ALG Reduces Plug-In Vehicle Residual Values; Nissan LEAF Hit With $2,500 Reduction

4 years ago by Eric Loveday 13

LEAF Now With Reduced Residual Value According to ALG

LEAF Now With Reduced Residual Value According to ALG

Residual values play a key role in determining lease rates and become somewhat relevant when vehicles hit the used lots.

Volt Gets Residual Reduction Too

Volt Gets Residual Reduction Too

With that in mind, we’re somewhat displeased to say that ALG, a world leader in predicting automotive residual values, has cut residual values for most plug-in vehicles.

ALG cites high incentives and price cuts for the reduction in residual values, which hit the Nissan LEAF especially hard.  ALG says the recent reduction in residuals led to a $2,500 price cut on a three-year-old LEAF.  But then again, that was bound to happen as the entry level LEAF is now $6,400 cheaper than it was last yet.

Other plug-in vehicles, including the Chevy Volt, Mitsubishi i-MiEV, Focus Electric and Fiat 500e were hit with reduced residuals by ALG.

Eric Lyman, vice president of residual value solutions for ALG, added this to the discussion:

“We have some concerns with demand seemingly shorter than initial expectations, and what it means after all those early adopters have met that demand.”

Reduced residual values typically mean higher monthly lease payments, so it’ll be interesting to see if these $199 lease specials stay around.

As for Nissan, the automaker doesn’t seem too concerned over ALG’s revised values.

Automotive News says that ALG’s Lyman listed these concerns as chief amongst those that led to reduced residuals:

  • Robust retail incentives on new EVs and plug-in hybrids. That puts downward pressure on the resale value of used vehicles.
  • Steep price cuts on models such as the Ford Focus EV, Chevy Volt and Nissan Leaf.
  • Fuel-efficiency strides for internal combustion engines, including the availability of next-generation three- and four-cylinder engines with turbocharging and direct injection, that could make EVs and plug-in hybrids less desirable.
  • Increased competition and potential overcapacity. Automakers have ambitious plans to introduce additional EVs, plug-in hybrids and conventional hybrids in the United States.
Source: Automotive News

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13 responses to "ALG Reduces Plug-In Vehicle Residual Values; Nissan LEAF Hit With $2,500 Reduction"

  1. Assaf says:

    The first 2 items in Lyman’s explanation make perfect sense.

    The last 2 are baloney, and betray the his anti-EV bias.

    Everyone can talk about ICE improvements till they’re blue in the face. Fact of the matter, Leaf improved 16% in its efficiency in the first minor upgrade they made, while ICE barely improves a few % over several years. Prius suddenly remembered to announce a 10% improvement year after next, after a half-decade of sitting on their asses doing nothing.

    As to “Increased competition and potential overcapacity”… might be true for the PHEV segment. All BEVs, every single one of them, are in a supply-constrained situation right now, quite a few automakers don’t seem in a hurry to dive in – which means that those who do like Nissan and Tesla can feel pretty good about demand over the coming 2-3 years. Beyond that it’s too crazy to even try and predict right now.

    1. Foo says:

      +1

      I don’t understand how even a moderate improvement to ICE vehicle propulsion is going to make EVs look less desirable. EVs represent a *quantum leap*, in almost every regard, over ICE technology.

      ICE vehicles would suddenly need to become about 4x as efficient at converting gasoline into motion (than they are now) in order to match EV fueling costs… which are typically 25% what it costs to a fuel an ICE vehicle, for the same amount of travel. ICE vehicles would also need to suddenly require at least 90% less maintenance (than they do now) in order to match the maintenance costs of a typical EV.

      The age of personal ICE transportation, at least in developed countries, is in its final phase. Those who cannot see this are blind.

  2. David Murray says:

    If you are in the market for a used Leaf, this is good news, I suppose. I’m still wondering if we’ll be able to negotiate a lower buy-out price for our Leaf and Volt since the numbers in the contract are unrealistically high now.

