Why does the 2104 Toyota Prius have a 42% better resale value than the Nissan Leaf?

You will be surprised at the answer. Basically, it’s all your fault.

When the National Automobile Dealers Association (NADA) released their findings this past month regarding value retention most people keyed-in on the vehicles at the top of the list, and rightly so. Vehicles that have a high retention of value are also the same cars that have the lowest depreciation, and there are huge financial advantages to buying one the cars at the top of the list in its given category. For example, the Prius is the top affordable green car in terms of value retention and thus it would seem the owner will get more back when they trade or sell their car for a newer one. What few folks like to talk about are the vehicles that are at the bottom of the list. According to the NADA report, that car is the Nissan Leaf. The interesting thing is you put it there.

NADA’s report is not a subjective ranking. It is not a list of editors’ favorites, or a guestimate of what a car might be worth. Rather, it is simply a report of what the actual resale values are of models for sale over the past few years based on actual sales data. NADA takes used car value information about the most popular trim level sold for a given model and then compares that to the vehicles’ MSRP. The cars at the top of the list retain their value best.

The Prius from model years 2009 to present has a value retention of 54.3%, second highest overall on the NADA list of green cars after the pricey Lexus CT 200h. That means if the MSRP for the Prius was $30K even, it would be worth $16,290 after 3 years. The Leaf has a value retention of just 38.2%, which is the lowest value retention of any car on the NADA list – not just green cars. So, a Leaf selling for $30K would have a resale value of $11,460. To equal the Prius’ resale value the Leaf would have to increase by $4800, or 42% of its current resale value.

The Leaf is an excellent vehicle and it has proven to be very reliable. Although the Leaf is burdened with a higher maintenance cost over the first three years of its ownership compared to the Prius, it does have good long-term cost of ownership as well. The reason that it is worth so little used is that you and your neighbors give the new Leaf buyers a $7,500 federal tax break. That is big bucks. Even worse when it comes to the Leaf’s value retention, states like to also throw taxpayer money back at new Leaf buyers. Incentives vary, but $2500 is typical, and some states, like Georgia, offer as much as $5,000. So a used Leaf faces not just the usual loss of value any used car has, but when compared to a new Leaf, one has to factor in that up to $12,500 is taken off the new Leaf’s cost. A new one with an MSRP of $30K costs just $17,500 out of pocket for many buyers. Leaf Prices have also gone down since it was first introduced. That hurts the resale value too. People know it could happen again.

Before we go too much farther, we need to point out that given the free money back from our governments, the Leaf might still – overall – be a great new car value. It depends how you look at it. Buyers who do get the full discount don’t actually lose when they resell because they started out at a lower initial cost. Make sense? The key here is to not be the sucker that pays for Leaf and does not maximize the possible taxpayer funded give-backs. This is a real issue here in my state where there is currently no state rebate, but one is pending. Whatever you do, don’t buy a Leaf in a state like mine until they settle on your green car kickback and make it law. Also, remember that some Prius models in some states like California also get state rebates, though not as much. It doesn't seem to hurt the Prius resale value.

There is great news if you want a Leaf though and don’t want to worry about getting stuck with a used one that has such low value. In most states, leasing a Leaf side-steps most of the devaluation. The end of lease value is set by the company providing the lease (Nissan). It would appear that Nissan is setting that value artificially high, which is great news for people who want a Leaf. Even better, the tax breaks and state kick-backs can be mostly rolled into the lease. Over the period of the lease the Leaf can be incredibly inexpensive. Although the higher maintenance cost does somewhat cut into the owner’s savings on gas compared to other green cars like the Prius, the dollar signs are still pointing in the right direction.

