Should You Buy or Lease an Electric Vehicle (EV)?

The decision to buy or lease an electric vehicle (EV) has become increasingly relevant as the automotive landscape continues to evolve. Ten years ago, leasing was often seen as an option for affluent individuals who preferred to upgrade their cars regularly. However, the rapid pace of technological advancements in the auto industry has changed this dynamic. Cars are no longer just modes of transportation—they are complex technological devices. As a result, many consumers now seek to upgrade their vehicles more frequently to stay in sync with the latest developments, which has made leasing a popular alternative to purchasing. 

This guide explores the benefits and drawbacks of both leasing and purchasing an EV, helping you make an informed decision that fits your financial situation and personal needs. 

The Appeal of Leasing an Electric Vehicle 

Leasing an EV has become more appealing for many reasons. When you lease, you essentially “rent” the car for a fixed term, making monthly payments over a period of two to four years. Once the lease is up, you return the vehicle to the dealer, with no long-term financial commitment. This is particularly advantageous in today’s rapidly evolving electric vehicle market, where advancements in battery technology, charging capabilities, and software are happening every year. 

For instance, a 2027 model is likely to offer significant improvements over a 2024 model—including increased range, faster charging, and enhanced features. Leasing allows consumers to upgrade to these newer models without the long-term commitment of owning a vehicle that could quickly become outdated. 

Benefits of Leasing 

1. Access to the Latest Technology: Leasing allows you to always drive a newer model with the most up-to-date technology. This is especially valuable in the EV space, where developments in battery life, charging infrastructure, and performance are constantly evolving. 

1. Lower Monthly Payments: Leasing typically requires less money upfront compared to purchasing, and monthly payments are often lower than loan payments. This makes leasing more accessible for people who want to drive a new car without making a large financial investment. 

1. Flexibility: After the lease term, you have the option to upgrade to a newer vehicle or even switch to a different brand. This flexibility is crucial as EV technology continues to advance rapidly. 

Example Leasing Deals 

To illustrate, leasing a Hyundai Ioniq 5 can be a highly affordable option. Currently, you can lease the Ioniq 5 SE Standard Range for $229 per month over a 33-month term, with an initial payment of $3,999 due at signing. This brings the total monthly cost to around $350, which is just 0.8% of the vehicle’s total price of $43,195—an excellent deal by most industry standards.

On the other hand, leasing a Rivian R1S would cost a minimum of $699 per month for a 36-month term with an upfront payment of $8,594. The total monthly cost, excluding taxes and fees, comes to about $938, representing 1.2% of the car’s value, which is still reasonable but not as competitive as the Ioniq 5 deal. 

Drawbacks of Leasing 

Despite its advantages, leasing has some significant downsides. The most notable is that you don’t own the vehicle at the end of the lease term. This means that after making years of payments, you have no asset to show for it. Additionally, there are several other factors to consider:

1. Mileage Limits: Most leases come with annual mileage restrictions (typically between 10,000 and 15,000 miles). If you exceed this limit, you may face expensive per-mile charges, which can significantly increase the total cost of leasing. 

1. Wear and Tear Fees: Leasing contracts often include penalties for excessive wear and damage. If your vehicle accumulates significant dings, scratches, or interior damage, you could be liable for additional costs at the end of the lease. 

1. Lack of Ownership: Leasing means you’re always making payments and will have to lease again or buy a vehicle outright at the end of the term. If long-term ownership appeals to you, leasing may not be the best option. 

The Case for Buying an Electric Vehicle 

While leasing is a popular choice, buying an EV has its advantages, particularly for those who plan to keep their vehicle for the long term. If you find an EV that meets your needs—offering sufficient range, charging speed, and other desired features—purchasing might make more sense financially. Ownership allows you to avoid mileage restrictions and wear-and-tear fees, and once your loan is paid off, you will have no more monthly payments. 

Related: Will Investing in Electric Vehicle Chargers Increase the Market Value of Your Home?

Financial Considerations of Purchasing 

While buying requires a larger upfront investment and higher monthly payments, the long-term financial benefits can be substantial. For example, purchasing a Hyundai Ioniq 5 with a $10,000 down payment would result in monthly payments of around $555.70 over a 60-month financing period. If you put down the same $3,999 as in the leasing example, your payments would rise to $653.27 per month. Though higher than leasing, these payments allow you to eventually own the car outright. 

Once the car is paid off, the savings become apparent. For instance, after five years of payments on the Ioniq 5, your average monthly cost over a 10-year period would drop to around $361. Similarly, buying a Rivian R1S would lead to payments of $1,537 per month for 60 months with an $8,594 down payment, but the long-term costs are reduced after the loan is paid off. 