    1. Aaron says:

      From what I’ve heard, Ally Bank doesn’t negotiate with terrorists, er, negotiate your residual value. They’re in for a big surprise when I return my i-MiEV. Its residual value is listed on the lease document at $24K. The latest values I’ve seen put it at around $14K.

      1. David Murray says:

        Yeah.. that’s what I’m talking about. My Volt has a residual of $26,000. The sad part is I can just aobut buy a new one for that price with the recent price drop. If they’d go down to $20,000 I’d probably buy it out. if they send it to auction I am willing to bet they’ll have to take less than that for it.

  3. James says:

    Short-sighted bastards!

  4. kdawg says:

    When a war breaks out in the Middle East, I’m guessing the residual values will increase 🙂

  5. Ocean Railroader says:

    I don’t believe most of this in that a 2011 Leaf is going for at least $15,000 to $19,000 right now on ebay with several $20,000. If I ever saw a used leaf that was $8000 to $10,000 I would be jumping for joy to buy it if the batteries all worked. But another thing I noticed too about EV’s is that even the first generation 2000 to 2003 EV’s still get a high respectable price on ebay at $8000 to $14,000 for what is basically a almost 14 year old car.

  6. Stuart22 says:

    The LEAF’s battery problems were largely ignored by national media – had this been as public of an issue as the various ‘problems’ the national media trumpeted about the Volt, the LEAF’s residual value would be even worse. Buyers would be far more aware of TMS as something valuable and important to have with an EV, rather than guessing it is something uncomfortable women have to deal with in life.

    1. CHLPatent says:

      IMHO, the alleged battery problems were HYPED by the national and regional media, fueled by a few disgruntled Leaf owners on some fourms, and some money-seeking private class-action attorneys (btw, I am an attorney and an electrical engineer). If there had been a large number of Leaf’s with battery problems, the national media would have been all over it. Fox News has been especially unfair and biased towards EV’s and they wouldn’t have missed a chance to attack the Leaf ahd there been anything significant going on. Since the ‘issue’ first arose, Nissan has announced the expanded battery warranty for premature capacity loss, and the battery replacement program. If it weren’t for the occasional crank comment, the issue would be entirely dead. The vast majority of Leaf owners seem to have nothing but praise for the Leaf and way Nissan dealt with the alleged issue in this new EV market. BTW, I would have thought that perhaps the better warranty and the replacement program would have resulted in some added residual value of the Leaf.

      1. David Murray says:

        I agree that the battery problems of the Leaf have been exaggerated. Specifically, I think the issue is exaggerated in regards to the number of people experiencing the issue, not so much the severity of the issue. However, I do not agree that Fox news didn’t jump all over it because of that. After all, 1 fire in a Volt during a laboratory controlled test didn’t stop Fox news from giving the public the idea that volts are heavily prone to catch on fire. So if 50 Leaf owners had battery problems, that should have been plenty for them to jump all over. I just think it was harder for them to call the Leaf an “Obama car” since it was developed and manufactured in Japan. And make no mistake, their reason for attacking the Volt has everything to do with trying to make Obama look bad. Since they can trick the public into believing the Volt is a direct result of something Obama did (I think they even believe this themselves) then by making the Volt look bad, they feel they make Obama look bad. Its much harder for them to make that link with the Leaf.

        Ist very simliar to how they call global warming something that is manufactured by liberals to gain votes, yet they never mention anything about Global Warming legislation in other countries that don’t give a rats ass about our liberals gaining votes over here.

    2. Nix says:

      The Leaf battery problems aren’t a national problem. It is a regional problem in just the hottest of states.

  7. Nix says:

    I read about Nissan’s CPO and extended warranty program, and they sound appealing enough to keep lease-return sales pretty good everywhere except in the south-western states.

    Here is what I don’t get. They are lowering the residual by 2500. But the real world sales price for a Volt or a Leaf can be $6,000 to $9,000 less than when these cars first went on sale. Won’t the lease prices be lower now anyways, even with the residual change? Seems like much ado about nothing.