Apples and Oranges

"Here tonight, we have, ah, apple and orange. We all different, but in the end, we all fruit."
     - Gus Portokalos, from My Big Fat Greek Wedding, 2002

In a post titled "Apples to Apples", I proposed an easy way to compare the costs of leases of identical duration... for each offer being compared, simply total up the drive-off and all the payments over the lease term. Just like in golf, the lowest total wins.

But what if you're mulling over whether to lease or buy a particular vehicle, with the end goal of owning it free and clear? Well, back in the old days when I used to lease ICE vehicles, circa 2013, I found it was pretty much a wash dollar-wise between leasing and buying, assuming that a leased vehicle would be bought for its residual amount at the end of the lease term. Lease charges over the three years seemed to be within spitting distance of finance charges on the first three years of a six-year loan, and the loan balance after three years was about the same as the residual on a lease. So typically I chose to lease because it resulted in lower payments, tax on only part of the negotiated sales price, and an easy out at lease termination.

With electric vehicles, the decision is sometimes a bit more complicated. Sometimes choosing a lease over a purchase with the intent to own isn't only about minimizing up-front cost, lowering monthly payments, and enjoying the convenience of haggle-free disposal at termination if you change your mind about keeping it. Total cost might be a major factor, because the cost comparison is muddied by the federal tax incentive for EVs. Top that with the fact that some manufacturers offer different rebates on the same vehicle that hinge on whether you buy or lease, and the least expensive path to ownership becomes even less clear.

Let's cut to the chase... Below is a comparison between leasing and purchasing for the Toyota RAV4 EV, Chevrolet Volt, and Ford Focus Electric. With the current offers available, it's significantly cheaper to buy the Volt and FFE rather than lease, so long as the plan is to keep the car for longer than 3 years.  As for the RAV4 EV, it's much cheaper to lease first, and then take ownership by paying the residual at lease termination. The Grand Total line in the table below sums it all up for each of the three vehicles.

For the RAV4 EV, I used the Carson Toyota offer posted in June 2014 on myRav4EV.com by Dianne Whitmire, which included both lease and purchase offers. The lease offer I used was for 12K miles/year. Clearly, the huge $16.5K rebate on a lease far outweighs the $10K total incentive (rebate plus federal tax credit) on a purchase, making the lease a much more desirable option. $38K with sales tax included and before any state incentive is a heck of a deal on a $50K vehicle. 

For the Volt, I took Rydell Chevrolet's offer from their June 16, 2014 print ad, which gave folks a choice between a $246/month + tax, 10K miles/year lease, or $4500 off of a purchase on top of a $1000 rebate, on base models with an MSRP of $34,995. What makes this lease offer unattractive for those wishing to keep the Volt longer than three years is the inflated residual value, a whopping 61% of the purchase price (aka capitalized cost in lease lingo). Most vehicles have a 50% or less residual for a 3-year lease; for example, the RAV4 EV deal shown above is at 41%, and the FFE deal is at 48%. I've heard FFE lease deals go as low as 41% to 43% on higher-mileage leases.  Where Toyota and Ford properly channel the federal tax benefit back to the consumer in the form of an immediate rebate, US Bank and Ally apparently decided to pocket the tax credit and then set the residual artificially high on their Volt leases to synthesize an attractive monthly payment. Bottom line... if you want to keep a Volt for the long haul, don't even consider leasing it. Buy it instead... $25K with tax included is a great deal for a shining example of what corporate America is capable of producing when they decide to do the right thing. And that's not even including any state incentives.

As for the Focus Electric, I didn't use an offer published by a dealership because, well, I just couldn't find any. So I took an recent killer lease deal posted on myfocuselectric.com by a forum member for an FFE with leather and premium paint, 10.5K miles/year. The deal was based on an offer that was initiated through the Costco Auto Program, which at the time was good for $1000 under invoice. In this case, the lease deal is incredible, but the deal on a purchase is epic. How many other new cars can be had for under $23000, tax included? Okay, so there's lots of them. But of those, how many have leather? And a rear camera? Navigation? Seating for five? More cargo space than a 3-series or C-class? Oh yeah, how about a fully electric drivetrain and a state rebate that would, at least in California, whittle down the cost to something pretty darn close to $20,000? All things considered, it seems that the FFE is currently the best $20K car that money can buy, electric or otherwise. One might argue that the killer deal I used as an example is unachievable for most folk since inventory is pretty slim in most areas. Unfortunately that's probably true for those outside of The Golden State, but it does serve as a well-documented benchmark. In my opinion, even if  you can only negotiate $1000 off of MSRP rather than $1000 under invoice, the FFE rebates still make for one of the best new car values on the planet.

