EV Lease Deals Persist Despite End of Tax Credit Incentives

The end of federal tax credits for electric vehicles (EVs) on September 30, 2023, has created a complex landscape for car shoppers. Despite this change, attractive lease deals and incentives remain available as of mid-October. According to Stephanie Valdez Streaty, director of industry insights at Cox Automotive, pricing trends may shift upwards for many EV models that previously qualified for the now-expired $7,500 credit.

As of October 5, 2023, inventory levels reveal that Ford dealers had approximately 21,600 EVs available, while dealers for General Motors brands, including Chevrolet, Cadillac, and GMC, boasted nearly 38,800 EVs in stock. Shoppers seeking the benefits of a tax break will need to adjust their expectations, as the expiration of the tax credit means a different set of incentives is now in play.

Despite the absence of the tax credit, some compelling lease offers persist. Ivan Drury, director of insights at Edmunds, noted, “Dollar for dollar, you will not find a better deal on an equivalent internal combustion engine vehicle.” He cautioned, however, that potential buyers should consider the compatibility of EV features with their lifestyle, particularly regarding charging infrastructure. Drury emphasized that purchasing an EV impulsively could lead to frustration if it does not meet a consumer’s needs in the long run.

In the weeks leading up to the tax credit’s expiration, both General Motors and Ford attempted to navigate the changing landscape by leveraging a specific Internal Revenue Service interpretation. This strategy aimed to extend the benefits of the tax credit beyond the September deadline. However, following political pressure, these plans have been abandoned. The finance arms of these automakers had made down payments on EVs in dealer inventory, allowing them to claim the credits. Now, they will not pursue this option.

Despite these challenges, General Motors has committed to providing around $6,000 in net savings on EV leases through October, while Ford continues to offer competitive lease payments. Some deals, including 0% financing, remain appealing options for buyers.

Valdez Streaty observed that overall EV lease deals in October are less aggressive compared to September but still present strong value depending on the vehicle model and buyer profile. In September, many shoppers found monthly lease offers in the $200 range with lower down payments. The current offerings show a shift towards premium trims and longer lease terms, with standout deals remaining available.

For those looking to purchase, select automakers are promoting 0% auto loans on various EV models. The Ford F-150 Lightning, Kia EV6, and Kia EV9 are currently available with attractive financing options, signifying a pivot towards purchase incentives. Ford Credit Financing is also featuring 0% for 72 months on the 2025 Mach-E for qualified borrowers this October.

One of the most notable lease deals this month is for the 2026 Chevrolet Blazer EV, requiring $1,549 down and offering a monthly lease rate of $299 for a 24-month term. Meanwhile, Stellantis is matching the federal tax credit for its plug-in hybrid and battery electric vehicles through dealer inventory, providing bonus cash for leases or purchases.

In a bid to enhance accessibility, Hyundai has also announced significant price reductions for its 2026 Ioniq 5 models, with cuts ranging from $7,600 to $9,800. Notably, the 2026 Ioniq 5 SE rear-wheel drive standard range now carries a manufacturer’s suggested retail price of $35,000, down from $42,600 for the 2025 model.

Looking ahead, the future of leasing deals may hinge on remaining inventory levels. Valdez Streaty indicated that pricing could trend upward following October, especially for models that previously qualified for the tax credit. The uncertainty surrounding EV lease timing and incentive eligibility is likely to persist as the market adjusts.

Todd Szott, owner of Szott Auto Group, noted that interest in EVs surged leading up to the tax credit deadline. He anticipates a temporary decline in EV sales, which previously accounted for around 8% of his dealerships’ business. Szott suggested that while the immediate impact may be minimal for his operations, other dealers who have relied heavily on EV leasing could face more significant challenges.

Lease offerings remain competitive, with deals such as a $336 monthly payment on a Ford Credit Red Carpet lease for a 2025 Ford Mustang Mach-E. The lease requires $336 due at signing, excluding title, taxes, and license fees. Higher-tier models are priced at around $389 monthly for the 2025 Mustang Mach-E with an extended battery.

The overall EV market is experiencing a transformation, with Drury highlighting that leasing is a popular choice for consumers exploring new technologies. In September, 71% of new electric vehicles sold were leased rather than purchased outright. The average lease payment was $567 with a down payment of $3,248, and the average MSRP for those EVs was $63,061.

As automakers grapple with the implications of the tax credit’s expiration, many are re-evaluating their EV strategies. Some companies have halted future product launches, such as Ram’s decision to discontinue the development of an all-electric pickup truck. Nevertheless, enthusiasm for EVs remains strong among early adopters. During the third quarter of 2023, more than half of EV trade-ins resulted in another EV purchase, indicating a continued commitment to electric technology.

In summary, while the cessation of the federal tax credit presents challenges for the EV market, competitive lease deals and incentives are still accessible. Automakers are adapting their strategies as they navigate this evolving landscape, and consumer demand for electric vehicles is likely to persist as technology improves and costs become more favorable.