EV Lease Popularity Spikes Just Before Tax Credit Expiration Date
The electric vehicle (EV) market is witnessing a shift towards leasing, as buyers respond to the approaching deadline for a significant tax break, according to a report by Experian Automotive. The Experian State of the Automotive Finance Market report for the second quarter reveals that leases account for 57.7% of EV financing, a marked increase from 47% a year ago. This trend is particularly noticeable as the deadline for EV buyers to qualify for the $7,500 tax break draws near, extended by the IRS. Melinda Zabritski, head of Automotive Financial Insights for Experian Automotive, attributes this trend to buyers' responses to the deadline. Manufacturers are also making 'call to action' appeals to likely EV consumers as the deadline approaches. In a similar vein, data from StoneEagle suggests that dealers are adopting aggressive lease strategies, particularly in EVs, to clear aging inventory before the expiration of tax incentives. This strategy seems to be a common practice at this time of year, according to StoneEagle's CEO, Cindy Allen. However, overall leases declined to 23.6% of new-vehicle volume in second-quarter 2025, compared to 26.1% a year earlier, according to Experian. This could suggest that while EV leasing is on the rise, it is not entirely replacing traditional financing methods. The IRS defines a payment as a nominal down payment or a vehicle trade-in for the purpose of qualifying for the tax incentive. A buyer must enter into a written binding contract and make a payment to 'acquire' an electric vehicle to be eligible. As the deadline for the EV tax break, set for Sept. 30, approaches, dealers and auto lenders are expected to see an increase in leasing for electric vehicles. Tesla, for instance, has sent out emails to consumers who have expressed an interest in the brand, with the subject line 'Federal Tax Credit Expires in Three Weeks'. The extension of the deadline is significant for EV buyers looking to take advantage of the tax incentive. For those considering leasing, it allows them to get their orders in by the deadline, even if actual delivery takes place later. The trend of increasing EV leasing is based on data from the United States, as referred to by Melinda Zabritski. This shift could signal a growing preference among buyers for the flexibility and lower upfront costs associated with leasing, as they navigate the transition to electric vehicles. For more information on the IRS guidance regarding the extension of the tax break deadline, please visit https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-under-public-law-119-21-139-stat-72-july-4-2025-commonly-known-as-the-one-big-beautiful-bill-act-obbb.
