Many shoppers have taken advantage of lease deals on electric vehicles (EV) and plug-in hybrids (PHEV) that factor in a federal tax credit of up to $7,500. Now that the Trump administration is planning to get rid of that credit, according to reports from Reuters, those in the market for a new EV or PHEV will have a limited time to act if they still want to save.
• Because you lease only for a few years, you won''t be stuck with a car that has outdated battery technology or charging standards, as these are still rapidly evolving.
• If an automaker drops the price of a new EV by thousands of dollars overnight—as Tesla did with the Model S and X, and Ford did in July on the F-150 Lightning—you won''t take the hit if your leased vehicle is suddenly worth less than it was the day before.
However, our analysis of available deals found that leasing might not always save you money in the long run, despite a lower monthly payment—especially if you end up with a vehicle that isn''t reliable or satisfying. To help you make the right decision, we''ve put together a guide to leasing an EV or PHEV that should answer all your questions.
With a lease, you make a monthly payment to a leasing company to drive a new car for a set number of months—usually 18 to 36—and for a set number of miles. The payment is essentially the amount the car is expected to depreciate during the lease period. You''ll usually make a down payment as well. The monthly payments are often less than what you would pay to finance a new vehicle for a similar time period. At the end of the lease, you return the car to the leasing company.
For now, EVs are eligible for a federal tax credit of up to $7,500. But for purchases, both the car and the buyer are subject to numerous conditions: The vehicle has to be made in North America, its battery components and minerals must meet specific sourcing requirements, it must be priced under a certain threshold, and the buyer''s income must not exceed a certain amount. That''s why only a few EVs qualify.
But those conditions all get thrown out the window if you lease. "A lease is considered a commercial sale to the leasing company and is eligible for a separate commercial vehicle tax credit that has fewer restrictions than the consumer tax credit," says Chris Harto, CR''s senior energy policy analyst. That means the leasing company can get a full $7,500 tax credit for an EV, and in turn pass some or all of those savings on to you in the form of lower lease payments. (Leasing also lets you enjoy those savings even if you don''t owe a tax burden at the end of the year.)
"The amount of the lease credit is deducted from the price of the vehicle at the time of signing, which reduces the customer''s monthly cost," says Phil Dilanni, a spokesperson for BMW, one of the manufacturers that offers discounted leases on some vehicles.
Many manufacturers explicitly mention the tax credit in their advertised lease deals—Audi and Volkswagen call it an "EV Lease Bonus," and Dodge calls it a "Hybrid/Electric Federal Tax Credit." But other companies are less clear, and consumers might assume it''s a standard discount. For example, Mercedes-Benz advertises "Lease Bonus Cash" and Lexus offers "lease cash." We have heard dealership salespeople refer to the tax credit as a "pass-through," a "capitalized cost reduction," or a "45W" credit, so look out for those terms, too. All these lease credits will likely go away if the federal tax credit on EVs is revoked, but some leased EVs may continue to be eligible for state and local savings, or even rebates from electric companies.
It''s hard to walk away from a lease. Most important for EV owners, it''s difficult to terminate a lease if you decide that you don''t like the car, or if your lifestyle changes and an EV no longer meets your needs. You''ll probably get stuck with thousands of dollars in early termination fees and penalties if you get out of a lease early—and they''ll all be due at once. Those charges could equal the amount of the lease for its entire term.
You''ll have equity in a car you own. At the end of the lease, you have no equity in the car—nothing to show for the payments you''ve made. If you choose to lease another car, the payments start up again. If you don''t, you may have to pay a disposition fee that''s typically a few hundred dollars.
There are no mileage limits. If you go over your lease''s mileage limit—typically between 10,000 and 12,000 miles per year—you''ll have to pay an excess mileage penalty. That can range from 10 cents to as much as 50 cents for every additional mile. You don''t get a credit for unused miles.
You won''t incur extra fees and charges. If you don''t maintain a leased vehicle in good condition, you''ll have to pay excess wear-and-tear charges to repair the dings and scrapes or remove any aftermarket accessories when you turn it in.
To get an estimate of whether a lease makes financial sense, we recommend calculating the total cost of a lease, comparing it to the cost of a purchase, then subtracting how much the car will likely be worth when you sell it.
For example, Ford offers a $389 per month lease for 36 months with an initial payment of $5,539 for a 2024 Mustang Mach-E Premium AWD with an extended-range battery. At the end of the lease, lessees will have spent a total of $19,543 to drive the car for three years. As is the case with all leases, once the lease term is over, lessees won''t own a car that they can continue to drive or trade in.
If you''d purchased that same car outright for $51,990, we estimate that it would be worth around $23,000 as a trade-in in three years, meaning that it would''ve cost you about $32,500 to drive it for the same period of time. In this case, the lease is the much better option.
