Putting the $20,000 2013 Nissan LEAF into Perspective in Terms of Payback Period

5 years ago by Eric Loveday 38

2013 Nissan LEAF

2013 Nissan LEAF

Priced at $28,800, the 2013 Nissan LEAF S is definitely the electric vehicle that will put the competition on notice, but will its low-ball price tag convince some buyers that it’s a bargain compared to a significantly cheaper gas-fueled Nissan Versa?

That’s the question that the Rocky  Mountain Insitute set out to explore in a recent blog post and the conclusion is intriguing.

In the chart below you’ll notice that RMI did a simple “payback” comparison between a 2012 Nissan LEAF, a 2013 LEAF S and a 2012 Nissan Versa hatchback.  RMI used “nationwide 2012 averages for prices for gasoline and electricity per kWh.” And the $20,000 figure is based on receiving federal- and state-level tax credits.

RMI Chart of Simple Payback for 2012 LEAF and 2013 LEAF versus 2012 Nissan Versa hatchback.

RMI Chart of Simple Payback for 2012 LEAF and 2013 LEAF versus 2012 Nissan Versa hatchback.

What RMI is trying to point out is that the 2013 LEAF S has a “simple payback” period of just over 3 years, compared to the 2012 LEAF’s payback period of 6.5 years.  RMI concludes that most consumers would accept a payback period of 3.1 years, but says that 6.5 years is far too long for the average buyer to consider it a wise decision.  We agree with this line of reasoning.

2013 LEAF S Sticker

2013 LEAF S Sticker

No, the spartan Versa is not comparable to the LEAF and it’s incredibly cheap, too.  Will buyers cross shop the two?  Extremely unlikely.  But RMI’s extreme-case scenario shows that even when compared to one of the cheapest vehicles in the US, the 2013 LEAF S competes rather well, at least in terms of payback period.

And here’s the kicker: notice that RMI used 17,000 miles per year in its calculations?  While that numbers seems high, RMI points out that 20 percent of US drivers average that per year, some even substantially over 20,000 miles.  If the miles driven per year exceed 17,000 miles, then the payback period shrinks even more.

Of course, high mileage electric vehicles aren’t all that common, but with the right charging situation and commuting conditions, it’s entirely possible to drive a LEAF over 150 miles per day (150 times 365 = 54,750).  We don’t inspire to drive any vehicle that much on a daily basis, but it’s doable, electric or not.

via Rocky Mountain Institute

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38 responses to "Putting the $20,000 2013 Nissan LEAF into Perspective in Terms of Payback Period"

  1. scottf200 says:

    Good article. The LEAF can fit a lot of peoples needs for specific driving patterns. People waste a lot of money buying cars every 2-3 years. Keep in mind that you/they neglected the other maintenance saving such as brakes because of regen slowing. (Even on my Volt with 25K miles in 2yrs I have 20K electric miles so the ICE only has 5K on it, I’m saving maintenance like the brake job. As well just now due for my first oil change after 2 years).

    12,480 miles per year (40mi * 52wk * 6days) is probably more realistic. 17,000 seems to be useful only to make the results “nicer”.

    1. kdawg says:

      Yeah, some fudging going on to create a nice result. 17K is high, and they also included a state tax credit.

  2. Anthony says:

    The 17,000 miles seems high for an EV that only gets 70-80 miles of EV range.

    If you use 12,500, the simple payback period only grows to 4.25 years, which is still within the time frame of making payments on the car (5 years). So it should seem reasonable.

    1. Sean says:

      Last year I accumulated a little over 22,000 miles on my Leaf – the vast majority of it as highway miles.

    2. I also drove my first LEAF over 24,000 miles in the first year. Drove LEAF number 2 for 11,000 miles in the 5 months that I had it. And my current Rav4 EV is at 8000 miles in less than 4 months.

      The 73 / 75 EPA mile car did just fine covering that distance, but make no mistake; without DC fast charging nearby, I much prefer the 100+ mile range of the Rav4.

  3. Josh says:

    I put 19k/year on my LEAF, primarily doing a 66 mile round trip commute with no workplace charging. I would say 17k/year is feasible, but most drivers would use less miles to calculate payback. It may also be difficult to do 17k miles per year on the 80% long life charge w/o workplace charging.

    1. Dave R says:

      Yep, for high mileage commutes, workplace charging is essential since it doubles your effective range.

      Letting one use 80% charging instead of 100% charging should also improve battery life some, too.

