Should I wait for Tesla’s Model 3?

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2016 Nissan Leaf
Tesla announced the release of the Model 3 on March 31, 2016, and several hundred thousand reservations have been made. This has demonstrated a strong market demand for an electric vehicle (EV) that has three attributes: It’s attractive, has a decent range, and is affordable.

Since Tesla began taking reservations for the Model 3, the near-term market for EVs that are available today appears to have cooled.

EV options

I’ve driven a 2013 Nissan Leaf EV for three years. It’s a fine car except for the range limitations. I also like Tesla. I’m personally in the situation, however, that my three-year lease is expiring in a few months. The result is that I need to make a decision now.

I have considered three alternatives:

  1. Stop driving an EV, and wait for the Model 3 to be produced.
  2. Purchase a used EV, and wait for the Model 3 to be produced.
  3. Lease an EV now, and have the option to purchase another EV from any manufacturer when the lease expires in several years.

Option 1: Stop driving an EV

The first alternative is to stop driving an EV until the Model 3 is released. This would require switching back to our internal combustion engine car. This is unappealing because I have Solar+ home. The home has been saving $4,000 per year, and has cut my carbon emissions from about 15 tons to about 2 tons of CO2. Losing the EV would be a definite step backward.

I quickly dismissed this first option.

Option 2: Purchase a used EV

The second alternative is to purchase a used EV. This would fill the gap until the Model 3 becomes available. How much would this cost? Edmunds calculates the total cost of car ownership based on depreciation, taxes and fees, financing, fuel, insurance, maintenance, and repairs. Table 1 presents the True Cost to Own® a 2013 Nissan Leaf.

I anticipate that multiple EVs with decent ranges will be available in the market within three years. Thus, I’m interested in the three-year cost of ownership. The three-year costs according to Table 1, excluding fuel and insurance, are estimated to be about $9,000.

True Cost to Own a 2013 Nissan Leaf

The disadvantage, however, is that I would still have a limited range EV. I decided against this alternative.

Option 3: Lease a 2016 EV

The third alternative is to lease a new EV. Consider the three attributes that are desired by the market: attractiveness, decent range and affordability. I am using the Nissan Leaf as an example.

Attractiveness
The first attribute is attractiveness. Beauty is in the eye of the beholder. Few, however, would claim that a Nissan Leaf is as attractive as a Tesla.

Decent range
The second attribute is decent range. The 2013 Nissan Leaf has an EPA-listed range of 75 miles. An anxiety-free range may be 25 miles less than this, say 50 miles. This limited range has definitely been an issue.

The 2016 Nissan Leaf with the 30 kWh battery has a stated range of 107 miles. Assume an anxiety-free range of 80 miles. Thus, the 2016 anxiety-free range is 50 percent better than the 2013 Leaf. This is true even though the battery capacity has only increased by 25 percent. While it doesn’t have the range of a Model S Tesla, the range is much better than the 2013 Leaf.

Affordability
The third attribute is affordability.

Maintenance costs: The 2013 Leaf had exceptionally low maintenance costs. Table 1 presents the actual maintenance costs over the three-year period that the car was owned. The total cost of all maintenance was $186; this translates to 0.7 cents per mile. I estimate that maintenance costs for the next EV will be even lower because there are some maintenance procedures that are now unnecessary.

Maintenance Costs for 2013 Nissan Leaf
Registration costs: The 2014 and 2015 registration costs were $275 and $253, respectively. Thus, the cost of maintenance and registration was $714. I expect the registration and maintenance costs to be similar for a new car.

Fuel costs: It can be complicated to calculate the fuel costs for an EV because electric rate structures can be complicated, and sometimes EVs are combined with solar PV. Clean Power Research’s WattPlan® is designed to perform these calculations.

It’s estimated that fuel cost, where combined with solar, is under four cents per mile.

Lease cost: Nissan (and others) are offering attractive lease deals. In addition, my existing lease is ending and I need to turn in my vehicle. I was concerned about what the fees would be since this was the first time I had leased a vehicle.

The dealer will waive all fees if I lease a new vehicle. The result is that the lease cost for a 2016 Nissan Leaf SV was under $10,000. This includes the end-of-life lease costs for the 2013 Leaf. It does not include any state rebates.

Estimated cost: The estimated three-year lease for the Nissan Leaf, vehicle registration and maintenance cost is $10,500. Fuel cost will be the same whether I purchase or lease, since the solar PV system has already been installed and this is a Solar+ home.1

The Leaf excels in terms of affordability. I decided to select this third option.

My decision

I decided to lease the 2016 Nissan Leaf SV for the following reasons:

  • The range, while not great, may be good enough to accommodate several key transportation needs that the 2013 Leaf does not support.
  • The economics of leasing an EV are appealing. The three-year lease cost for a new EV is only slightly greater than the three-year purchase cost for a used EV.
  • Leasing a car eliminates maintenance hassles. The 2013 Leaf was my first experience with leasing, and it has been positive.
  • Affordable, decent range EVs will probably be available by 2019 from multiple manufacturers. Leasing for a few more years provides future flexibility.
  • I’m uncertain about how much a Tesla Model 3 will actually cost. The base price does not include options, and many people on the Model 3 waiting list will not receive the $7,500 federal tax credit.2

Key takeaway

It can be complicated to make an informed decision about which automobile to acquire. Whether to purchase or lease is also part of the decision. We have developed a tool at Clean Power Research that helps you to evaluate your options. Check with your utility to see if they have WattPlan available to support your decision making process.

Consider leasing an EV today. It can be affordable, plus it can provide options for the future. This is true even if you plan to buy another EV in several years.

1There is some additional fuel benefit because Nissan has its “Charge for Free” program. This is not included in the analysis.
2 The credit is available only for the first 200,000 cars that the manufacturer sells in the U.S. and Tesla will approach this limit as it releases the Model 3.

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