Like just about everyone else in this country, I own a smartphone that costs me about a hundred bucks per month. I never would have thought someone could lease a car for less than the cost of my phone.
In Southern California, some dealers have started to offer a $69 per month lease a new Fiat 500e.
How can leasing a new car cost less than service on a smartphone?
There’s a wide number of factors at play, but in California they all came together to form the perfect storm for bargain-hungry green car shoppers.
Electric cars may be the wave of the future, but they’re still far from being accepted as mainstream. Chalk that up to cheap gas or a continued suspicion of the new technology, but for now, gas-powered cars remain king.
That presents a problem for makers of electric cars. We’ve mentioned the artificial market for EVs created by government requirements for clean vehicles, and it seems that ultra-cheap lease prices are a side effect of those laws. In fact, FCA CEO Sergio Marchionne once pleaded for the public to not buy its 500e because the company loses about $14,000 on each one.
Automotive News said,
The 500e, which was introduced for the 2013 model year, is a “compliance car” — a vehicle whose sole purpose is to satisfy clean-air regulations in California and other states mandating the sale of zero-emission vehicles. And while Marchionne took heat in 2014 for trying to steer consumers away because of the losses the 500e generates, the automaker needs those sales to be able to keep selling Jeeps, Rams, Dodges and Chryslers in the largest state market.
Even in the relatively small field of electric cars, the 500e fails to stand out as a worthy entry. The interior is cramped, the driving position is awkward and the rear seat is best reserved for short people traveling short distances. That’s right up the little Fiat’s alley, though. In this new era of 230+ miles on a charge, the 500e is good for just 84.
A $69 per month lease means substantial incentives from the automaker, which creates a problem with residual value at the end of the term. Used 2013 models are already showing up for under 10 grand, so with this low lease offer I’d expect 2017 models to sell for even less in three years.
If electric cars end up becoming obsolete as fast as smartphones, a used 500e in 2020 might even be difficult to give away.
How low would prices of electric cars have to go in order for you to buy?