The RAV4 EV, Volt, and Focus Electric probably represent three of the most extreme examples where the total dollars shelled out toward ownership are drastically affected by a choice between leasing and buying. There are others... for example, the BMW i3 currently has a $4875 lease incentive, but no purchase incentive. In this case it should be cheaper to buy the i3 rather than lease and then pay the residual. Why? Well, If the lease incentive is not more than $7500 over the purchase incentive, chances are that the lease will be a more expensive path to ownership.This comparison of the manufacturer incentives offered for leasing versus buying is probably the best indicator of which one is the cheaper path to ownership.

Another factor to consider, which you are probably already aware of but might be worth mentioning for others that are new to this, is whether or not your total federal tax liability next year will be large enough to take full advantage of that $7500 federal tax credit. If not, you should seriously consider using a lease as an instrument to finance your quest for ownership. Look at it as a loan with a low monthly installment for 3 years, and then one huge balloon payment in the end that can be financed with a used car loan.

One more thought... most folks don't pay cash when buying a new car. More likely than not, they will finance it. So for the case where a purchase looks better than a lease (i.e. FFE and Volt),  how should the interest on a loan be factored into the decision? My advice is to plug some numbers into an auto loan calculator, like this one on bankrate.com. Model a 7-year loan for the full purchase amount with tax, minus the fed rebate and any manufacturer rebates. Interest rate for such a loan looks to be about 2.5% to 3%. Then look at the total interest paid after 36 months into the loan. For the FFE and Volt examples above the total interest paid after 3 years will only be about $1400 to $1500, which is much less than the $4000 (FFE) to $8000 (Volt) benefit of buying over leasing. In other words, for the Volt and FFE, a financed purchase is still much cheaper than a lease if your intent is to keep the car for over three years.

Still clear as mud on which way to go? Just do the math both ways based on your situation, and let the numbers guide you. Need help? Post your numbers below, and I'd be happy to take a crack at it, see what we see...

Sticker Shock

Woohoo! Got my green stickers, baby! It was getting a bit dicey there…. one of the reasons why I got a Volt now instead of later is because those California HOV stickers were running low for qualified plug-in hybrids and extended range electrics. Back in January there were over 7,000 of the available 40,000 stickers left, and by the end of last week that number dwindled down to under 4,000 remaining. I applied for my sticker as soon as I could – the day I got my plates, about a month into the lease – then monitored my bank account on a daily basis looking for a check cashed in the amount of eight bucks. Meanwhile, the depleting sticker supply debacle was getting more and more attention in blogs and articles. To make things worse, more dealers were getting into the act of ordering stickers en masse for cars they had in transit from the factory. It didn’t take long to have second thoughts about not leasing my Volt from one of the big dealers in the Valley that pre-orders stickers, even if it would have meant abandoning the great lease terms I got from a local dealer. At my lowest point I even wished I had not picked up the Volt at all, that I should have just kept driving the Focus Electric 18,000 miles a year, which at 20 cents per mile over 12,000, would have resulted in almost $4000 of excess mileage charge over three years, instead of taking on the Volt for a mere six cents per mile more.

Despite the risk of such significant financial penalty two years from now, I started neglecting the Volt most of the week, like I did with the Mercedes it replaced, in favor of commuting with my white-stickered Focus Electric in the HOV lane. Spending over three hours a day crawling on the 405 in the Volt just wasn’t as appealing as flying in the Focus Electric at proper freeway speeds while the rest of the world around me stood still. At any price. As the weeks of March passed, seeing more and more Volts on the road with no plates and pre-ordered green stickers on their bumpers further convinced me that I probably made a costly mistake.

Eventually the planets aligned. On Wednesday of last week I logged into my checking account like so many countless weeknights prior, and there it was – a tiny icon that was a scanned image of an eight dollar check payable to the DMV. That meant arrival of my Volt’s green stickers were imminent, and that my daily obsession with online banking would transition to manically sifting through a pile of snail mail that my wife so thoughtfully places on my side of the kitchen table before I get home from work (I love that girl!). But the following night as I made a beeline from the front door to the kitchen I couldn’t see the stack of mail…. my wife was standing in front of the table with a firm stance and cold stare. If I were a dog my tail would have instinctively curled under my hind legs, head lowered as I slowly back away. “Uh oh”,  I thought. She held up an envelope and sternly asked, “Why are you getting mail from the DMV? You did NOT buy another car, did you???”.

