Inflation is rising with time, and it is getting tougher and tougher to own and maintain vehicles with rising fuel prices and dipping scrapping years. That’s where the statement from a profound American industrialist comes into the picture, i.e. “If it appreciates, buys it. If it depreciates, lease it.” Which is still used as a great philosophy for maintaining the right relationship with money and articles. The leasing philosophy is famous in the US and Europe, and the rising number of lessees clearly depicts that. It’s so important that corporates and retail users prefer to lease their cars in the West.
Unfortunately, India stayed untouched by the boon of vehicle leasing and leasing in India is seen as something related to business and not something for retail owners. But in contrast, if used smartly enough with vehicle leasing, one could save a lot and enjoy vehicle ownership at a much deeper level.
With ICE vehicles, leasing might not be a desirable option, but with upcoming electric vehicles, leasing will be much more profitable and might become a go-to option for individual owners.
In this blog post, we’ll see the whole EV leasing scenario and what’s best. EV leasing or purchasing.
EV Leasing in the Globe vs India:
Compared to other countries, India’s leasing penetration rate is significantly lower, still in its nascent stages. Here’s a breakdown of the numbers:
Condition of leasing in India:
- Penetration rate: Estimated around 5%, with some optimistic projections reaching 5-8% soon.
- Reasons for low penetration:
- Cultural preference for ownership: Owning assets, especially vehicles, holds strong cultural significance in India.
- Limited awareness and understanding of leasing: Leasing is still a relatively new concept for many Indian consumers.
- Complexities of legal and regulatory framework: The legal and regulatory environment for leasing can be challenging to navigate, deterring potential participants.
Other developed countries:
- US: Leasing penetration rate ranges from 25% to 40% across various asset classes.
- Europe: Varies depending on the country, but generally higher than India, reaching 30% in some countries like Germany.
- China: Rapidly growing market with a projected penetration rate of 15% by 2025.
Comparison in numbers:
Country/Region | Leasing Penetration Rate |
India | ~5% |
United States | 25-40% |
Europe (average) | 30% |
China | ~10% (growing rapidly) |
Should you buy or lease an EV:
2024 is the year of EVs, and if you’re planning to purchase an EV this year, you must consider leasing instead of purchasing the whole vehicle. As the automotive industry changes, the pattern people use to own a vehicle will also change. Unlike ICE vehicles, an EV would be more profitable when it’s leased. Due to its lower after-market value and tax benefits. Let’s understand that further in this article.
First, let’s see what the limitations of leasing are. In leasing you:
- Don’t own the vehicle.
- Limited modifications
- Few Driving restrictions
These limitations don’t hold much weight when it comes to electric vehicles but may play a significant role in ICE vehicles, and this becomes a key reason to lease an EV instead of buying one.
Benefits of EV leasing in India:
Affordability & Accessibility:
- Lower upfront cost: Leasing avoids the high initial payment associated with buying an EV, making it accessible to a broader range of consumers, especially the middle class and youth.
- Data: A Zecat survey shows that 39% of Indians prefer leasing or subscription models for vehicles.
- Benefit: Affordable leasing can drive EV adoption and address the high upfront cost barrier.
- Reduced monthly burden: Compared to car loans, leasing often has lower monthly payments due to the lower purchase price financed.
- Data: Leasing plans start at Rs. 21,399/month for 4-wheelers and Rs. 13,549/month for 3-wheelers (Clean Mobility Shift).
- Benefit: Makes EVs more economical for daily commutes.
Flexibility & Convenience:
- Upgrade potential: Easily switch to newer EV models every few years, keeping pace with technological advancements.
- Data: 2-3 year leasing options are common, aligning with rapid EV technology improvement.
- Benefit: Access the latest features and avoid depreciation concerns.
- Simplified ownership: No hassle of resale, insurance, maintenance, or roadside assistance, as the leasing company manages these.
- Data: Leasing companies handle service, repairs, and battery replacements.
- Benefit: Offers peace of mind and convenience.
- Trial before buy: Experience EV ownership before committing to a full purchase.
- Data: Some leases offer purchase options at the end of the term.
Benefit: Reduces purchase risk and helps with decision-making.
Conclusion – Should you lease an EV in 2024:
Based on the information presented in the article, leasing an electric vehicle in 2024 appears to be an advantageous option compared to purchasing, especially in the Indian market. Key benefits of EV leasing include greater affordability and accessibility for middle-class buyers, increased flexibility to upgrade models every few years, simplified ownership without resale or maintenance hassles, and the ability to trial EV ownership before total purchase commitment.
With EV technology rapidly advancing and prices projected to achieve parity with petrol vehicles in the coming years, leasing enables tapping into these innovations at a more reasonable monthly cost. The lower upfront expenditure also makes EVs viable for more everyday commuting needs.
As consumer awareness and electric infrastructure expand in India, EV leasing penetration rates are likely to increase from the current levels below 10%. The convenience, peace of mind, and route to upgraded future-ready mobility make a compelling case for Indian buyers to strongly consider EV leasing in 2024 and beyond.
