EVs Still Eligible For Tax Credit Can Be A Bad Deal

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Senior Pricing Analyst

As CarsDirect’s resident pricing expert, Alex offers must-know analyses of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured by The Wall Street Journal, Fox Business, Motor Trend, Automobile Magazine, and more.

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, Senior Pricing Analyst - October 12, 2022
2022 Ford Mach-E

Changes to the EV tax credit as a result of the Inflation Reduction Act have wreaked havoc on prices for electrified vehicles. However, our analysis finds that models that managed to stay unscathed can be an awful deal for consumers looking to lower their costs when it comes to leasing.

According to the Department of Energy, about 20 plug-in models remain eligible for the tax credit after a requirement went into effect on August 16th that vehicles be assembled in the U.S. VW canceled lease programs immediately. Toyota followed suit by canceling lease deals on plug-ins.

While vehicles like the Ford Mustang Mach-E and Nissan LEAF still qualify for the $7,500 government incentive, leasing these vehicles can result in a significant disadvantage for consumers. That's because the brands' captive lenders are actually keeping the tax credit for themselves.

2022 Nissan LEAF

For example, dealer incentive bulletins reveal that Nissan is offering just $950 in lease cash on the LEAF EV even though it qualifies for the full $7,500. While EV incentives can also take the form of low lease rates, on paper, this means Nissan is keeping 87% of the incentive's value.

In many parts of the country, Nissan is keeping 100% of the tax credit. For example, we're seeing no lease cash whatsoever in places like Denver, Atlanta, and Chicago. Back in March, a Nissan spokesperson downplayed the message this could potentially send to consumers on the often highly politicized topic, stating:

"Nissan offers competitive lease prices in the marketplace. If a customer purchases a 2022 LEAF vehicle, they will be eligible for the full federal tax credit of $7,500. In a lease situation, the tax credit stays with Nissan as the vehicle’s owner. NMAC factors the federal tax credit into the cost of the lease, as well as other elements such as state credits, to offer competitive lease pricing, which varies per market. This is common practice in the industry."

2022 Jeep Grand Cherokee 4xe

In the case of the Mach-E, Ford Credit has been keeping the credit entirely for itself since the EV arrived in 2021. Instead, the lender is promoting a lease-like balloon financing program called Ford Options Plan that offers the ability to purchase your EV at the end of the contract or return it.

For now, there is an enormous amount of uncertainty surrounding EV prices. After all, within the span of a few days, Toyota EV lease prices rose by over $100 a month. The latest incentives from Hyundai also show similar lease price increases as a likely result of the Inflation Reduction Act.

Fortunately, there are still deals to be had. Chrysler Capital is continuing to pass along the full $7,500 as lease cash on vehicles like the Chrysler Pacifica Plug-In Hybrid, Jeep Grand Cherokee 4xe, and Wrangler 4xe. For other eligible EVs, it may be a better deal to buy rather than lease.

Explore Top EV Leases & Deals

, Senior Pricing Analyst

As CarsDirect’s resident pricing expert, Alex offers must-know analyses of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured by The Wall Street Journal, Fox Business, Motor Trend, Automobile Magazine, and more.

Follow On: Twitter

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