  4. Christof says:

    Interesting comparison, and nice that it favors the EV, though I disagree that the Versa and LEAF are not comparable. Sure, no one will cross shop them, but I bet most people who actually buy/lease a LEAF aren’t cross shopping ANY gas cars. The Versa has a very similar design, similar amount of space, etc. In fact, I’m so tired of people saying the Versa isn’t comparable to the LEAF, I’m going to write a blog entry about how/why they are comparable 😉

    On another note, what about battery pack replacement? This projects beyond the 3-5 year time horizon that’s looked at here. But how does the comparison looked when pushed to 8-10 years, and a new battery pack for the LEAF is put into the equation (I sure hope we aren’t moving to a paradigm where pure EVs get thrown out after the battery pack goes, because that would be incredibly wasteful, and would go against the greater sustainability that EVs supposedly deliver).

    1. Dave R says:

      Sure, the LEAF/Versa aren’t really comparable (the LEAF is better equipped), but making the comparison and showing that it still makes sense gives all the people who insist on comparing an EV to the cheapest econobox one less thing to argue against EVs.

      1. Jay Cole says:

        We are actually going to run a piece by Mark Larsen (wave if you are out there reading this Mark) comparing the LEAF against a Versa…not just based on pricing, but as vehicles overall in the very near future.

        It was going to run today, but then this Rocky Mountain came out and it seemed a little too similar to run back to back, so we pushed it back a bit.

  5. David Murray says:

    Well, I expect to keep my Leaf indefinitely. I have 1 year left on the lease and then I plan to refinance it for 5 more years to pay it off. So the payments should drop considerably next year, and once the car is paid for it will be a very inexpensive vehicle to operate. I just hope it still has at least 50 miles of range once it is paid off.

    1. Bloggin says:

      Interesting. Why would you want to actually own 2011/2012 battery technology, understanding that the vehicle price is dropping each year, range is extending, and the battery is guaranteed to loose capacity and need replacement?

      Since the same vehicle gets cheaper and cheaper to lease every couple years, why not just lease the better technology for less each time?

      Especially as the new model gets cheaper than your current model, the value of yours will keep dropping rapidly while sitting in your driveway.

      It’s like buying a $30k iPhone. That’s going to be free with service activation in 2 years.

      1. Brian says:

        I think you’re missing his point. After 8 years (3 year lease / 5 year financed buyout), David’s Leaf will cost him nothing. Your proposal of continually leasing means that after 8 years, and forever more, David is paying every month. If he Leaf still works for him after those 8 years, he wins.

  6. Brian says:

    I wonder about these statistics. I drive over 20,000 miles per year, but about 2/3 of that is well out of the range of my Leaf. How? My commute is about 5 miles round-trip, but I travel 500+ miles (mostly visiting family) on average 15-20x per year. I know my use case is one extreme, but a 50+ mile daily commute with infrequent longer trips (enough to say, rent a car every time) is another extreme.

    Most Leaf owners have a second car in the driveway, and that’s unlikely to change in the near future. The breakdown of mileage makes a huge difference in payback. I wonder what the typical breakdown of those 20,000 miles/yr drivers looks like…

    1. Josh says:

      @Brian

      You are right that just saying miles/year isn’t enough detail to figure out payback. I do the 66 mile commute in the LEAF. On weekends we pretty much use it exclusively, keeping the ICE parked.

      When we go out of state, we usually fly, but 3 – 4 times a year drive a 400 mile round trip to Austin. We just use the ICE for that trip.

      It seems in your situation the Volt would be a better fit. That is why we need enough options to match drivers habits and preferences.

      1. Brian says:

        If I had only one car, the Volt would be it. However, the lower CS MPG means that the Volt would actually burn more gasoline than a Leaf + Prius 😉 (Forget flying – tickets for a family of 4 is orders of magnitude pricier than driving 500 miles @ 50mpg) But like you said, the important thing is to evaluate one’s own situation.

        But that brings me back to my original concern – the statistics bury the details. Your situation and mine would fall into the same ~20k miles/year category, but they are wildly different in practice.

        1. Dave R says:

          Well, with a 5 mile commute, you probably just want a plug-in Prius instead of a LEAF+Prius!

          That way you get EV for those 5 mile commutes (as long as you don’t have to get on the freeway) and 50 mpg for those long trips in a single vehicle.

  7. GeorgeS says:

    seems like there are lots of maint items that have been left out like brakes that Scott pointed out and engine maintenance plus the MTBF (mean time between failure) has got to be way lower in the electric vehicle.

  8. Warren says:

    Of course the battery is the whole story for EV’s. For most, break-even will be more like 5 years. At that point will we have a useful range left? What will a replacement pack cost in five years? Even if I don’t plan to keep it past 5 years, what resale value would a 30 mile range EV have?

    If the OEM’s don’t come up with a good solution by then, I see a great market for inexpensive Chinese, aftermarket packs.