Potential for Resale Value 

A significant benefit of purchasing is the potential resale value of the vehicle after you’ve paid off the loan. If the car is in good condition after 10 years, you can trade it in or sell it privately, recouping some of your investment and lowering your overall cost of ownership. Additionally, ownership eliminates the concern of exceeding mileage limits or incurring wear-and-tear fees. 

Purchasing and Federal Tax Credits 

For buyers, especially those purchasing EVs that qualify for the $7,500 federal tax credit, the financial advantages can be substantial. According to Joseph Yoon, a consumer insights analyst at Edmunds, if you qualify for the tax credit and plan to keep your vehicle for the long term, buying may be more beneficial than leasing. 

Should You Buy or Lease an EV? 

Ultimately, the decision to buy or lease an electric vehicle depends on your financial situation, driving habits, and desire for the latest technology. Leasing offers the advantage of lower upfront costs, access to the newest models, and flexibility, but comes with mileage restrictions and a lack of ownership. On the other hand, purchasing an EV allows you to own the vehicle outright, build equity, and avoid the fees and limitations associated with leasing.

If you expect to drive more than 15,000 miles per year or plan to keep the vehicle for a long time, buying may be the better option. If you prefer flexibility and staying current with the latest technology, leasing could be more appealing. 

Whether you choose to lease or buy, always consider your long-term financial goals, current credit situation, and how much you’re willing to spend on the latest EV technology. 

In the same year that Hyundai Motor Group overtook Ford to reach the second position in the US EV market, which is led by Twitter-owner Elon Musk’s Tesla, the Korean automaker’s India unit crossed 40 per cent in bids on the second day of its IPO. When market closed, subscriptions hit more than 4.17 crore equity shares out of 9.97 crore shares on offer— the country’s largest-ever initial public offering of Rs 27,780 crore. This includes retail investors, Non-Institutional Investors (NIIs), Qualified Institutional Buyers (QIBs), and employee reserved portion. Of the 4.95 crore shares available to retail individual investors (RIIs), 38 per cent received bids at market close on Tuesday.

ALSO READ: Hyundai Motor India IPO: Should you apply for India’s largest public offering?

Hyundai is expected to launch four new models in the mass-market EV sector in India, starting with Creta EV scheduled for January 2025. Other models include Inster EV to rival Tata’s Punch EV, and speculations for Grand i10 Nios EV and Venue EV. As of now, Hyundai sells its high-end EV IONIQ 5 in India.

In the US, Hyundai, Kia, and Genesis—which together form the Hyundai Motor Group—accounted for more than 10 per cent of the EV market, with market leader Tesla slipping 50 per cent market share for the first time.

ALSO READ: From Tesla to Toyota: Automakers race to embrace gigacasting technology

India’s EV market is touted to grow to a whopping Rs 318,000 crore by 2030 due to increasing affordability, launch of mass-market EVs, rising infrastructure, spiking fuel prices, and government support, according to a report by Grant Thornton Bharat and the Automotive Component Manufacturers Association. In September 2024, the Indian government issued new charging guidelines for EV charging stations and infrastructure, in a bid to attract more EV adoptions.

The India unit is a wholly owned unit of the global automaker Hyundai Motor Company (HMC), headquartered in Seoul, Korea. As of date, Hyundai India boasts a Credit Rating of CRISIL AAA for Packing Credie and CRISIL A1+ for Short Term Debt as per official information from the automaker’s India website. 

Some 20 years ago, it was common for a financial adviser to be product-centric, then, towards the end of 2010, they became customer-centric.

More recently, the industry is becoming human-centric.

I admit, this is a broad-brushed – and inevitably unfair – assessment of how advice has evolved over the course of the last 20 years. So, allow me to elaborate.

When advice was product-centric, earnings were often linked to commission-based remuneration. Training standards emphasised product knowledge. The aim was to ensure advisers were well-versed in the offerings available. Their primary role was to match clients with suitable financial products.

It is no longer good enough to be thinking of clients as ‘customers’, as in ‘the recipient of a service’ or ‘the recipient of a product’

Then financial services was nudged to become customer-centric. Here, the Retail Distribution Review played a pivotal role. It banned commission payments from product providers and aimed to ensure adviser recommendations aligned with clients’ best interests.

Advisers faced higher qualification requirements, enhancing their expertise in financial planning. Transparency improved with clearer fee disclosures and detailed service explanations.

Ongoing professional development further reinforced the focus on delivering customer-centric advice, as did the Treating Customers Fairly initiative.

“OK,” I hear you cry. “Where does human-centric come in?”

Well, Consumer Duty has been the major regulatory driver for advisers to become human-centric. It is no longer good enough to be thinking of clients as “customers”, as in “the recipient of a service” or “the recipient of a product.”

Advisers can distinguish themselves from more automated propositions, which can lead to referrals

Think about it for a moment. A “customer” is merely one of many people who bought a product or service. Speak of the customer and it highlights a rather transactional relationship: a connection between a service provider and, well, the customer.