I was relieved. Because I did nothing of the sort, this time.  She’s a bit sensitive about my craigslist buying binges, and is probably harboring a fear that my obsession has moved back to cars. Over the past couple of years, my weakness has been with guitars… now there are over 20 guitars lining the walls of  my man-cave, bought from aspiring rock stars that moved on to other pursuits, professional musicians that upgraded their gear, and folks that otherwise don’t want to spend the time nor resources to fix broken instruments – probably half of the collection required mild restoration, i.e. snapped necks, failed electronics, sometimes just a simple paint touch-up. After getting two electric vehicles so far this year, one in January and the next in February, I suppose her angst is justified.

Surprised and delighted about the DMV mail, I snatched the envelope from her hand and ripped it open. “Stickers! Look, I got my stickers,” I  clearly explained, waving the shiny green holographic treasures just inches from her face. She rolled her eyes and stepped aside, opening up my path to the kitchen table, where I got on my son’s laptop and started googling for pictures of Volts with HOV stickers to help me visualize how I should install these things. In all these weeks of waiting, I didn’t have the sense to finalize exactly where they would go once I got them. Between eating dinner, cleaning up, and putting the boys to bed, it took all night to decide and then to install the stickers, but by midnight the Volt was armed and ready to take on the HOV lane for the Friday morning commute.

Since then, I’ve been commuting with the Volt exclusively to get a jump on minimizing excess miles on the Focus Electric lease.  With the stickers installed and 50% higher average speed achieved in the HOV lane, the Volt now needs about a quart of gas per day on the 38-mile, 1200-foot climb back home after being fully charged at work… in its pre-sticker guise it took at most a pint, and with the weather warming we were actually starting to make it home without waking up the ICE. A small price to pay for spending one less hour on the freeway, I suppose.

I’m guessing that the depletion of the green sticker supply will slow momentarily because as reported by Inside EVs,  the DMV has suspended the program that allows dealers to obtain those stickers prior to sale. This is good news for those dealers that don’t pre-order the stickers as well as for consumers that shop around for the best deal. Even better news is that there’s a bill to increase the number of green stickers that can be issued, exact quantity is apparently yet to be determined. With any luck, it will be enough to cover introductions of the rumored Focus Energi and imminent next-generation Volt. Because after one solid week of driving my Volt, I’ve realized that it has a few shortcomings that keeps me from wanting to keep it longer than its lease term. More on that later.

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.

Free Turkeys

Back in the old days, so I was told, a year-end holiday tradition for my employer was to hand out turkeys to employees from the back of a truck. Eventually, by the time I was hired on, the tradition morphed into a gift certificate to be redeemed at a local grocery chain for a frozen bird. Perhaps not as nostalgic as a fresh-plucked hen from the tailgate of a stakebed truck (or at least that how I imagined it, loosely based on folklore passed down from the elders), but still very much appreciated. For me, that small gesture of generosity helped set the mood for a warm holiday season.

As the years passed, the privately held company was sold to a publicly traded one, then broken into pieces and sold off for a tidy profit.  Cultural practices and traditions that once set us apart from other companies gradually disappeared, including the free turkey. Layoffs, a shrinking market, and shareholders with expectations changed the climate and cadence of the workplace. Even the company-funded year-end parties have been curtailed. We had to be lean and mean. The little holiday touches that reminded me that this company cares about its employees seemed to have completely faded away… that is, until one day last week when I pulled into work. Because on that day, there were twice as many dual-port Chargepoint EVSEs than the day before. Eight EV parking spaces in total, taking up maybe a third of the first floor parking spaces that were along the west wall of the structure. It was an awesome sight. I’m not sure what was playing on SiriusXM, but it might as well have been a chorus of angels at that very moment.  That visual had way more impact on me than discovering a free turkey certificate in my company mail slot. I pulled my Focus Electric into the last available space and plugged in.

It was actually no surprise to me that the additional EVSEs were coming. Last September, after leaving a strongly worded note on a plug-in that wasn’t plugged in while parked in an EV spot,  I called the Commuter Services office for help. I reported the indecency and asked them to please put up some signage telling folks to not park there if they’re not plugged in. They gave me a phone number to call of a guy in Facilities that might be able to do something about it. So I contacted him, and it turns out he wasn’t just some worker bee like me – he is the company’s Sustainability Program Manager. I let him know of the time that I was denied a charging opportunity twice in one day at two different charging sites (each with two dual-port Chargepoint EVSEs at that time) because the last available space was taken by an unplugged EV at each site. He was very empathic about my plight, asked me for suggestions on signage (which I still owe him), and mentioned that he was planning to double the number of EVSEs by the end of the year at our location if all goes well.