    1. Herm says:

      Surprised no one mentioned that.. but yes, in many places all you are going to get is 5 years out of the battery, meanwhile the LBW warning will still come on at the same level of reserve increasing your anxiety (LBW comes on at about 14 miles of range left, always, no matter how much battery degradation you have).

      See th battery degradation Wiki at
      http://www.mynissanleaf.com/wiki/index.php?title=Battery_Capacity_Loss

  9. Alaa says:

    Gas is more than $4 now. How much will it be in the coming years? I suspect more thus the pay back time will be much less than what is stated.

  10. Warren says:

    US national average is $3.74 right now. Unfortunately, the entire global economy runs on fossil fuels. As energy gets more expensive, so will the cost of a Leaf.

    The answer to transportation costs, and environmental costs is slower, smaller, more energy efficient vehicles, regardless of what they run on.

    1. Brave Little Toaster says:

      “The answer to transportation costs, and environmental costs is slower, smaller, more energy efficient vehicles, regardless of what they run on.”

      Yeah. Like trains. It would be interesting to see what effect on the economy high speed electric rail would have. Like France already does.

  11. Levi says:

    ***Who among you thinks Gas will be Cheaper than $4/g in the future???? Raise your hands..

    ***Who among you thinks Battery packs will be cheaper in the future??? ( I raise my Hand )!!!
    Evidence… Cheaper 2013 Leaf compared to 2012 Leaf.

    ***THE FUTURE IS ELECTRIC MY FRIENDS!!! Just a little while & it will PLAINLY EVIDENT.

  12. Bloggin says:

    What this article makes clear is that it is not the smartest move to buy an EV.

    In just 1 year, anyone who bought a 2012 Leaf, would have lost an immediate depreciation of $5,400 due to year over year base price drop. And that does not take into account depreciation due to mileage and wear.

    Then there are the car payments and required down payment if you bought the car. $705/mo at 0 interest = $8,460. So after 1 year, cost of ownership is at $13,860.

    If the vehicle was leased the only cost of ownership would be $2,388 of 12 months lease payment, plus the $666 down($1,999 / 3) = $3,054.

    Then as EV prices continue to drop, so is there more instant depreciation for the ‘owned’ model.

    Along with battery capacity degradation and the impending cost of having the battery replaced on the EV you now own.

    One thing to remember, is that it’s no longer just buying a car, but buying technology, or like buying a smartphone. They will get cheaper each year, and upgrades are coming fast.

    So clearly, the lease is the only way to go. Otherwise you are buying a $30k iPhone,

    1. Dave R says:

      You’re comparing apples and oranges.

      The ’13 LEAF S is not comparable to the ’11-12 LEAF SV – you need to add on a couple thousand worth of options to get it there.

      Not to mention that it was trivial to get the ’11-12 LEAF under MSRP – even when the ’11s were first released.

  13. Mark H says:

    Great article Eric! I used to apply 15,000 in comparisons and still do from time to time, but have started to use Anthony’s number of 12,000 since this is the average national value used by the department of energy http://www.afdc.energy.gov/calc. Also an important note about the DOE calculator, it does use NPV (net present value) in calculating future gasoline cost which is the best way to handle it. It does use the current rate of gas for its base value which is not necessarily the best method.

    Herm/Warren, right on with battery replacement. This is the number that drives most crazy because there has to be some speculation involved. The current rate of $500-$600/kWh will not be the case in five years. Most studies are predicting $200-$300/kWh and continuing to drop in future years. I believe Tesla will sell you a 85kWh battery for $12,000 (under $150/kWh) when purchased up front. They are gambling that the cost indeed will come down by the end of the warranty cycle.

    I am a fan of selecting a value. Put it out there and start to dissect it. FYI, I did look into the battery installation cost for my Volt and the number is $365 (not bad), so this does not add much to the overall cost of replacement. NOW, for fair comparison you have to add real world maintenance cost to the ICE like timing belts, oil changes, catalytic converter, brakes, etc. to the calculation. I use the value of $1,500. You also have to include a core value for you old battery, for it is not dead and there will be a market for the battery. Hey Mark Larsen, please address in your up and coming article!
    There is no method to add a battery cost at a given year increment in the DOE calculator, but if you did it would have a flattening effect on the cost of ownership. Even with the battery exchange, I argue that it is still viable. Herm, your math is pretty good, what say you?
    So a 2018 Leaf battery “could” cost between $4500-$7000. Lets say $6000 with installation
    $6000 less the ICE $1500 maintenance and less a core value of maybe $1000-$1500
    You could be looking at $3500 future cost in five years. Lets argue the numbers some, but anything under $5000 puts you right back at the initial cost divide.
    That’s my argument, bring it!!

