AUTO

EV CPO Leasing Isn’t a Thing, But It Should Be

March 11, 2024

Price is a significant barrier to EV ownership, but leasing requires less of a financial commitment.
Honda and Acura are starting to offer leasing programs on certified pre-owned ICE cars, so leasing used pre-owned EVs could be next.
CPO EVs would allow first-time car buyers a secure road to EV ownership.

Honda and Acura recently launched a program offering leases for certified pre-owned internal combustion cars. An American Honda spokesperson says the company currently has no plans to offer a similar used car leasing program for EVs (to be fair, it won’t even start selling mass-produced EVs until later this year).

Honda Motor should think about leasing certified pre-owned EVs, though. Indeed, all automakers should consider offering EV CPO leasing programs. That would be a great way for a first-time car buyer to get into an EV while easing concerns about things like sticker price.

What Does Certified Pre-Owned Mean?

A CPO vehicle is a low-mileage used vehicle, typically late-model, that has been inspected by a factory-trained technician and is sold with a warranty. Are certified pre-owned cars worth it? Well, such certification can add to the used car price, but it also gives the buyer peace of mind.

What Does It Mean to Lease a Car?

Leasing generally involves signing a multi-year contract to make monthly payments on a vehicle. At the end of the lease, the lessee can buy out the contract or just return the vehicle to the dealer.

Why an EV CPO Program Could Work

In an interview with Electrify News, Jimmy Douglas, founder and CEO of online wholesale EV marketplace Plug, said an EV CPO leasing program is a great idea. His reasoning is a bit technical, but he ultimately does explain how leasing a used EV could be financially wise for some people.

“Most used EVs are getting to the end of their life. We don’t know how long they will go. What leasing a product does is give the consumer the opportunity to pay for the depreciation,” Douglas says.

However, here’s the good part: “A used EV has already seen the most intense of its depreciation upfront. Now the depreciation curve is relatively flat, it should be a very low cost way to get behind the curve.”

What he means is that it is a less expensive way to drive an EV.

It makes sense. Companies such as Recurrent offer full reports on an EV battery’s health for some 90% of the used EVs on the road, according to Recurrent CEO Scott Case in an email exchange with Electrify News. Knowing the remaining useful life of the battery helps determine the length of even a used car lease.

Online marketplace Edmunds has a handful of used EVs for sale on its site, mostly Teslas and Hyundai IONIQs. The IONIQ listings are certified by Hyundai and include a Recurrent battery health ranking. But EV CPO leasing isn’t included.

Leasing newer used vehicles is an “enticing idea” given the challenging economic environment, Jessica Caldwell, AVP Insights at Edmunds said in an email. But the concept hasn’t really taken off yet. According to her, only 0.3% of used vehicles purchased in 2023 were leased.

“And for used EVs, specifically, there would be a small market — most of which is Tesla — so maybe it’s something that will grow over time as people want to make the switch but require a less expensive vehicle,” Caldwell said.

An EV CPO Leasing Option Could Eliminate EV Adoption Barriers

In a consumer sentiment survey from AAA, respondents said the crucial barriers to them buying EVs included price, access to charging stations, and cost to replace or repair the battery. However, these issues could be addressed by allowing for EV CPO leases.

Leasing instead of outright buying a pre-owned EV could help alleviate the price concern. Charging infrastructure buildout is already occurring. And the health of EV batteries is measurable, thanks to services like Recurrent, so lessees can feel confident that their EV battery is in good shape.

Automakers should consider this option, especially if they want to get more people driving EVs.