Chevy Volt MSRP is $41,000, But Will Lease For Same Price as Nissan LEAF

· · 11 years ago

GM used the stage at Plugin 2010 this morning to let the long-awaited cat out of the bag: the Chevrolet Volt will start at a base price of $41,000 when it goes on sale at the end of this year. Starting today, consumers will be able to go to and pre-order their Volts. The pre-order process is unlike the Nissan LEAF's in that it is going to be conducted in a traditional manner, with dealers setting their own pre-order and deposit terms.

And, although most of the world will surely report on how the Volt MSRP of $41,000 puts it out of the reach of the average consumer, and that the Nissan LEAF, at a base MSRP of $32,780, is clearly the hands down winner of the pricing wars... that's not the real story here. No, the real story is the fact that, if you lease the Volt, it will cost you the same as leasing a LEAF: $350 a month for 3 years.

That certainly makes things interesting, doesn't it?

To be sure, there are small differences in the leasing structure. Namely, the LEAF lease requires a down payment of $1,999 whereas the Volt lease requires a down payment of $2,500. The LEAF comes standard with a telematics system that allows consumers to control basic functions like timing of charging, monitoring battery pack status, and turning on climate control via a smartphone; the Volt will require a subscription to OnStar to access the same features. Sure, as GM says, the OnStar Directions and Connections package will come standard with the Volt for free for five years, but after that it will cost you $299 a year to maintain the functionality that you get for free indefinitely with the LEAF. But in a way, that's peanuts to the overall package.

So how did GM make the Volt available for the same lease price as the LEAF given that the Volt's base MSRP is $8,000 higher than the LEAF's? For starters, when you lease a plug-in car from a manufacturer, the manufacturer can take the available $7,500 federal tax credit for themselves and roll that into paying down the MSRP. Add to that the Volt's $2,500 down payment, and now you're paying a lease on a $31,000 vehicle instead of $41,000. But apply the same principle to the LEAF and the LEAF lease is effectively for a $23,780 vehicle... yet it has the same lease terms as the Volt.

The magic all comes down to the manufacturer's calculated residual value—how much they think the car will be worth at the end of the lease. GM has made the calculation that the Volt will maintain a very high value over the first three years of its life. As a result, GM has effectively engineered a situation where the vast majority of Volt buyers will decide to lease the car. Twinges of the EV1 days will surely flit through the minds of the old school California mandate folks when GM took all the EV1's back at the end of their leases and crushed them. But this time is different because people can actually buy the car outright if they want.

With the Volt's pricing and leasing terms now set, the inevitable question becomes: Volt or LEAF? In a way it's a question that doesn't need to be answered right away because the first few years of production demand will far outstrip supply for both vehicles. But in the long term, if the LEAF and the Volt can be had for the same lease price, which one will be seen as a better value? Only time will tell what consumers are drawn to.

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