The financial case for purchasing vs leasing EV/PHEV when incentives aren't being passed along

So, I’m in the market for EV/PHEV. Personally, I don’t care about the electrification but I do need the carpool sticker in CA, so there you have it. I’ve been looking at multiple cars and except for Audi, I do see a lot of brands not passing along the federal EV credit (Kia, BMW, Volvo etc).

So now I’m debating if I were to proceed with any of these cars, does it make more sense to buy it vs lease it. Personally, I’d prefer leasing as to not take a risk with the residuals down the road as the technologies are rapidly evolving but still.

Assumptions include taking the residual set by the bank and subtracting another $2500 from that as the trade-in value 36 months down the road. For purchase, Im assuming a 1.8% finance rate for 36months.

Kia EV6:
Ownership TCO: $28K
Lease TCO: $33k

Both calculations are done with 10.5% tax rate and 15K miles. I assume people who qualify for state incentives would be getting even a better deal with purchase vs lease.

Here is a similar comparison for BMW i4 M40.
Ownership TCO: $33.4K
Lease TCO: $39.7k

Trying to understand am I missing something? Does it actually make more sense to purchase these vehicles vs lease them?

As a side note, I’ve driven the Audi E-Tron, Audi Q5e, BMW i4, BMW X5e, Ford Mustang Mach-E, Volvo XC-60, Kia EV6, Polestar 2 and Lincoln Corsair PHEV. Hard to get hold of Hyundai Ioniq , Tuscon PHEV or Sorento PHEV for a test drive as inventory is really tight.

Edit: Volvo has lower MF’s than lease, so the delta isn’t as big. On the other hand, even thu Audi passes the EV credit, their MFs for current programs look pretty high (as per Edmunds)

For a purchase, it would be hard to beat the TCO of a RAV4 Prime.

For a lease, Nissan Leaf.

Probably. Im looking for something that is more engaging and premium to drive. Rav4 felt like driving a toaster.


There are a whole lot of EV’s set to be released this year

Also - what about Lucid?

Lucid is kinda out of my price range. ALso, the trunk is really small and rear seats are too close to the floor to be comfortable. Driving dynamics are great though.

PHEV/EVs with an incentive, depending on numbers, may be better to purchase… but depending on the model some leases pass through the Fed credit.

You might also look at a balloon payment finance, lower upfront and payments like a lease but you get the full Fed credit.

You must really loathe toasters.


yeah, but thanks for our beautiful leaders in CA, you still end up paying 10.5% tax for the whole vehicle.

If you do the one pay, are you vulnerable to losses if you total the car (assuming there is gap coverage) like you would if you made a lease down payment?

I think the wildcard is in the residual. EV technology is evolving pretty quickly such that the new generation car is a step-function better than the prior. So that could push residuals lower than expected. Having said that, given supply chain constraints are slowing down delivery of new models, I personally don’t think much is going to change in the next 3 years. The risk is probably more over 5+ years.

Yeah I feel you. I can publish a residual comparison for all the cars I’ve looked at. Mostly are between 50-55%. Polestar inflates their RV to 61% while Ford is depressing it to 44%.

So yeah, I am concerned if the RV in 3 years /36k miles would be closed to 50% or 40%?? Who knows and thats a risky thing.
I am just not happy at manufacturers not passing along free money … but I guess its within their rights. Audi does but their MF is sooo high

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Could not agree more. Unfortunately, demand is very high and supply is low. if/when there is ample supply aging on dealer lots, it may change.

Is the Outlander PHEV on your list out of curiosity?

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Yea totally get you. Balloon financing might be the sweet spot. However, I noticed that, as you point out, Ford’s residual on their balloon financing for the Mach-E seems super low, so it’s not really much of a “put” on the residual.

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Not really. Im planning to keeping one car and ‘fun’ is important to me along with practicality and I guess affordability. Like, I would love to get the Polestar 2 if it was a bit more roomier. Right now leaning towards Volvo XC60 PHEV but jurys still out. Appreciate the feedback thu!

Check out Volvo C40. At least it’s a Volvo vs. Polestar and is probably bigger. I didn’t get a chance to get inside, but its interior is probably on par with XC40 (not the trunk though).

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Will do, Thanks.

This is always an interesting discussion. A manufacturer not including a like-value cap cost reduction is not necessarily “not passing it along”. They may just be applying it differently, like saying the RV on a Polestar is 61%.

Last time I saw lease numbers on a C40, they were horrendous.

They should be, no doubt. Have you seen ANY good lease numbers (exclude the 2 usual suspects) lately?

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Perhaps I should rephrase…

they were particularly horrendous

Like $900+/mo horrendous, and that wasn’t with some ridiculous mark up factored in.