But that''s not the case with all vehicles, so make sure you do the math on your own. In addition to cost savings and less restrictive tax credits, leasing might offer other advantages over purchasing an EV:
You won''t get stuck with old technology. EV technology is advancing so rapidly that battery range can increase and purchase prices may drop over a relatively short period of time, says Jake Fisher, senior director of CR''s Auto Test Center. "If you bought an EV a couple of years ago, it might not even be capable of the fastest kind of fast charging, whereas the newer vehicles have larger batteries, faster charging, and the prices keep coming down," he says. In addition, a plethora of new EVs are about to hit the market, including new three-row electric SUVs from Kia and Volvo.
Repair costs are lower over time. Whether gas or electric, most all-new models get more reliable after their first year, and that''s no different for EVs. Many of the latest crop of EVs have shown below-average reliability in their first year or so of manufacture. But if you lease, your car will likely be under warranty for the entire time you''re driving it, so fixing any unexpected issues won''t cost you. In addition, most EV batteries are warrantied for at least eight years or 100,000 miles, so that important component will be covered as well.
You''ll enjoy peace of mind. It''s difficult to predict now how much an EV purchased today will be worth in two, three, or five years, Fisher says. "Prices and rebates have been fluctuating quite widely, making resale values impossible to predict," he says. If the EV you''re leasing depreciates a lot over the next few years, it''s not your problem. But if you purchased an EV before a big price drop—which has happened to some Tesla and Ford buyers—your car just took a bigger depreciation hit than most used cars do.
Dealerships don''t necessarily have to honor advertised lease deals, says Gabe Shenhar, associate director of CR''s Auto Test Center. "Leases are negotiable because dealers compete among themselves," he says.
For example, the decision to include the tax credit in your lease (and to sell you the car without first inflating the manufacturer''s suggested retail price with dealer fees or other markups) is ultimately up to the dealership. For example, the Chevrolet Bolt is eligible for a $7,500 tax credit, but dealerships are marking up the MSRP by 14 percent, on average, as of July 2023, according to data from TrueCar, a CR partner—eliminating much of the savings.
If demand for used EVs is high at the end of your lease, resale values may be higher than expected and it may make sense to purchase the car for the buyout value that''s written into the lease contract. "If the automaker underestimates the resale value, you can buy the car and have equity, or sell it for a profit," says Fisher. That''s what many lessees were able to do when used-car values soared early during the pandemic. But if similar cars are selling for less than the buyout amount written into your lease—or if the new crop of EVs are better than the leased one you''re turning in—it''s smart to walk away.
As subject matter experts, we provide only objective information. We design every article to provide you with deeply-researched, factual, useful information so that you can make informed home electrification and financial decisions. We have:
Sourced the majority of our data from hundreds of thousands of quotes through our own marketplace.
Incorporated third-party data and information from primary sources, government agencies, educational institutions, peer-reviewed research, or well-researched nonprofit organizations.
Built our own database and rating system for solar equipment, including solar panels, inverters, and batteries.
We won''t charge you anything to get quotes through our marketplace. Instead, installers and other service providers pay us a small fee to participate after we vet them for reliability and suitability. To learn more, read about how we make money, our Dispute Resolution Service, and our Editorial Guidelines.
The 2022 Inflation Reduction Act (IRA) drastically changed the incentives available for electric vehicles. While there are many great new opportunities for electric vehicle (EV) incentives, the details can be challenging to follow. In this article, we''ll explain what you need to know about which EVs qualify for incentives now and in the coming years.
The IRA updated the federal EV incentives available through the Clean Vehicle Credit while adding some eligibility requirements.
The details about which EVs qualify for incentives may vary over time depending on their cost and other manufacturing details.
Income-specific EV incentive requirements rolled out in January 2023.
Save even more by powering your EV with clean energy when you go solar through EnergySage!
The IRA updated the Qualified Plug-in Electric Drive Motor Vehicle Credit, now known as the Clean Vehicle Credit. Two critical new requirements impact an EV''s eligibility, which went into effect at different points:
Production location: the final vehicle assembly must now be in North America. This requirement took effect immediately when the IRA passed on August 17, 2022. Additional manufacturing requirements come into play later.
About Aaron electric vehicle incentives
As the photovoltaic (PV) industry continues to evolve, advancements in Aaron electric vehicle incentives have become critical to optimizing the utilization of renewable energy sources. From innovative battery technologies to intelligent energy management systems, these solutions are transforming the way we store and distribute solar-generated electricity.
When you're looking for the latest and most efficient Aaron electric vehicle incentives for your PV project, our website offers a comprehensive selection of cutting-edge products designed to meet your specific requirements. Whether you're a renewable energy developer, utility company, or commercial enterprise looking to reduce your carbon footprint, we have the solutions to help you harness the full potential of solar energy.
By interacting with our online customer service, you'll gain a deep understanding of the various Aaron electric vehicle incentives featured in our extensive catalog, such as high-efficiency storage batteries and intelligent energy management systems, and how they work together to provide a stable and reliable power supply for your PV projects.
Related Contents