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I have a friend who leased a Chevrolet Volt and bought a Nissan LEAF. She did so for the same reasons: she ran the math (she's in California) and it was cheaper to do a 3-year lease on the Volt and buy the LEAF outright and take the incentives.
I just hope I can get mine in a year or two before we all "run out of other people's money," as Maggie Thatcher would have said.
I have owned my LEAF for over a year now. My total expenses including the trip to the dealer for the 1 year maintenance totalled $48 for the entire year. This includes fuel expenses since I generate my own electricity from a paid off solar panel system on my roof. The only high cost maintenance item is a $300 brake fluid change at year 2 of the maintenance schedule and that is Nissan just trying to make some money off the LEAF since it is so maintenance free. My total estimated maintenance in that case is $450 for the first 3 years. If the only maintenance cost of a Prius in 3 years is fuel cost at $3.50/gal that would mean to have a lower cost they would only need 45 gallons of gas per year. I owned a Prius before my LEAF and kept track of every fill up. My average year required 200 gallons of gas with an average MPG of 65. Not bad for a 2008 Prius rated at 48 MPG. I think it is interesting that all the articles that compare maintenance cost never take into account the fuel. Most cars I have seen don't run well without maintaining the fuel level.
Len, you make a valid point. The cost of fuel is an important part of the total cost of ownership when comparing an electric vehicle to a gas-electric hybrid. I left that out and I could have included a statement stating that. But, let's be honest, readers of stories about Evs compared to green cars know that, do they not? You did.
The Prius does not cost less to maintain, it is just that Toyota has decided to eat the cost of that maintenance for the first few years. If you compare the first 5 years of maintenance instead, I bet the Prius would cost more, or at least the same. Regardless, the only reason you can say that the Prius costs less is because Toyota, in an effort to win/retain customers (especially after all its recall troubles) has thrown in free maintenance. Its a gimmick. You should make it a point to explain WHY the cost is less and not just state that it is less John, especially because if one buys the Prius and keeps it for longer than the free maintenance period, they will be paying more in maintenance. As for depreciation, you're absolutely right. I wonder if, after the rebates are gone in a few years, for the LEAF, if it will be a different story though.
All true. I did explain why EVs should be less expensive to maintain in the link to that topic saying "Historically, maintaining a car was focused on the internal combustion engine (ICE). This meant that the owner’s cost to maintain the car was closely linked to the engine. Since the EV has no engine of this sort, maintenance could be less expensive." The rest of the linked story does include facts from third parties about the 5 year maintenance costs of the Leaf Vs Prius. Prius is still ahead, Leaf is almost even with it. In the story above I do say the Leaf has good long term COO. When Tesla includes free electricity at SC networks is that too a gimmick?
I think Tesla's inclusion of free supercharging, for those that pay extra or buy the 85kwh battery is something of a gimmick actually. Like Toyota, Tesla is charging the buyer up front for a feature. I calculated that the extra cost for getting access to super charging for a 60khw Tesla Model S ($2000 surcharge) would take somewhere around 600 charges to equate to the $2k fee. If one used the supercharger 1x per week every week it would take about 11.5 years to recoup the cost of the free electricity (likely longer than most will own car and or about useful lifespan of battery). In short, Tesla has a brilliant marketing scheme, as does Toyota, but both are gimmicks of a sort. You are better off, cost wise, not paying extra for supercharging (cost of doing so is rolled into 85kwh Tesla, so same applies there) or for buying into a Prius actually costing less over long term than a LEAF; equal maybe depending on time frame but less, no.
Well said.
I found it very interesting that just as we were having a dialogue on this topic Nissan began promoting free electricity in many places. We are just ahead of the wave apparently. Cool.
Could it be because the 2104 Prius is 90 years ahead of its time?
The Prius also has rebates but does not suffer from depreciation they way the Leaf does. That is an argument against your idea that it is only incentives that cause the sharp depreciation of the Leaf. It is an issue that battery warranty causes depreciation. The Prius sees this sudden drop when its battery crosses the warranty threshold. It stands to reason that the battery being the most expensive part will see a sharp depreciation when it is close to its warranty limit.
Thank you Sush. As far as I know the only Prius that receives any rebates in most places is the Plug-in Prius. That model is excluded from the above analysis, which looked only at the most popular trim level of the cars. The Plug-in Prius sells about 1100 units per month, the "Prius" sedan sells in the neighborhood of about 10X that number. I'm not saying you are wrong, it could very well be the batteries that are causing the concern. However, in this analysis, the Prius mentioned has no rebates from the federal government or most states (California doesn't). I checked and the federal hybrid rebates ended by 2011. If I am mistaken, help me by attaching a link or two. Thanks for your input. You could very well be right about the reason.
I'd most assuredly buy the Prius over the Leaf. Why? Because I've driven Toyota products for 44 years and am on my 4th currently after the 3rd (Camry) was totaled. Obviously, the quality speaks for itself. Behind the quality and reliability, though, is a company that has backed my purchases without question. In the times we are a livin', any company that offers decent service, quality extraordinaire, and fair price is light-years ahead of its nearest competitor. Toyota fits the bill! --Lifetime Toyota Customer
I bought a Prius 2014 in mid-2014, I just went in to see what the value for trade in would be and it was less than half. I am not particularly impressed with the retention. The maintenance fees are really high as well.

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