How EV leasing/renting reduces the TCO (Total Cost) of EVs
H. Karan Kumar
In the ever-evolving landscape of automotive technology, the rise of Electric Vehicles (EVs) has been nothing short of revolutionary. Not only do EVs promise reduced emissions and a shift towards sustainable transportation, but they also present a unique opportunity for consumers to rethink their approach to vehicle ownership.
One of the most intriguing avenues in this regard is EV leasing, a concept that significantly benefits reducing the total cost of ownership (TCO) of electric vehicles. Let’s delve into how EV leasing accomplishes this feat.
Planning to Buy an E-Vehicle?
TCO of Nexon EV on Buying VS Leasing:
Total cost of ownership (TCO) for buying versus leasing a Tata Nexon EV in India over five years.
*The figures provided are estimates, and actual costs may vary.
Buying:
Item | Cost |
Initial Cost | ₹15,60,000 |
Maintenance Cost | ₹15,000 per year |
Annual Run | 15,000 kms |
Cost of Electricity/Fuel | ₹7/unit |
Running Cost/km | ₹0.875 |
Running Cost/Year | ₹13,125 |
Running Cost/5 Years | ₹65,625 |
Total Ownership Cost | ₹16,40,625 |
Total Savings | ₹2,06,250 |
Planning to Buy an E-Vehicle?
- Purchase Price of Tata Nexon EV: ₹15,00,000 (approximate starting price)
- Down Payment: ₹3,00,000 (20%)
- Loan Term: 60 months (5 years)
- Interest Rate: 8% (average interest rate for car loans in India)
- Annual Maintenance Costs: ₹10,000 (estimated)
- Running cost for 5 years: ₹65,625/-
Leasing:
- Lease Term: 60 months (5 years)
- Monthly Lease Payment: ₹25,000 (approximate)
- Down Payment (if any): ₹0
- End-of-Lease Charges: ₹0 (assuming no excess wear and tear)
Calculations:
Buying:
- Loan Amount: ₹15,00,000 – ₹3,00,000 = ₹12,00,000
- Monthly Loan Payment: Using a loan calculator, the monthly loan payment for a ₹12,00,000 loan at 8% interest over 60 months is approximately ₹24,000.
- Total Loan Payments: ₹24,000/month x 60 months = ₹14,40,000
- Total Maintenance Costs: ₹10,000/year x 5 years = ₹50,000
- Total Cost of Ownership: Down Payment + Total Loan Payments + Total Maintenance Costs + Running cost = ₹3,00,000 + ₹14,40,000 + ₹50,000 + ₹65,625 = ₹17,55,625
Leasing:
- Total Lease Payments: ₹25,000/month x 60 months = ₹15,00,000
- Total Cost of Ownership: Total Lease Payments = ₹15,00,000
Comparison:
- Buying TCO: ₹17,55,625
- Leasing TCO: ₹15,00,000
Now, apart from financial gains, EV leasing has various other benefits also.
Benefits of EV leasing
- Lower upfront cost: Leasing eliminates the need for a large down payment, making EVs more accessible to a broader range of consumers. Especially in a price-sensitive market like India, leasing is the only saviour of the future of electric vehicles. Leasing an EV can reduce monthly expenses by up to 20% compared to purchasing one.
- Flexibility: You’ve got one life; why commit it to one vehicle? Lease an EV and change your electric ride every year. Leasing can give you the option to change your ride every 2 years.
- 0% maintenance costs: EV leases typically include comprehensive maintenance packages, covering all repair and service costs during the lease term. This can significantly reduce financial burden and provide peace of mind.
- Tax Benefits: Buying an EV on a loan is considered luxury spending, and you are charged tax on your loan, but when you lease an EV, you get tax benefits.
- Futureproofing: EV technology is rapidly evolving, with new battery breakthroughs and charging infrastructure developments happening frequently. By leasing, you can stay ahead of the curve and enjoy the latest technological advancements without incurring the high cost of upgrades.
Conclusion:
In summary, leasing can be an effective way to reduce the total cost of EV ownership. By lowering upfront costs, taking advantage of incentives, avoiding depreciation risk, and providing more flexibility, leasing makes EVs accessible to more consumers. For those looking to join the EV revolution in a financially savvy way, leasing is undoubtedly worth considering. As the EV market and technology progress rapidly, the innovative lease model empowers drivers to stay ahead of the curve while minimising their TCO. For an optimal blend of affordability, convenience and peace of mind, EV leases check all the boxes.
