This Leasing Loophole Is The Key To Getting The Best Deal On A New EV
While the idea of driving an electric vehicle is steadily becoming more attractive thanks to new features and advancements, one of the biggest barriers to mass EV adoption remains the price. While EV tech has come a long way in the last decade, allowing EVs to become cheaper than they used to be, it's still generally more expensive to rent or own an EV than renting or owning a traditional car. However, with the release of some new, updated guidelines for the Inflation Reduction Act by the Biden Administration, there may be a new way to lease an EV at a drastically reduced cost.
Last Friday, the U.S. Department of the Treasury, in conjunction with the IRS, released the newest updates for the rules to claim the $7,500 clean vehicle credit from the Inflation Reduction Act. These new rules are a bit looser than previous provisions preventing automotive manufacturers from claiming credits on EVs utilizing batteries containing minerals from countries that are deemed a "Foreign Entity of Concern" rather than full allied countries like Canada. Basically, even if an EV's battery uses materials from countries that the U.S. government isn't on great terms with like Russia, China, or Iran, automotive manufacturers can still claim the relevant credit, at least for the next two years.
Passing the savings onto you
So the manufacturers can get access to a tax credit. That's nice and all, but how does that help get you into an EV? If you're buying an EV, it won't help you much, but if you're specifically leasing an EV, the updated guidance provides you with an attractive loophole to cut your overall costs.
When you lease a vehicle rather than purchase it, the vehicle in question is still technically the property of the manufacturer; in other words, they're commercially-owned vehicles driving on behalf of the manufacturer, kind of like a delivery van. Since the EV you're driving around in is operating in the manufacturer's name, the manufacturer can claim the full $7,500 clean vehicle credit. They get a big check from the government, which in turn lowers the overall price of your EV lease.
There are still some rules to be aware of. Firstly, not all EVs are eligible for the full credit; currently, only around 20 distinct models are good for the whole thing, with around 15 eligible for just half. Additionally, the EV must be manufactured in North America and must cost $55,000 or less for sedans and $80,000 or less for a truck or SUV. Talk to your local dealership to see what kind of savings you can get.