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Which is why it’s great that so many Americans are now leasing EVs.
The new way to buy an electric car is not to buy one at all.
Just three years ago, four out of five EV drivers had financed their car or paid in cash, while only 21% had leased the EV, according to data from TransUnion. But by the second quarter of this year, leasing had become the top choice: 48.7% of people leased their new electric vehicle versus 34.7 percent who financed and 16.6% who paid in cash.
That’s a sea change in the way people shop for EVs, and it could be great news for the electric car market — just think of all the gently used cars that will flood the market when those leases end.
There are numerous factors behind leasing’s ascendance, starting with money matters. Electric cars still cost more than fossil fuel-burners, but the monthly payment on a lease is almost always less than what you’d pay per month to finance the full cost of a vehicle. In that way, leasing brings EVs within reach for budget-minded drivers — Joseph Yoon, consumer insights analyst at Edmunds, recently told me there are great leasing deals aplenty on EVs because dealers want to move them off the lots.
A tweak to the federal tax credits helped, too. It got more complicated to buy an EV outright this year after the government restricted the benefits to vehicles with a minimum amount of domestic manufacturing. But the same rules don’t apply to leased vehicles, giving those who lease an EV the option to get a discount on a car that wouldn’t necessarily be eligible if they financed it.
There are other hypotheses about the rising popularity of the lease. A bigwig at one of the credit bureaus told InsideEVs that leasing reflects buyers’ comfort with the subscription model that has taken over our economy at large. The data also shows that the total number of first-time lessees has actually declined a little since 2019, which suggests to me that perhaps a lot of people who always lease their vehicles decided over the past few years that it was time to go for an EV.
Leasing is also simply an attractive choice given the current state of electric vehicle offerings. Most of today’s most popular models haven’t been on the road long enough to tell us much about how they’ll age — or what might go wrong when they’re eight or 10 or 12 years old. Lease-holders don’t have to worry about any of that. They need not worry about the battery range inevitably fading, either.
For this reason I’ve begun, from time to time, to second-guess my own decision to buy my EV. Rather than watching its battery diminish as the years go by, I could have leased it, returned it after three years, and gotten into a cool new EV that didn’t exist when I bought mine. Then again, I’m closing in on the last monthly payment rather than being locked into the cycle of forever payments that comes with leasing. So I got that going for me, which is nice.
The jump in leasing is having a clear impact on the shape of the electric vehicle market, where carmakers in the U.S., in particular, are still having trouble putting out affordable EVs that buyers want. Luxury buyers, on the other hand, have always favored leases as a way to keep themselves in a shiny, new-ish car, and to avoid the unpleasant experience of owning an out-of-warranty BMW, Mercedes-Benz, or Audi. Around 90% of those three companies’ EVs are leased, a number that has helped the Germany luxury brands get a foothold in the electric car market (especially considering the staggering MSRPs of most of their electric offerings).
And then there’s what happens to all those leased vehicles. Once a typical three-year agreement expires, its driver must give back the vehicle to the dealership, presumably in the undamaged, low-mileage condition that’s specified in the terms of the lease. From there, the vehicle goes on to start its second life as someone else’s brand new used car — which is why it’s good news that lots of people are leasing EVs.
While leasing is one way to work around the high sticker prices of EVs, buying used is another. Used vehicles have long been a better deal because somebody else suffered the financial penalty of buying a new car and seeing its value plummet the moment they drove it off the lot. (In fact, what you’re really paying for when you lease a car is the severe depreciation it undergoes during its first few years of life. The dealership has to get that money from lease customers because they’ll get much less for the vehicle when it returns from its lease as a three-year-old and they resell it as a used car.)
The used EV market, though, hasn’t been particularly robust to date. For one thing, there just aren’t that many vehicles on the market since EV sales really only took off in the past few years. Further limiting supply are the plummeting prices of used EVs, which appear to be depreciating much faster than gasoline cars or hybrids. Since owners would recoup so little from selling their EVs, more of them are hanging onto their cars.
That’s why the rise in leased EVs could be good news for everyone else. In a few years, all of those electric vehicles will return to the lot where many will become gently used, certified pre-owned cars that sell for much less than new vehicles. And though the fate of the federal tax credits after this year’s election are uncertain, used EVs currently also qualify for a tax break.
Used electric vehicles have their own set of concerns. Their drivers won’t enjoy the full driving range that the battery offered when new. They’ll be responsible for the longer-term repairs if they want to keep the car running indefinitely. But used EVs with 80% or 90% of their original range are plenty useful, and given those prices and tax breaks, they’re a steal, too. And with a lot of leased EVs soon to enter the secondary market, you might even be able to find one.
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From grid monitoring to controlled burn robots.
Los Angeles has a long way to go before city and state officials can start looking for lessons to take away from these fires. Likely topics of discussion will include building resilient structures, vegetation management, and community preparedness. But there are also some more out of the box solutions coming from a growing number of technology companies — “firetech” startups, if you will — that are putting new, high-tech spins on some of these familiar solutions.
