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Buying a used Nissan LEAF - a perfect storm of value

Sometimes we need to transport the frenzy from one place to the next. Early in our life, we lived in an apartment that only allowed one parking space per unit. So we had to get rid of one of the two cars we had been using. We eventually bought a house and moved out of that apartment, but with a combination of public transit, biking, and getting rides from family and friends, we managed to keep our family a single car family. After moving to a second house and a job change that significantly shifted commutes, we needed a second car.

Cars are a funny thing. I am not a car person. I don't get any pleasure out of driving. I cannot wait for Google to continue to take over every aspect of my life by driving my car for me so I can shop online more. But I also want to have options. I know you can rent a car when you need to go further than the LEAF's range. But I don't really want to rent a car that can handle snow or gravel roads. I don't need those options often, but I do need them on occasion. So we have a SUV to allow for those occasions.

But we definitely didn't need two SUVs. Frankly, I don't even want the option to drive two cars hundreds of miles to go camping. We'll stick with the option of taking less crap with us.

So we needed a commuter car for the second car. Having a distinct lack of time to take cars to the mechanic frequently, not to mention not wanting to spend the money, we wanted a reliable car. (And yes, if we don't have time to take a car to the mechanic, we certainly don't have time to DIY auto repair...) Since we have a paid off car already, and interest rates are super low, we were fine with financing a car. But I also didn't want to take on more debt than needed for this. So we were looking for cheap and reliable. We figured around $10,000, low miles, more recent year, and finally something with a hatchback for storage. (Because to me coupes have to be the dumbest car to buy. I'll admit, I don't find any car sexy or appealing so there is a certain je ne sais quoi that I am sure I cannot evaluate. But why would giving up trunk space look better?)

Turns out, despite the common knowledge out there that you lose thousands of dollars when you drive a car off the lot, it's a bit difficult to put all those things together. But one car kept coming up. It was super simple to get a LEAF that had 20K to 30K miles, that was two years old for around $10,000. That was confusing at first. The MSRP was the same as some other hatchbacks if not even a bit higher. But the value of the car fell precipitously. Strangely there is a perfect storm of value when it comes to a used Nissan LEAF.

Here are the things that I've been able to figure out impact the price:

  • Lack of shiny - or diffusion of innovation - electric cars are purchased by early adopters. Early adopters want something new and shiny. They don't want to own something for years. So when they go to unload or sell it, they discount it heavily because they don't value it.
  • Fear of battery degradation and unanticipated maintenance - very few electric cars were bought. They were leased. This is mostly because being a new technology it was seen as a way to avoid owning some potential problems. So when the lease is up, many of these get turned back over to dealers that are overflowing with inventory. Large inventory plus fewer buyers equals opportunity!
  • Government subsidy - for pretty much every used LEAF on the market, the federal government indirectly paid $7500 to Nissan. It may seem like that was to the benefit of the original owner. However, when that owner turns around to sell the car, they will likely be competing with other sellers who got the same subsidy. So competition basically requires that the subsidy be taken out of the price of the car. And the benefit passes on, albeit indirectly, to the next owner.
  • Dealership ambivalence - perhaps you're better off with most cars going with private parties, but there are not many LEAFs that were bought outright that the private party wants to turn around and sell after 2 or 3 years. In the rare case they want to do that, they may not want to internalize how much the value of that purchase cratered. So more than likely you'll be going to a dealer. The used car sales team have a large inventory and they know next to nothing about electric vehicles. The dealers are willing to negotiate. Don't just walk in and buy for the listed price. Call a few dealers and see if they'll come down on the price. You'll be surprised on how quickly things move.

For all these reasons, these cars are cheap. There is an economic inefficiency there to be exploited. Don't buy a new LEAF. They depreciate faster than your beanie baby collection. But a used one with less than 20K miles on it can be had for a steal. Of course, that is only if the car fits what you need. If you have to drive hundreds of miles a day, then this financial car hack is not for you. For us, as a second car, it worked well.

There are also things that help. If you live somewhere with reasonable electricity prices or a time-of-use rate, charging the car overnight for the next commute at your house will usually be a cheaper alternative than getting gas. But more than that, you don't need to stop at the gas station which saves time. You will likely not be going to the mechanic too often. There are fewer moving parts and other than getting new tires, the most significant expense is likely related to replacing the battery somewhere down the road if you choose to do that rather than buying the next used LEAF or whatever the equivalent will be in the future.

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