The situation worsened in October and November… although the previously inconsiderate (or more likely, uninformed) EV drivers were starting to play nice, there was a very noticeable increase in the number of plug-ins at work vying for the charging spots; many times I had to wait until after 5pm to charge up. Worried that the additional Chargepoints may not come in time to satisfy the growing demand, I set up an account with EVConnect so that I can charge at a nearby Metrolink station that had a couple of EVSEs. Just in case.

Fortunately by the beginning of December, construction started to accommodate the additional EVSEs. It took a couple of weeks to complete – the foundation had to be prepped and poured for the outdoor units, and both the outdoor and garaged units had to have two metal pylons installed in front of them, in case someone pulling in forgets that the brake pedal is on the left, not the right. For a few days, the existing EVSEs in the garage were unpowered, probably in an effort to bring the new ones online. This meant that all the plug-ins were then competing for the four outdoor charging spots at a building about a mile away. I did feel bad when I beat a Volt and C-Max Energi by mere seconds to take the last available spot one Friday morning, but hey…. at least they can get home on gasoline; I needed to pump at least 9kWh of juice into my car’s battery to start my weekend. I quickly plugged in and avoided eye contact.

As promised by our trusty Sustainability Program Manager, we now have sixteen EV charging spots to serve our sites. What surprised me is that on the first morning of service in the parking garage, all eight spots were being utilized; six Volts, a Leaf, and my Focus Electric. The eight outdoor spots, probably due to a less convenient location, were only half-ultilized. Those that previously chose not to deal with the EVSE shortage are now enjoying the benefit and convenience of charging at work, and those like me who have to charge at work to get home can now rest easy that there will be a space available. To top it off, there is clear margin to serve more employees when they inevitably replace their ICE vehicles with plug-ins in the coming year.

I sent an email to our Sustainability PM, thanking him for the thoughtful holiday gift. He wrote back, excited about being able to make it happen here in California and about putting in our first EVSE at a Texas facility, with more locations to follow.

Sounds pretty wonderful to me. Perhaps this is the start of a new workplace holiday tradition.

Free Electrons!

Woohoo! Looks like I can cross that one off of the bucket list sooner than I thought. Until now, I’ve always had to pay to charge up my Focus Electric. Kudos to the City of Beverly Hills for providing free electricity to go along with two free hours of covered parking in their municipal parking garage, for poor souls like me that drive so much that they’re bound to get an undeserved speeding ticket that begs to be challenged in court.

He said he clocked me at 50 in a 35 with his laser gun. From my perspective, I figure that he did this while mounting his motorcycle with his backside turned toward me. He must have had that laser gun strapped to his right butt cheek, pointing in my general direction. Or maybe there’s some newfangled speed sensing device that can detect the velocity of an object that’s not in line-of-sight. How else can he explain how fast I was going before we saw each other? I was coming over a hill and spotted him mounting his bike across the street, at the bottom of the hill as I crested.  Regardless, I can’t believe he pulled me over… I’m in an electric vehicle, for crying out loud…  aren’t these things supposed to be painfully slow? Shouldn’t he have seen the “Electric” emblem on my hatch while giving chase, then just back off and let me go since there was no way such a contraption could have been doing 50mph uphill? Unfortunately for me, that’s not how things went down.


Fortunately we have California’s basic speed law, which in essence allows folks to exceed the posted speed limit as long as they’re going under 55mph and can prove that the conditions were not unsafe (i.e. clear day, no traffic). So I decided to challenge the ticket, and I’m glad I did, so far… got a free charge out of it, for starters. Then I got free admission to an impromptu comedy performance… the judge doing arraignments was hilarious and upbeat, commenting on how folks dress, telling us about her flu shot ordeal earlier in the day, and making fun of folks that were late or dozing off. If you ever get a traffic ticket in Los Angeles, ask for a change of venue to the Beverly Hills courthouse, then prepare to be entertained. Too bad the court is only used for arraignments.

One more thing I learned by fighting this ticket… the California Vehicle Code (CVC 22511) says it’s illegal to not practice basic charging etiquette, so long as there’s a sign posted indicating so (see picture).

How cool is that? A city that enforces charging etiquette, and a state that makes it easy for them to do so. Hopefully others follow suit.