The surge in electric vehicle (EV) sales over the past few years has been largely fueled by competitive lease programs, offering lower monthly payments than traditional gas-powered cars. However, as we approach 2025, a significant number of two- and three-year EV leases are coming to an end, prompting lessees to consider their options.
For many individuals, this may be their first experience with an electric vehicle. Even seasoned lease holders may find that having an EV changes their approach to the next car. It’s crucial not to wait until the last minute to plan your next move. Ideally, start thinking about this process three to four months before your lease ends.
Residual value, or the predicted resale price of the vehicle, plays a crucial role in lease programs. As EV depreciation rates have been significant in recent years, lessees need to assess their options at the end of the lease term.
One option is to turn in the leased vehicle and lease another EV. Most lessees prefer this cycle of leasing for lower payments and the opportunity to upgrade to a new car every few years. Shopping around for competitive lease programs from different automakers is advisable.
Another option is to buy out the lease and keep the vehicle. If leasing another EV is not feasible and you’ve had a positive experience with your current car, purchasing it from the leasing company at the end of the term is an option. However, be aware of inflated residual values that could result in higher costs.
Alternatively, turning in the vehicle and buying a used EV is a cost-effective option. As pre-owned EV inventory is expected to grow, prices are likely to remain low. A used purchase can be advantageous in the long run, especially if you plan to keep the vehicle for an extended period.
It’s essential to consider all factors, including interest rates on used car loans and potential maintenance costs, when opting for a used EV. Requesting an extension from the leasing company or exploring buyout negotiations can also provide additional flexibility.
Overall, lessees need to assess their individual circumstances and preferences to determine the best course of action at the end of their EV lease. With the EV market evolving rapidly, staying informed and proactive is key to making a well-informed decision.