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The New Economy

Electric cars: Considering a Volt or Leaf? Lease it.

Electric cars are coming this fall. But with many unknowns, it could be more prudent to lease than buy a Chevy Volt or Nissan Leaf.

By / July 31, 2010

President Obama, accompanied by General Motors Assembly Manager Teri Quigley, drives a Chevy Volt at GM's Hamtramck, Mich., plant Friday. At $41,000, the Volt won't be the cheapest of electric cars. But GM will let customers lease one for a much more affordable $350 a month.

Pablo Martinez Monsivais/AP

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By taking the wheel of a gleaming black Chevy Volt and driving all of 10 feet Friday, President Obama may not have convinced anyone to buy into the auto industry's new experiment.

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But he did drive home one point: Mass-produced electric cars are coming. Soon.

This fall, the Volt and Nissan's Leaf will face off with dueling plug-in technologies. Next year, Ford, Toyota, and just about every other major manufacturer are likely to unveil their own electric cars. Is it time to consider buying one?

The new generation of plug-in cars come with all sorts of unknowns. How good is the technology? Will the batteries last? Will people want an expensive electric car (the Volt) that can replace their current vehicle? Or a cheaper specialized version (the Leaf) with a more limited range?

Perhaps the biggest risk of all is that gasoline prices would fall, making electric motors more expensive to run than conventional combustion engines.

There's one way to mitigate these risks: leasing. As the Monitor's Mark Clayton pointed out this week, General Motors will be encouraging customers to lease the Chevy Volt rather than buy it.

Leasing avoids the sticker shock ($41,000, or $33,500 after the federal tax credit). At $350 a month (with $2,500 up front), it's roughly comparable to leasing conventional cars.

Leasing also avoids the complications down the road if the technology turns out to be less than satisfactory, competitors come out with something substantially better, or gas prices fall. After the three year lease, you can bolt if you want to.

Compared with the Volt, the Nissan Leaf is cheaper to own ($32,780, or $25,280 after the federal tax credit). But its three-year leasing terms are similar: $349 a month (with $1,999 up front).

Those who lease won't benefit from the hefty $7,500 tax credit. But sometimes, when first confronting a brave new world of technological change, it's OK to hedge.

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