The federal incentives for the Zero-Emission Vehicles (iZEV) program may steer consumers toward leasing, particularly for buyers seeking a 48-month term.

If a consumer opts to buy a new electric vehicle priced at $50,000 and claims the full $5,000 federal rebate, that buyer is recovering 10 per cent of the purchase price. Leasing that same vehicle for 48 months with an estimated residual value of 30 per cent makes the full benefit available for roughly 70 per cent of $45,000 — or $31,500.

Adding provincial incentives of up to $5,000 in British Columbia and $8,000 in Quebec to the iZEV rebates could drop that figure even more.

Chris Budd, owner of the Budds’ Group of Cos. dealerships based in the western Greater Toronto Area, told Automotive News Canada that while the terms of the program might make leasing more appealing, many EV buyers are committed to ownership.

“I think leasing is a good option with the new credit,” Budd wrote in an email. “With saying that, many electric-vehicle buyers are intending to keep the car for a long time and probably tend toward either a finance option or they just pay cash.”

WAITING ON IMPACT

Didier Marsaud, a spokesman for Nissan Canada, said it is too early to gauge the program’s effect on the purchase and leasing mix.

“We need more time, at least one full month of sales, to understand if there is any change in the trend of the lease or financing penetration.”

According to year-to-date data compiled by J.D. Power, as of mid-May, leasing made up 29 per cent of all Canadian automotive transactions, financing, 51 per cent while 20 per cent were cash deals.

Robert Karwel, senior manager of J.D. Power’s automotive practice in Canada, told Automotive News Canada that leasing could be especially appealing to EV buyers because it gives them an opportunity to back out if they don’t enjoy the new technology.

“The customer doesn’t have to commit to the vehicle,” Karwel said. “If you don’t want to buy it out at the end of the lease contract, you drop off the keys at the dealership and you walk away.”

If the market leans heavily toward leasing as a result of the iZEV program’s terms, a potential side effect could be a glut of used EVs hitting the market over the next four to five years.

“So far, the market for electric cars has been good on a used-vehicle basis, and there is a lot of demand,” Budd said. “The future may depend on how fast the technologies move ahead over the next three to four years. Lower price and longer range make a new car more interesting than a used one.”

Al Cormier, interim president and CEO of Electric Mobility Canada, said a wider market for used EVs offers good value for consumers.

“Batteries will last long enough to still be near top performance after four or five years,” Cormier said. “That will make lower-priced EVs available to markets that cannot afford new ones.”