Indoor Plumbing

“Celebrate now, knowing that one day EVs will be as common as indoor plumbing, and there will be no reason to celebrate.”

That’s how I wrapped up a post last September on supporting National Plug-in Day, titled “It’s Just a Car.”

It’s now February 2014, and as one might expect, EVs still have a long, long way to go to achieve the popularity of that very essential porcelain throne found  in every first-world home, thankfully invented by Sir John Harington in the 16th century, then improved by Thomas Crapper in the 1800s. But on this little patch of real estate that my family and I call home, that far-fetched day has come to pass. Three plug-in electrics are now parked in the driveway of our four-bedroom, three-bath home. An EV to match every toilet in the house, that was my goal, and that’s why they’re all white.

Of course I’m joking. It really happened because I’m a cheapskate, plain and simple. Just ask my wife, she will nod in affirmation while laughing hysterically.  A little over a year ago, we were shelling out over $500 every month for gas. When the Focus Electric joined the herd, our gasoline consumption was cut by over a third. This year, after replacing the Focus Electric’s aging ICE backup with a new Volt in January, then trading in my wife’s 2013 Honda Pilot for a fresh RAV4 EV last Sunday, our gas bill should be less than $20/month.  Twenty bucks should cover four gallons of regular to be consumed by an ’07 Dodge Ram Hemi driven maybe once a week at the most, and about three quarts of premium since the Volt, which will serve as a commuter twice a week, needs somewhere between a cup and a pint of gas after its battery is depleted to complete the 38-mile daily trek back home that takes me from sea level to all the way up to a 1200ft elevation.

Commuting daily in the Focus Electric consumed about $60 of electricity per month last year. I expect that to increase slightly with using Volt for two out of the five commuting days since the Volt has a slow 3.3kW L2 charger that costs me about 40% more than the Focus to fully replenish when hooked up to the $1/hour L2 EVSEs at work. The RAV4 EV, serving as our new Mother Ship that’s used to chauffeur the boys around town and run errands to the big box stores, shouldn’t cost more than $30/month to charge nightly, so in total I’m guessing that we’ll be spending about $100-$120/month on electricity and gas, much less than the $500+ per month that we were spending at the pump back in 2012.

I knew that as a household we would eventually end up transitioning to mostly electric, but not this soon. Maybe in several years, when choices should be even more diverse and battery costs should have fallen even more. What drove the urgency is that the 40,000 California HOV green stickers for plug-in hybrids and EREVs are running out by this summer, and so far there has been no indication that CARB will increase that. Another thing that’s expected to deplete in a matter of months is the RAV4 EV; expectation is that Toyota is building only 2600 … so when Carson Toyota advertised killer lease deals with zero drive off and payments that were nearly equal to our lease payment on the 2013 Pilot, I signed on the dotted line.

So that’s really the  reason why we have three EVs in the driveway. It all comes down to saving pennies. Forty thousand pennies every single month, in my case. And as a bonus, I’m helping to save the planet, which is cool. Nothing to do with indoor plumbing, except for the fact that I hated flushing so much hard-earned cash down the Crapper.

Apples to Apples

For the uninitiated, comparing one lease to another can be confusing.  I don’t claim to have all the answers, but I can share one  simplification that might help to make a decision that is right for you.

When comparing leases, I think that the easiest and quickest comparison is to just add up what you’ll be shelling out over the next three years, all the way to lease termination. This includes the total drive-off and all the monthly payments. You can also add the lease termination fee, but often that’s not provided on the web page or newspaper ads. Seems to be about $400 these days.  I usually ignore it since I end up trading in the car rather than turning it in. When comparing leases for the same vehicle from the same financier, it washes out so I won’t consider it here.

Let’s take a current example in Los Angeles area newspapers today. One of the Valley dealers is advertising two three-year 10,000 miles per year  leases on a base 2014 Volt: One is $287/mo+tax, $0 due at signing, the other is $179/mo, $3990 due at signing. And via email, the local dealer in my area is advertising $159/mo, $4000 + taxes + fees to start. So to compare:

• Lease 1: ($287+$25.83 tax) * 35 payments + $0 due at signing = $10949.05
• Lease 2: ($179+$16.11 tax) * 35 payments + $3990 due at signing = $10818.85
• Lease 3: ($159+$14.31 tax) * 35 payments + $4000 + $246 tax on rebate and first pmt + $350 license fee = $10415.85

Over 3 years, Lease 2 is over $100 cheaper than Lease 1, and Lease 3 is over $500 cheaper than Lease 1, but as a rule I always go for $0 at signing if possible since I can reliably make over 10% in dividends a year on REIT stocks. Over three years, that $4000 would make me about $1200 (about $400/year), more than enough to cover the extra $100 – $500 I’d pay out over the three years on Lease 1. Another perhaps more compelling reason to minimize the drive-off payment is in case I want to trade in the car well before lease termination, say after two years. In that case, Lease 1 with $0 due at signing lease would have cost me $7507 over two years. Compare that to Lease 2… its high $3990 drive-off and 24 months of payments would have cost me $8672.64 – over $1000 more than Lease 1 after 2 years! Lease 3 comes out the worst of all: $8754.44 over the first two years. Given the above scenario, I’d go to the local dealer and tell them I want a $0 out of pocket lease where the payments add up to about $10,415 and see what they come up with. My bet is that they’ll quote something within $100 of that.

All of these leases are better than Chevy’s website deal – $269/mo, $2679 due at signing, plus tax, license, and fees. That comes out to ($269 * 35) + $2679 + tax, license and fees. That’s $12094 over three years. Tax of 9% on the $2575 rebate and the 36 payments (first payment is part of the drive-off) is about $1113, and license is $350, which brings the total of $13557 after 3 years, which is over $2700 more than the above leases (!). It’s horrendous, but good to know when negotiating with the dealer. It serves as a shining example of what NOT to pay.

So in my case, last month I was able to get a $0 drive-off, $267/mo lease (tax included) for a 36-month 10,000 miles/year lease on a base Volt from my local dealer. After all 35 payments, that’s $9345… about $1100 – $1500 off of the above dealer-advertised offers and over $3700 off of the corporate offer. I’m not bragging… just trying to give you a sense for what is possible. I suspect that my deal would be fairly easy to beat at this moment since dealer inventory seems to be up since last month and there’s a $1000 voucher you can get on the Chevy website that can be applied to the cap reduction cost, which should lower monthly payments by $30 or so.

Hope this helps… it really is that simple – just add up the total 3-year cost to get a decent comparison between leases.

Now if you’re thinking of keeping the car after lease end, it gets a little more involved. You’ll have to add the residual cost, plus tax on that residual cost, to the 3-year total, then compare that total between leases. But if you’re looking at a Volt, beware… the banks that offer the leases on Volts set unreasonably high residuals to lower the payment – about $7500 high it seems, equal to the federal tax credit they are pocketing. Leases on the Focus Electric and RAV4 EV are much more palatable since the fed tax credit is given immediately to you in the form of a huge rebate, so you get the benefit of a low payment and a residual value that is much closer to the anticipated market value of the car after 3 years.

In the near future I’ll blog some thoughts on comparing leases between competitive models (i.e. Volt vs FFE vs Leaf vs ???) and on deciding between a lease vs loan vs cash purchase.