Nissan LEAF Price Cut Makes it One of the Cheapest Cars to Own

By · February 28, 2013

Nissan LEAF Cost of Ownership

The 2013 Nissan LEAF S may end up having among the lowest 5-year total ownership costs of any car on the U.S. market.

Earlier this week, I came across an article from Time.com’s Brad Tuttle, which poses the question: "Are Electric-Car Enthusiasts a Little Too Enthusiastic?” Tuttle draws on accounts from two EV owners, one of whom claims that the cost of owning his Nissan LEAF is—despite popular perceptions about EVs being expensive to own—equal to or less costly than a gas-powered car. Here's Tuttle's response:

“What about the claim that the entire cost of owning a Nissan LEAF is cheaper than what the owner of a standard car pays for gas? Ridiculous. Two years ago, Leafs were being leased for $300 to $350 per month. Figure around $4,000 per year, not including a down payment. Do you spend anywhere near that much on gas?”

Based on my calculations, the total cost of owning a 2013 Nissan LEAF over five years is cheaper than the Honda Fit or Ford Focus.

It isn't really necessary to rebut Tuttle’s logic because it’s based upon a misinterpreted premise and backed up with incorrect numbers—which is to say, it’s par for the course for lightly-researched EV-bashing blog posts on major media internet outlets.

But in evaluating this claim I got to thinking: What is the true cost of ownership of an EV, and how might the new less-expensive 2013 Nissan LEAF change the outcome of that equation?

New Price, New Financial Consideration

In January, we finally got some details regarding long-anticipated pricing information for the 2013 LEAF. Prices dropped across all trim levels, but the announcement that got the most attention was that Nissan will now be offering a no-frills base model of the LEAF that starts at just $28,800 (plus a mandatory $850 destination fee that has always been part of the cost of the car.) That’s big news for drivers who are more interested in saving money than enjoying the host of standard high-tech features included in the LEAF SV, and it dramatically changes the base-level cost-to-own calculation for the car.

To try and get an understanding of just how much, I turned to Edmunds.com’s “True Cost to Own” (TCO) calculator. Based upon a number of variables including depreciation, taxes and fees, financing cost, fuel, insurance, maintenance and repairs, Edmunds establishes a total cost of ownership for the first five years of ownership of a vehicle. (These calculations change depending upon your zip code, so for the purposes of my experiment I used my own San Francisco Bay Area location.)

First, I compiled a list of a number of vehicles I thought would make for worthwhile points of comparison and input them into the site, recording their TCOs and “Total Cash Price,” which is a metric Edmunds uses to figure out how much it really costs to walk out of a dealership with a car (it’s always at least somewhat higher than MSRP.)

Vehicle Model Total Cash Price True Cost to Own
(Over 5 years)
2012 Nissan LEAF $35,957 $35,646
Chevy Volt $44,900 $42,127
Volkswagen GTI $21,718 $43,308
Honda Fit $14,982 $33,744
Ford Focus $17,336 $38,288
Hyundai Elantra $20,181 $37,401
Toyota Prius c $20,799 $36,922
Chevy Cruze $19,561 $38,495
Volkswagen Golf $26,456 $40,453

Interestingly enough, when you include the federal $7,500 credit, Edmunds’s TCO calculator already scores the 2012 LEAF ahead of a number of gas-fueled sedans when the costs are averaged over a five-year period.

The 2013 LEAF should fare even better. To get an estimate of how the new LEAF might come out using this metric, I subtracted the difference in base cost between the 2012 LEAF SV and the 2013 base model S. In order to estimate the cost of ownership, I calculated the rate of depreciation for the 2012 LEAF (as a function of its starting price) and applied that to the price of the 2013 model, keeping all other factors constant. Here’s what I came up with:

(To reiterate, the numbers below are not from Edmunds, but rather an estimate of how the 2013 LEAF might shake out using methods I’ve inferred from Edmunds's data.)

Vehicle Model Total Cash Price True Cost to Own
(Over 5 years)
2013 Nissan LEAF
(*estimated)
$29,705* $32,610*

Surprisingly, if my extrapolations are even close to correct, the 2013 LEAF S may end up having among the lowest 5-year total ownership costs of any car on the U.S. market. At $32,610 the LEAF even comes in ahead of inexpensive small gas cars like the Honda Fit and Ford Focus.

How could this be? The biggest contributing factor would of course be the $7,500 federal tax credit, which lowers the starting price of the LEAF to just $21,300. In states like California, where additional incentives exist, the after-credit price will drop to as low as $18,800, though I didn't include any further rebates in my calculations.

Other major factors include fuel costs (which put the LEAF at a $5,218 5-year advantage versus the Ford Focus,) and maintenance and repair costs, which Edmunds pegs at $2,447 less than the Honda Fit.

Caveats and Disclaimers

My little experiment wasn’t intended to be conclusive and there are several areas in which my findings can be called into question.

First, Edmunds’s True Cost estimates are based on 15,000 miles per year of driving, which is somewhat above average for both EVs and ICEs. Furthermore, drivers in my area pay well above the national average for gasoline, but close to average for electricity. Still, while reducing these two factors to average conditions would bring fuel costs of the LEAF closer to gas sedans, the difference certainly wouldn’t be significant enough to drive the TCO of the car past the Focus or Prius C.

Then there’s the issue of resale value. Edmunds’s resale projections for the LEAF are somewhat optimistic compared to other sources, and unless you plan on selling whatever car you buy at exactly the 5-year, 75,000-mile point in ownership, your results will vary.

And what about those options? Sure, you could buy a 2013 LEAF S without the optional 6.6-kW onboard charger, but most buyers will probably end up paying for that (and at least a few other) features. Then again, most people also tend to add a few frills to cars like the Focus and Fit when they buy them as well.

Finally, it’s worth noting that regardless of whose numbers or formulas you’re using to calculate something like cost of ownership, it's best to personalize them as much as possible. Gas prices, electricity rates, miles driven, insurance, and even maintenance costs vary greatly depending upon where you live.

Use resources like Edmunds’s True Cost calculator or the Alternative Fuels Data Center’s tool as a starting point, and try to do your best to recalculate based on your specific situation. See what you get compared to my numbers, and then let me have it in the comments section if my methodology or calculations are off.

But based on what I see, the base-level Nissan LEAF (at its cheaper price and with incentives) should silence the refrain: "EVs are just too expensive."

UPDATE: Edmunds appears to have updated its cost projections for the 2012 LEAF since this story went live. The Total Cash Price is now listed as $39,811 and the Total Cost of Ownership has gone up to $40,515. We'll try and get to the bottom of this and update you as soon as possible.

UPDATE 2: Edmunds's media relations manager Stephanie Mar responded promptly to my request for clarification. Here's what she had to say:

"There was an $8500 dealer cash incentive on the 2012 Leaf that expired on 2/28. The TCO tool on our website calculates these things on-the-fly, so when that dealer cash expired, the corresponding components of TCO (sales tax, DMV fees, finance interest, depreciation) were adjusted accordingly.

"…Nissan just extended this dealer cash until 4/1, and it will switch to a $7500 "final pay" dealer cash after that. So to add complication to your story, the TCO costs for the 2012 Leaf will look a little different tomorrow when everything is updated for Nissan's incentives change."

So it would appear that my original story was correct about the LEAF's TCO at the time of its posting but quickly became outdated due to an expiring incentive. Soon though, Nissan's new dealer cash incentive will kick into the calculation, brining the TCO and True Price scores back to within $1000 or so of the figures in the article.

Thanks to Edmunds for getting back to me with such a speedy and informative explanation.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.