Thanks to tax incentive loopholes, the price of EV leases have plunged to as low as just $20 per month in some areas of the county.
Leases have become the customer's method of choice for taking home EVs since sale prices have become too expensive, according to a new report from Bloomberg.
Average monthly payments for new vehicles in the U.S. rose to $735 in the first quarter of 2024, while lease payments dropped to $595, according to Experian.
This has driven more EV buyers to opt for leases, which made up 32% of EV transactions in Q1, up from 11% a year ago, per Cox Automotive. EV leases are $88 cheaper per month on average compared to new electric vehicle loans.
Bloomberg writes that lease payments for electric vehicles have become more affordable due to cooling demand, automaker incentives, and changes in the $7,500 federal tax credit, which now often favors leasing over buying.
The Inflation Reduction Act of 2022 limited tax breaks for EV purchases, so many models don’t qualify, but a loophole allows leased EVs to qualify as commercial vehicles.
This lets automakers apply the tax credit to lease deals, reducing monthly payments.
Manufacturers receive the tax credit on leased EVs but often pass it to consumers as a rebate or discount, the report says.
In some areas, it has led to stunning offers. In Colorado, some 2025 Nissan Leaf leases were offered for as low as $20 a month in July, thanks to EV tax credits and state incentives, the article notes.
At Koons Kia in Virginia, Finance Director Ramon Nawabi says few customers inquire about EVs, with high prices deterring them.
Some EV6 SUVs have been on the lot for over six months, leading Kia to offer discounted leases on top of the $7,500 tax credit. "In a sense, we're just giving them away," he told Bloomberg.
In the first quarter of 2024, BMW led EV leases with 89%, followed by Audi at 87%, according to Cox.
Tesla, the largest U.S. EV maker, leased only 24% of its cars. Tesla's leases are less appealing due to no lease-to-purchase options and because many models qualify for the $7,500 tax credit when bought.