BurnBot, for instance, makes a remotely operated machine that executes efficient controlled burns to help mitigate wildfire risk. “I don't think you can ever replace the talent and the expertise and the know-how of the front line [firefighters],” Anukool Lakhina, CEO of BurnBot, told me this week. “But what you can do is make their job safer.”
Last August I wrote about Convective Capital, the venture capital firm exclusively focused on funding wildfire solutions, and one of its portfolio companies, Rhizome, which makes an AI-powered wildfire risk mitigation platform for utilities. Here are five more notable companies in Convective’s portfolio that will hopefully help bring wildfire prevention and mitigation into the future.
On January 8, as flames began to encircle Los Angeles, Gridware announced its $26.4 million Series A funding round. The company uses sensors placed on power poles to provide continuous monitoring of grid infrastructure and can alert grid operators to hazards and faults in realtime. This allows for rapid repairs and immediate response to wildfire threats such as equipment failure, downed lines, or any contact with vegetation. And because Gridware’s devices operate on solar power, they can remain online even during a power outage.
“Our country depends on the electric grid, yet until now, utilities have been operating it without reasonable monitoring capabilities,” said Bryan Schreier, a partner at Sequoia Capital, which led Gridware’s Series A, in a statement about the funding round. Utility-caused wildfires tend to be particularly damaging, as they often occur near populated areas. And though California utilities spend over $6 million annually on risk mitigation, most of that goes towards older technologies, something Gridware hopes to change.
Gridware implemented a successful pilot with PG&E last year, and has since expanded to monitoring over 1,000 miles of power lines for 18 different customers, with devices installed on about 10,000 poles.
As mentioned above, BurnBot deploys robots that can chop up vegetation and conduct controlled burns in a wide variety of geographies, from densely treed forests to shrubbery near urban environments. Traditionally, controlled burns are only safe to do in very particular weather conditions, but because BurnBot captures the smoke from its operations and immediately extinguishes the fires after vegetation is removed, Lakhina told me the robots can operate in all weather.
“Today, a lot of the predominant way that fuel treatment is done, regrettably, is extremely archaic. It's humans with matches setting things on fire, or humans with shovels and spades that go and dig the vegetation.” Some estimates calculate that the U.S. has about 200 million acres of land that need to be treated for wildfire risk, and “you're not going to get there relying only on humans or only on grazing,” Lakhina said. He estimates that the company’s robots can treat 40 times the area of a typical hand crew.
BurnBot has piloted its tech with CalFire, PG&E, and the U.S. Forest Service, and raised a $20 million Series A funding round last year.
Fire Aside makes software products that help fire departments and other safety agencies to digitize their inspections processes, thereby ensuring that homes and businesses are complying with fire safety requirements and helping to scale state and community wildfire prevention programs.
“It enhances the reach of municipal fire departments so that they can, at scale, communicate with their neighborhoods and their communities, and automate and digitize these inspections,” Jay Ribakove, principal at Convective Capital, told me. That’s certainly a step up from the traditional method, which involves “a firefighter showing up and leaving you with some handwritten notes on what you can do better,” Ribakove said. Residents in communities that use Fire Aside are five times more likely to take actions to protect their property against wildfire, the company says.
Fire Aside raised a seed round of undisclosed size in 2023, led by Convective Capital.
Early fire detection is one of the most critical factors in keeping blazes under control. Pano is a software company that relies on artificial intelligence and computer vision to automatically detect when and where a wildfire is breaking out. The company mounts its cameras on telecommunications towers, poles, or other equipment, which, combined with other inputs like satellite data, field sensors, and emergency alerts, gives fire professionals and first responders a unified view of any developing situation.
“The sooner that we can detect fires, the faster we can respond,” Ribakove told me, citing research that indicates that if wildfire response times in California were just 15 minutes quicker, the frequency of large, out-of-control fires could be reduced by at least 3% and as much as 7%. Given that California has experienced, on average, $117 billion in total annual economic losses from wildfires from 2017 to 2021, tech like Pano’s could save it as much as $8.2 billion per year.
Pano raised a $20 million Series A round in 2022 and a $17 million growth round in 2023.
Overstory has another approach to minimizing the presence of fire fuels, providing utilities with a “global vegetation management platform” that applies artificial intelligence to satellite imagery, allowing the company to identify the location, size, health, and species of any tree in the world. With this data, Overstory can then help utilities identify particular areas where vegetation might pose a wildfire risk, such as by growing too close to a power line, and recommend specific actions. Overstory also hopes its tech will save utilities money, as vegetation management budgets have ballooned in recent years.
Overstory works with more than 40 utilities, including PG&E, along with others in Canada, Brazil, and Europe. At the time of its $14 million Series A round, in 2023, the company said that it monitored about 2 million acres and protected about $6 billion in utility assets.
The island is home to one of the richest rare earth deposits in the world.
A top aide to incoming President Donald Trump is claiming the president-elect wants the U.S. to acquire Greenland to acquire more rare minerals.