This perspective emphasises the act of buying and selling. It doesn’t delve into the deeper, more personal aspects of the individual behind the transaction.

However, with the rise of behavioural science, psychology, neuroscience and other human-centred disciplines, we are learning to look beyond the generic customer to the individual human. Humans have instincts, emotions and vulnerabilities, and their decisions are influenced by a variety of contextual factors that either enable or hinder them.

Consumer Duty, with its strong emphasis on real-life outcomes, pushes advisers to consider these broader human elements. This marks a fundamental shift towards human-centric advice. The focus is on understanding and supporting the whole person, recognising that clients are not just customers but individuals with unique needs and life circumstances.

Think about it for a moment. A “customer” is merely one of many people who bought a product or service

There are many different aspects of human-centric advice, many of which will bring opportunity. This could be through human-centric communication – for example, in times of market volatility. Or in building trust by more systematically considering the non-technical components that contribute to it.

Overall, human-centricity can be a fundamental part of why people look for and select a financial adviser, bringing in emotional and often apparently ‘irrational’ reasons. Through a human-centric approach, advisers can distinguish themselves from more automated propositions, making the fact-find and client reviews more meaningful. All of which can lead to referrals.

The context we’re in nudges advisers to be ‘human-centric’. It’s a label worth embracing to capitalise on the opportunities that come with it.

Dr Thomas Mather is manager of Aegon’s Centre for Behavioural Research and Insights

HUNDREDS of households have been affected by a DWP benefits error, which could leave them out of pocket.

It comes as the government continues to move all two million claimants on legacy benefits to Universal Credit by the end of March 2025 through a process known as managed migration.

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As part of this process, households on legacy benefits, including tax credits, receive “migration notices” by post.

These notices provide instructions on how to switch to Universal Credit, as the transition is not automatic.

Households must apply for Universal Credit within three months of receiving their managed migration letter.

Failing to do this can result in benefits being stopped.

However, a “small number” of the 800,000 on income-related employment and support allowance (ESA) have faced a stumbling block when applying for Universal Credit.

ESA provides financial support for those unable to work due to illness or disability.

According to Department for Work and Pension (DWP) rules, ESA claimants should not be required to provide fit notes during the migration process. 

Furthermore, those in the ESA support group should not be asked to undertake any work-related activities, as their work capability status should carry over when they migrate to UC.

Despite these clear rules, some DWP staff have asked ESA claimants to obtain fit notes from their GPs.

Others have been incorrectly informed that they need to agree to new work commitments before making the switch. 

Claimants have been told that failure to provide fit notes or agree to new work requirements would make them ineligible for limited capability for work and work-related activity (LCWRA) payments.

These extra payments are worth up to £416 a month.

Similar to Universal Credit, legacy ESA claims consist of a standard allowance and an additional component for incapacity for work.

This additional component – either the work-related activity component or the support component – is being replaced by Universal Credit’s LCWRA payments. 

Therefore, if you were already receiving these extra components under ESA, you are not required to submit a new fit note or agree to new work requirements to be eligible for LCWRA payments.

Ayla Ozmen, director of policy & campaigns at anti-poverty charity Z2K, said: “It’s very concerning to hear that some disabled people on employment and support allowance who are being moved on to universal credit are being asked to look for work.

“Not only is this unlawful, but it puts disabled people at risk of being inappropriately sanctioned.”

A DWP spokesperson added: “We are aware of an issue where a small number of claimants are still being asked to attend a Claimant Commitment appointment and are currently working to resolve the situation.

“Anyone who thinks they have been affected should contact their work coach.”

A WORD OF WARNING

Since July 2022, the Department for Work and Pensions (DWP) has sent nearly 1.14million migration notices.

However, according to the latest figures from the DWP, 284,660 individuals lost their benefits after failing to respond to migration notices received between July 2022 and June 2024.

That’s why it’s vital to ensure that you switch to Universal Credit within three months of receiving your letter.

Failure to do this will stop your current benefit payment.

You will also forfeit transitional protection top-up payments designed to ensure you do not lose money when transitioning to Universal Credit under the managed migration process.

Some 623,310 individuals have since made successful claims for Universal Credit, and another 232,830 are still in the process of transitioning.

HELP CLAIMING UNIVERSAL CREDIT

As well as benefit calculators, anyone moving from tax credits to Universal Credit can find help in a number of ways.

You can visit your local Jobcentre by searching at find-your-nearest-jobcentre.dwp.gov.uk/.

There’s also a free service called Help to Claim from Citizen’s Advice:

• England: 0800 144 8 444
• Scotland: 0800 023 2581
• Wales: 08000 241 220

You can also get help online from advisers at citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.