other states, as the power generation inevitably becomes greener, automatically the electric cars will get greener too. Not so with say, Prius.

Apparently even the bright minds apparently can’t grasp this simple idea.

Nissan Leaf – A range of ranges

•June 16, 2010 • Leave a Comment

I’m close to Scenario 4 – so I expect an easy 100 mile range.

As they say “Common sense, the only cure for range anxiety”.

How many Leafs will be delivered in US this year ?

•June 14, 2010 • Leave a Comment

I think all of us who are in the initial rollout areas would be very interested in finding out how many Leafs will be actually delivered in December. Production starts in October according to the newest press release.

1. Nissan promised Project EV that they will sell about 1000 cars in each of the 5 areas. That is 5,000 cars. But there is no indication that all those will be delivered in December.

2. Production numbers have been quoted as 50K per year. This would be about 4,000 / month. This would indicate about 24,000 by Mar 2011.

3. But the production till Mar ‘2011 has been quoted as 12,000 or 19,000 (mainly in the Leaf “sold out” in first year stories). This would mean about 2,000 or 3,000 per month.

Let us say cars manufactured till Dec ’15 can be sold before the end of the year. That would be 5,000 to 10,000 cars. If we assume 50% of the cars will come to US – we can expect from a low of 2,500 to a high of 5,000 cars delivered to us before the end of the year.

Leasing the battery – Best thing since … ?

•November 15, 2009 • 1 Comment

Ever since Nissan Leaf was announced back in May, one issue that has been much discussed is whether Nissan is going to sell or lease the battery. We have an answer now.


Nissan launched their 22-city nationwide tour of Leaf in LA on the 13th  and CEO Carl Ghosn’s comment gives us the answer.

Because the Leaf’s batteries will be leased, Ghosn said, the Leaf will cost almost exactly the same as a similar gasoline-powered vehicle.

There are a lot of people who post on the internet saying they are dead set against leasing the battery. I find it difficult to figure out why leasing the battery is bad. Are they worried about EV1 style recall and crush or are they have bought too much into the “ownership” society that ironically has the largest debt in the world ? Are they worried whether they can get the federal rebate if the battery is leased – I guess Nissan has figured that out by now. 

Currently Nissan’s battery is holds 24kwh of energy and will propel the car a 100 miles on a full charge. The batteries are for all practical purposes use a first generation technology. The technology is evolving rapidly and no doubt the the future generations will be cheaper, smaller and better. They will hold more energy and thus give better range. They will also be safer.

Given this, why would anyone want to buy a battery which will degrade slowly with usage ? The battery will only hold 80% of the charge after 5 years. With highway driving that would probably result in 50 to 60 miles of range.

Instead, if leased, Nissan is in charge of the battery. They will replace it when it is time – or may be we can buy it in 5 years when we will have 3rd gen battery which would cost half the current estimated $10,000 and/or hold more energy.

That is why I think the idea of leasing the battery is the best thing since …. well the idea of Nissan Leaf itself.

Ofcourse one problem might be the cost of lease. Nissan has not given the monthly lease figures – but Ghosn, has given enough information for us to calculate a rough figure.

For someone who drives between 12,000 and 15,000 miles a year, buying the Leaf and leasing the battery will be cheaper than owning a similar gas-powered car and filling up with liquid fuel.

Let us assume a gas price of $2.50 to $3.00 per gallon. Let us also assume a mileage of 25 miles/gallon.  Then we get a figure of $100 on the low side for the cost of filling up the car and $150 on the high side. In a September interview Ghosn actually quoted 100 Euros as the lease for the Renault EV – which translates to about $150. So, I think we are in the right ballpark here.

Taking what Ghosn is saying about the cost of the battery being same as the gas we need in a month, I expect the battery to be leased for $100 to $150 a month and the car to cost some $25,000 to $30,000 before rebates. I’d pay that much for a battery lease in a heart beat.