Electric vehicle leases have become astonishingly affordable, with some offers dropping to just $20 per month in certain parts of the country, according to a new report from Bloomberg. This dramatic price reduction points to a significant decline in demand, prompting automakers to take drastic measures to move their electric inventory.
Key Facts:
– Steep Drop in Lease Prices: In Colorado, some 2025 Nissan Leaf leases were available for as low as $20 a month in July.
– Increase in EV Leasing: Leases accounted for 32% of electric vehicle transactions in the first quarter of 2024, up from 11% the previous year.
– Unsold Inventory Accumulating: Dealerships report electric vehicles sitting on lots for over six months due to lack of interest.
– Tax Loopholes Utilized: Automakers are using federal tax credits meant for commercial vehicles to reduce lease payments for consumers.
– Manufacturer Discounts: Companies like Kia are offering additional incentives on top of tax credits to entice buyers.
The Rest of The Story:
Leasing has become the preferred option for consumers interested in electric vehicles, primarily because purchasing prices have soared while demand has waned. According to Experian, the average monthly payment for a new vehicle purchase in the U.S. rose to $735 in the first quarter of 2024, while lease payments decreased to $595. This disparity has led to leases making up 32% of EV transactions, a significant jump from 11% the previous year.
Several factors contribute to the unusually low lease prices. Cooling demand for electric vehicles has left dealerships with excess inventory. Automakers are combining manufacturer incentives with federal and state tax credits to reduce lease costs. The Inflation Reduction Act of 2022, while limiting tax breaks for EV purchases, contains a loophole that classifies leased EVs as commercial vehicles. This allows automakers to apply a $7,500 federal tax credit to lease deals, often passing the savings to consumers as rebates or discounts.
In some regions, the effect is striking. Colorado residents found 2025 Nissan Leaf leases for as little as $20 a month in July, thanks to combined incentives. At Koons Kia in Virginia, Finance Director Ramon Nawabi observed that few customers are interested in EVs due to high prices. “Some EV6 SUVs have been on the lot for over six months,” he told Bloomberg. To address this, Kia is offering discounted leases in addition to the federal tax credit. “In a sense, we’re just giving them away,” Nawabi said.
Luxury brands are also feeling the impact. BMW led in EV leasing with 89% of its electric vehicles leased in the first quarter of 2024, followed by Audi at 87%, according to Cox Automotive. Tesla, the largest U.S. EV maker, leased only 24% of its cars. Tesla’s leases are less appealing because they don’t offer lease-to-purchase options, and many of their models already qualify for the $7,500 tax credit when bought outright.
Commentary:
The plummeting lease prices for electric vehicles highlight a critical issue: demand for EVs has significantly decreased. Despite government incentives and aggressive marketing, consumers are not adopting electric vehicles at the expected rate.
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Automakers, facing accumulating inventory, are compelled to exploit tax loopholes and offer substantial discounts just to entice buyers.
This trend suggests that the market is oversaturated with electric vehicles that the public isn’t eager to purchase or lease at regular prices. The steep discounts and reliance on tax credits indicate that without these incentives, EVs might remain unsold. It’s a clear sign that consumer interest isn’t aligning with the production and promotion efforts of manufacturers and policymakers.
The Bottom Line:
The dramatic reduction in electric vehicle lease prices is a direct response to declining demand. While these low prices may temporarily boost EV adoption, they also reveal a disconnect between market supply and consumer interest.
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Automakers and policymakers may need to reassess their strategies to better align with what consumers actually want, rather than pushing products that aren’t resonating with the public.
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