[ad#post_ad]This week General Motors released its long anticipated MSRP for the Volt, and it is no secret that the $41,000 was not received very well. In fact if you were around the comment section here on July 27th, you would have sworn that GM had swooped into people’s houses in the middle of the night and stolen their babies.
For many of these newly child-less persons, the moment of anguish was quickly soothed with GM’s announced of a $350/month, 36 month, $2,500 down lease deal. This was not your typical payment for a car with a price tag starting with a 4, and it was a well calculated figure by GM in regards to its ‘competition’ on the market.
Personally, I have never been a big proponent of pitting two EVs against each other and having them fight fictitious battles to the death to see who reigns supreme. We have exactly zero mass produced EVs on the road now, and quite frankly if we can have 150 different types of SUVs, we surely can have a couple EVs co-exist.
However, it is impossible to not recognize that GM’s lease, is eerily similar to Nissan’s $349/36 month, $2,000 down lease. In fact, it can’t be ignored. The General, newly invigorated with the power of AmeriCredit, has decided to go to war with the LEAF for pocket books of lease customers. For all the gnashing of teeth over the lack of competitive pricing spirit against the LEAF ($32,780 vs $41,000, with both cars eligible for a federal $7,500 rebate), General Motors brought out the ‘hurting stick’ to Nissan with the lease.
Before I digress further, I should say, in the majority of situations, heck almost all situations, leasing a car is a terrible idea.
In a lease, your capitalization cost of the portion of the vehicle you use is huge, you have to guard your car against excessive wear/damage, and in the case of the Volt, your are also giving away your $7,500 rebate as a lump sum to lower the payments (that is your money, regardless how you choose to view it).
Specific to the Volt is the fact that a good portion of the cost of the vehicle is in the long term warranty cost on the battery (8 years/100,000 miles), you need to drive the Volt to get any real return from the warranty benefit in this case. The more you drive, the more value you regain…in a lease, you are capped at 3 years/36,000 miles before fees kick in.
Also, just basic driving patterns themselves are counter intuitive to the value of a standard lease. When the last data set came out of the NHTS, they found that the average driver puts 13,673 miles on their car on a year, and it is increasing. Even worse, males drove 16,749 miles per year (10,174 for the ladies). With a 12,000 cap on mileage before fees kick in, the average driver will have a issue using the Volt as their daily driver…which of course is one of the big advantages of GM’s EREV platform over something like the LEAF. The Volt can certainly take on the more meaty commutes some of us have worry free…but with a lease, it is only worry free if you aren’t worried about cost per mile bonus fees.
That being said, there are also some reasons to lease. If you just want a new car every three years or so, free from the hassle and commitment of the ownership and re-sale of a car, then a lease is for you. Also, if you simply cannot afford/qualify to purchase the car, but you really want it anyway…a lease is for you. This financially stressed/under qualified buyer is really what GM’s acquisition of AmeriCredit was all about, regaining the sub-prime consumer, who wants a fancy new car.
So, while most potential customers weighing a decision between the two EVs would be hard pressed to swallow the $41,000 + price associated with a Volt, if they are also considering a lease, the similar structure of GM’s lease along with the added benefit of the extended range should make the choice a virtual ‘no-brainer.’
In the case of leasing, GM will win this battle with Nissan easily. The question now is, how many people want to lease a electric vehicle from GM?
This entry was posted on Saturday, July 31st, 2010 at 7:03 am and is filed under Financial. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.