“This is about critical minerals. This is about natural resources,” Trump’s soon-to-be national security advisor Michael Waltz told Fox News host Jesse Watters Thursday night, adding: “You can call it Monroe Doctrine 2.0, but it’s all part of the America First agenda.”
Greenland is rich in “rare earths,” a class of unique and uncommon hardrock resources used for advanced weaponry, electronics, energy and transportation technologies, including electric vehicles. It is home to the Kvanefjeld deposit, believed to be one of the richest rare earth deposits in the world. Kvanefjeld is also stuffed with uranium, crucial for anything and everything nuclear.
Experts in security policy have advocated for years for Western nations to band together to ensure that China, which controls the vast majority of the world’s rare earth minerals, does not obtain a foothold in Greenland. U.S. and Danish officials have reportedly urged the developer of the island’s Tanbreez deposit — rich in the rare earths-containing mineral eudialyte — not to sell its project to any company linked to China. Eudialyte also contains high amounts of neodymium, an exceedingly rare metal used in magnets coveted by the tech sector.
If the U.S. somehow took control of Greenland, it could possibly seize these resources from Denmark, a NATO ally, and the Greenlandic home-rule government. So too could it lead to Greenlanders losing control of their homeland. The country’s minerals have been a major source of domestic debate, as politicians critical of mining have won recent elections and regulators have since fought with mining companies over their plans.
Waltz didn’t go into that much detail on Fox. But he made it clear how the incoming administration sees the situation around control of the island.
“Denmark can be a great ally, but you can’t treat Greenland, which they have operational control over, as some kind of backwater,” Waltz told Waters. “The people of Greenland, all 56,000 of them, are excited about the prospect of making the Western Hemisphere great again.”
Exhausted firefighters are unlikely to catch a break just yet.
On Friday, Angelenos awoke to their first good news in three days: that the battle against the city’s unprecedented fires had finally turned in firefighters’ favor. Though the two biggest blazes — the Palisades and the Eaton — were still only single-digit contained, at 8% and 3%, respectively, it was the first sign of progress since the fires ignited and roared out of control on Tuesday.
The days ahead, though, won’t be easy. Though the Santa Ana winds dipped enough on Thursday and Friday for firefighters to establish a foothold, two upcoming wind events have forecasters and emergency management officials worried. The first will be shorter-lived, beginning on Saturday afternoon and continuing through Sunday, but “it does look significant enough where we might need additional red flag warnings,” Ryan Kittel, an L.A.-based meteorologist with the National Oceanic and Atmospheric Administration, told me. NOAA is anticipating gusts of between 35 and 50 miles per hour during that event, and at those speeds, aerial firefighting support will likely be grounded again.
A second wind event will follow that one, which is tracking to hit Monday night into Tuesday. “We’re still figuring out the exact details as far as the strength, but we’re very confident that it won’t be nearly as strong as the winds we saw on Tuesday this week,” Kittel said. “But it could be number two in the ranks of wind events that we’ve had over the last seven days.”
The associated concerns are twofold. The first is that the return of strong wind gusts will fan the blazes that firefighters are only now getting a handle on, potentially pushing the fires into new areas. But there’s another concern, too: that new fires will start.
“What we’re trying to communicate is that the environment is favorable for a fire to get really big, really fast, if one starts. We just don’t know if or where,” Kittel said.
Though the L.A. fires flared up as big as they have because of the Santa Anas, the wind’s cessation creates new risks. The Santa Anas “blow the fires towards the ocean,” Dan Reese, a veteran firefighter and the founder and president of the International Wildfire Consulting Group, told me. But when the Santa Anas subside and L.A.’s normal west-to-east winds return, they’ll push the fires back in the other direction and potentially into neighborhoods that haven’t burned yet.
“Right now, [firefighters’] challenge is what we call closing the back door, making sure that what was once the heel of the fire, or the back side of the fire, does not get up and all of a sudden become a running head the other direction,” Reese explained.
The weather is one problem, and it’s a big one. But there are other challenges, too. Firefighters are only human, and many are completely exhausted after working double shifts and doing the grueling work of defending people and structures for days on end.
There are also logistics-related challenges. Aerial firefighting is exceedingly complex and dangerous, and pilots are only allowed to fly a certain number of hours, which varies depending on whether operations are conducted during the day or at night. “Rotating those crews and keeping those crew hours balanced becomes critical, especially when you’ve got ongoing, continuous fires,” Reese pointed out.
There’s one more bit of bad news. Putting out the fires is only the first challenge. A second will come close on its heels: the mop-up.
“Maybe the fire went through a community but the houses were left standing,” Reese said. “Now all those structures and properties are at the mercy of mudslides and rain, because all of the holding capacity keeping the soil in place has now been burned off.” Soil can even become hydrophobic after exposure to intense heat, repelling water instead of absorbing it, making runoff even more severe.
But there is no rain in the forecast, and the fight against the L.A. County fires — while it’s taken a turn for the better — is far from over. Firefighters “have to deal with the disaster they’ve got right now,” Reese said. “And then they’ll deal with the secondary disasters when those occur.”