Monthly lease rates for EVs in the US have dropped below those for gas-powered cars, with the average EV lease at US$624 compared to US$670 for combustion vehicles, according to Edmunds.com.

Some models, like the Mercedes EQB, were being leased for as low as US$352 per month in July, including the down payment, placing it among the cheapest lease options at that time.

EVs now make up about 71% of all lease transactions in the segment, up from 51% two years ago.

Automakers are offering significant discounts and incentives to clear inventory ahead of changes to federal tax credits, which are set to expire at the end of September.

Dealers are also using lease incentives to move cars produced before recent tariffs increased costs.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ EV leasing surge reflects both regulatory urgency and structural financing advantages

The dramatic shift toward EV leasing represents more than just attractive deals. It’s driven by a combination of timing and financial mechanics.

Leasing has become the dominant financing method for EVs, jumping from just 14% in 2022 to 46% in Q2 2024 1. This surge coincides with the approaching September 30th deadline for the $7,500 federal tax credit 2.

The leasing structure allows dealers to pass federal incentives directly to consumers through lower monthly payments, avoiding the complexity of individual tax situations that can complicate purchase incentives.

This explains why automakers can offer deals like the Mercedes EQB at $352 monthly or Honda’s Prologue at $200 monthly. The lease structure enables them to immediately apply the full value of government incentives to reduce payments.

The timing creates urgency for both dealers and consumers, as the expiration of federal credits will significantly impact the economics of EV adoption starting in October.

2️⃣ Current lease deals represent strategic market positioning ahead of natural cost parity

The aggressive EV lease pricing reflects manufacturers using subsidies to accelerate market penetration before achieving organic cost competitiveness.

EV prices have already dropped significantly, from an average of $65,108 to $53,469, while traditional vehicle costs rose to $48,334 3. Electric vehicles are projected to reach true price parity with gasoline cars by 2025 as battery costs drop by an estimated 77% through 2030 4.