Are Leasing Programs the Next Strategic Move?

Des Moines, Iowa, started an EV leasing program in 2020 for its municipal fleet's light-duty vehicles. This program has saved costs and advanced sustainability goals, offering valuable lessons for future initiatives.  See the FExLS version of this case study here.

‍Fleet and Infrastructure:

• 4 Nissan Leaf EVs procured through the Climate Mayors Electric Vehicle Purchasing Collaborative

• Deployment timeline: 2020

Key Figures and Impact:

• Capital cost per vehicle: $23,899, less federal incentives and credits.

• Savings of $7,700 per vehicle compared to MSRP.

• 36-month closed-end lease term with a $5,578 residual buyout option

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‍Innovative Procurement Strategy

The City of Des Moines evolved its traditional procurement process from a competitive bid to a lease agreement. This new approach allowed for:

1. Vehicles to be paid through two annual payments
2. Immediate cost-parity compared to light-duty municipal sedans
3. Application of federal electric vehicle tax credits to each vehicle
4. Opportunity to test vehicles before deciding to keep or replace with a new model.

Financial Operation

• The lease structure allowed the city to pay for the vehicles in two annual payments over a 36-month lease term.
• At the end of the lease term, the city has the option to pay a $5,578 residual buyout for each vehicle, for a total cost of $23,899 per vehicle.
• As of 2025, the city has continued to use leasing for vehicle procurement, working with D&M Leasing to lease-purchase various vehicles under Sourcewell contract  

Cost Savings and Benefits

By structuring procurement via a municipal lease, Des Moines experienced several advantages:

• Immediate Cost-Parity: The leasing model allowed for cost-parity with traditional light-duty municipal sedans, even before factoring in reduced fuel expenses.
• Reduced Upfront Costs: The EV business case became more cost-justified by lowering initial capital expenditures1.
• Tax Credit Application: Private leasing enabled the City to apply federal electric vehicle tax credits to each vehicle, further reducing costs.
• Flexibility: The closed-ended lease program provides the City with the option to test the vehicles and make informed decisions about keeping or replacing them with new models.

Lessons Learned and Future Plans

The Des Moines EV leasing program has demonstrated that:

1. Municipal leasing can make EV adoption more financially viable for city fleets.
2. Evolving procurement strategies to include leasing options can significantly reduce upfront capital costs.
3. Utilizing closed-ended lease programs offers flexibility in fleet management decisions.

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