> if net manufacturing and battery costs were to fall
That makes it even worse. If costs fall, competitive pressure will force you to lower the price of your new vehicles, which has a knock-on effect of reducing the resale value of each EV you get back from the consumer from leases that are ending.
Imagine a $50,000 vehicle. You write a lease that assumes that it will be worth $25,000 in 3 years. Instead of charging the customer $25,000 for the lease, you only charge them $15,000. When they return the vehicle, you sell it for $25,000 as planned. But the total amount of money you collected is $40,000 - a loss of $10,000. Now, what happens if net manufacturing and battery costs drop in those 3 years? Your new cars are on the lot for $40,000 and when the customer turns in their leased vehicle you can only find a buyer for it at $15,000. You've therefore collected $30,000 for your $50,000 car and have to eat a loss of $20,000.
Cheap leases get sales on the books today, but come with guaranteed losses years down the road (and you hope the market doesn't tank in the meantime). It might work out well in the end, but rarely does.
That makes it even worse. If costs fall, competitive pressure will force you to lower the price of your new vehicles, which has a knock-on effect of reducing the resale value of each EV you get back from the consumer from leases that are ending.
Imagine a $50,000 vehicle. You write a lease that assumes that it will be worth $25,000 in 3 years. Instead of charging the customer $25,000 for the lease, you only charge them $15,000. When they return the vehicle, you sell it for $25,000 as planned. But the total amount of money you collected is $40,000 - a loss of $10,000. Now, what happens if net manufacturing and battery costs drop in those 3 years? Your new cars are on the lot for $40,000 and when the customer turns in their leased vehicle you can only find a buyer for it at $15,000. You've therefore collected $30,000 for your $50,000 car and have to eat a loss of $20,000.
Cheap leases get sales on the books today, but come with guaranteed losses years down the road (and you hope the market doesn't tank in the meantime). It might work out well in the end, but rarely does.