Buying a new EV isn’t as easy as it could be. While the Inflation Reduction Act has a long-term goal of promoting ownership of electric vehicles in the US, in the short-term things are confusing. Fewer than a dozen EVs qualify for the full $7500 tax credit if purchased. What gets lost in the muddy messaging is that if you switch to a lease, then your possibilities expand considerably.
All leased battery-powered vehicles qualify for the full $7,500 tax credit because they are categorized as commercial vehicles (the consumer doesn’t own the car, the lessee/leasing company does). In March, the lease rate in the US EV market jumped from 18% to 34%, so the market is definitely adjusting to the new rules.
Beyond widening the available choices, leasing holds a few more pluses for potential customers:
• When you lease, the tax credit is applied immediately to your monthly payment. When you buy an electric car, you get your credit back when you file your taxes the following year.
• EV resale values are rising because oftentimes improved software updates can extend range, improve safety and/or expand infotainment functionality and features. Higher resale values can lead to lower lease payments at the start since the car is expected to be worth more at the end of the lease.
• Leasing can act as technology insurance. If you’re worried about your battery losing range over time, or you expect that vehicles will continue to evolve at breakneck speeds, leasing gives you a hedge.