  14. Levi says:

    Let me give you my actual Real life analysis… No speculation.

    Note:- I own my limousine company (3 Lincoln Towncars)
    We service around 100 mile radius from the airport.

    Been in business 10 yrs. Average towncar gets 17 mpg.. fills up at 17.5 gallon gas tank = (17*17.5)= 290 miles. We usually use 1 tank a day/ car. At $3.75/g for 3 cars i pay =
    ($3.75/g*17.5g tank) * 3 cars = $196.8/day in gas. That’s alot for my small business .
    Let me make it easier 1 towncar.. 17.5g * $3.75 = $65.4/day for 6 day/week we run = 65*6= $390. That comes to (390*4 weeks) = $1560 / month or $18,000/ year.

    I just replaced one towncar this February with my brand new Model S. Electrician just finished redoing the high power sockets for faster charging @ our office. I calculate that my Model S will
    Pay for it self in around FOUR YEARS.!!!

    The Towncar I replaced was consuming $18,000 gas per year ( $18,000 * 4 yrs) = $ 72,000
    Tune-up & Maintenance was $2,500/yr * 4 = $10,000 ( these r commercial vehicles kept in excellent conditions) new tires every yr, spark plugs oil change etc.. That’s $82,000 in 4 yrs.

    You can’t believe if I tell you that customers actually drive me to the airport…. & pay me for the fare.(just so they can test- drive a Tesla). I’m planning to replace another towncar by years end.By the way Im having a business BOOM because of it.

    1. evnow says:

      Very cool !

    2. Mark H says:

      Did you pay it forward on your next battery? Was there a time limit before you can get it?

      1. Robert.Boston says:

        Tesla has announced that, for $12k prepaid, you’ll get a replacement 85kWh battery in 8 years. So even adding $1,500/year towards the battery replacement, the Model S quickly repays @levi’s investment. Realistically, though, in the towncar business, he’ll want to get a fresh vehicle in 8 years. (Tesla’s battery warranty is 8 years, as is its announced extended bumper-to-bumper warranty).

    3. JC says:

      COOL!!!!!!!!!!!!!!!!!!!!!!!!

      Wich airport?
      I want a ride (drive)!!!!!!!!!!!!!

      TAXIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

      1. Dave R says:

        +1 – let us know the name of your business – a lot of readers are curious!

    4. Phil says:

      Where is your business located. Is it where cold weather would effect the range?

  15. Here’s my $50k Rav4 EV to $30k Rav4 oil burner comparison:

    100,000 miles driven divided by 25 mpg equals 4000 gallons multiplied by $4 gallon = $16,000 for fuel.

    For a non-solar electrical costs, I used a generic 12 cents per kWh, and an economy of 2.5 miles per kWh (from the wall including charger inefficiencies) makes 40,000 kWh consumed in 100,000 miles multiplied by 12 cents equals $4,800.

    Assuming both cars are worth ZERO at the end of 100,000 miles, and oil doesn’t go up, and making no concessions for oil changes:

    ——–Rav4 V6—–Rav4 EV
    Cost- $30k ——— $50k
    Fuel- $16k ——— $ 4.8k
    Fed tax credit —— ($7.5k)
    California rebate — ($2.5k)

    Sub- $46k ——— $44.8k

    Obviously, it’s somewhat easy to pay less for electricity with a sub-meter assigned only to EV (I pay 7.7 cents per kWh between midnight and 5 am). I could run it off the solar only, but I’d want to add a few panels for the upcoming Tesla and Rav4.

    If oil prices are high, the electric Rav4 will have a very high resale value that the oil burner won’t. I’m betting on electric!!!

  16. evnow says:

    Easy way to analyse is to use lease figures, rather than buy cost. That way you don’t have to worry about battery depreciation etc.

    1. Brian says:

      Didn’t someone do a comparison like that for the Honda Fit? I remember seeing somewhere that a 24-month lease was actually cheaper for the EV, not even including cost of gas/electricity.

  17. BrainKnot says:

    What if the Nissan Leaf SL cost less than the Versa on day 1 (due to Georgia state 5k tax credit and buying a demo car), what if you put 20k miles every year and save $3k of gas a year. Then the equation becomes a no brainer. This is my particular scenario. When car is paid off, I will enjoy many years of almost zero cost commuting (charging at work and about $0.08 of electricity a day). With cost of gas near $4/gallon, my new car cost is almost 100% offset with my gas savings. All these analysis are just mental exercises. If your situation makes electric a better option, then is a matter of making it happen. Looking forward to my 2nd electric car so my wife can have the Leaf which is the perfect size car for her. Just raking my mind how to make the Tesla possible, and Levi just gave me an idea.