Lucid is one of the companies that has offered customers a monthly savings if they lease one of their EVs.
Overall, EV leasing is down, but the Inflation Reduction Act might change that.
Automakers might pass along the commercial EV credit to customers that lease their EVs.
Car companies that have shared the credit to lessees are already seeing business grow.
Automakers using the loophole that incentivizes car shoppers for leasing an electric vehicle have seen their leasing business skyrocket — and it might be a secret jackpot for the transition to electric.
Last summer’s Inflation Reduction Act introduced rules for new and used EVs to qualify for crucial tax credits. As of today, less than a dozen pure electric vehicles qualify for the de facto new EV discount, and that is expected to shift with more rules from the IRS.
But for vehicles that don’t meet the sticker-price stipulations, ‘Made in America’ requirements, or other factors outlined in the law (and thus, don’t qualify for those credits), there’s a third option.
An automaker or its in-house finance arm can tap into the available commercial EV credit by leasing electric cars (that otherwise wouldn’t qualify) to customers. This credit, which was designed to encourage commercial fleets to go electric, goes to the company that owns the vehicle.
The credit is $7,500 for vehicles that weigh less than 14,000 pounds, and $40,000 for all other commercial EVs.
An automaker can opt to keep the credit it earns from owning the EVs that it leases. Or, it can pass that along to the customer through the form of a lower monthly lease payment. The auto companies passing it along have seen business surge.
It’s especially interesting as car leasing trends downward, with EV leasing no exception. Only 12.6% of new EVs were leased in 2022, down from 26.5% in 2021, according to Experian.
Which car companies are sharing the credit with customers?
Startup Lucid, along with at least 10 “traditional” automakers, are leveraging the commercial credit, according to data from J.D. Power.
Mercedes-Benz, Volkswagen, Chrysler, Jeep, Genesis, and Volvo are doing so through lease bonus cash. Audi, Mitsubishi, Lexus, and Toyota have other types of bonuses.
Of note, the brands J.D. Power shared that are utilizing the commercial credit are largely non-domestic and would likely have a harder time qualifying for the new EV purchase credit stipulations than the homegrown auto brands.
Automakers that passed along the amount …read more
Source:: Business Insider