Featured Very few EVs qualify for the federal tax credit as of 2024

Lithium refining is perhaps the main issue. Much of lithium mined in friendly countries ends up being processed there.

 

In current market, if I want a new EV (BEV or PHEV) that is not on the list, I would just lease it. bZ4X $7500, RAV4 Prime $6500, and Prius Prime $4500 lease cash deals. And locally plenty available sitting at local dealers lot right now.

 

Not only that, stealerships love love leasing cars - because that gives him a bigger chunk of the financial pie.
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yeah, i looked into leasing before buying the bolt. looked to me like the leaseco was keeping the tax credit.

 

Yep, and in theory they should knock down off the price the entire amount of tax credit benefit. Funny how those discount numbers don't work out though. They count on wearing you down after sitting there for hours.
In the world of car negotiations my better ½ likes me to play bad cop while she while she gets to be good cop. But when she saw how the Chrysler sales creap tried to cheat us out of the credit via Leasing? She out & out right called the guy a liar. Kind of freaked me out when she suddenly switched to the bad cop role

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unlike a sale, the difficulty is not knowing whether they have actually applied the credit or not.
you simply get the terms: months, payment, downpayment. you can only judge by your personal feelings as to whether it is a good deal or not.
most leases i looked at, you paid 50% of the msrp in 3 years. i didn't see that as a deal.

 

For Toyota lease deals, money applies directly from TFS as capitalized cost reduction. I would not sign lease deal that does not spell our all the costs in clear language. For most part, that means only Manufacturers offered closed-end deals are the one I would consider.

$7,500 Cash from Toyota Financial Services, Inc. on the lease of a new 2023 bZ4X from participating dealer's stock and subject to vehicle availability. Must lease through your dealer and Toyota Financial Services to qualify for cash and cash must be applied as capitalized cost reduction on lease.​

 

It depends on the lease-end buy option. If you pay 50% of MSRP during your 3 yr term and at the end, you are given option to buy the vehicle for a predetermined price of 50% MSRP plus some fees, then it is an OK deal especially if the lease cash is applied.

For a BEV, 50% depreciation in 3 years maybe normal. When I last considered leasing, I could find a deal that the math works out to be 30% depreciation in 3 years which would be a good deal.

 

it isn't normal for bev's that qualify for fed and state incentives. they sell for way over 50% of msrp after 3/36.
i paid 22k for a bolt. 2 year old bolts with low miles are right in that ball park. 3 years a little less, but nothing anywhere near 11k. teslas are the same way, at least in this area.

 

For a closed end lease with preset buy option price, the lessor (i.e lease company) takes the risk of depriciation. So with 50% capitalized cost and if your buy option is preset at 50% MSRP. If the car's residual value at the end of 3 yr is more than 50%, then you simply buy the car and then sell it for profit. If the value is less than 50% (assuming you did not abuse the car as beyond normal wear and tear damages or excessive miles), then you simply return the car and walk away. Of course, if you plan to keep driving the car beyond the lease term, you would buy it at the end of the lease term and keep the car. The total payment in this case would be less than buying the car at the beginning because of the lease cash incentive (minus financial fees).

Certainly the total lease payment and buy out cost would likely be less than financed to purchase on normal auto loan. Even though the lease financing fees and interest (often called lease factor or money factor) are higher than normal auto loans, you are financing only depriciation which is 50% in present discussion for 3 years, not the entire price of the car for 5 to 6 years.

Some closed end lease dose not offer prefixed buy price at the end of the lease term or simply do not offer buy option at all. I would not consider signing those lease unless the total payments for the term is smaller than 30% of MSRP.

As for the BEV that fully qualifies for the Fed and state incentives like Bolt, buying it would be better deal in most cases. 22k you paid for your Bolt is not the MSRP. But at the end of 3 years, the depriciation of the car is determined solely based on the MSRP. That's how I was able to sell two PP at price more than what I paid for them.

 

Wow. My simple Rav4 hybrid SUV loaded has depreciated $7,500 against a purchase price of $37,500 over 4.5 years. So my cost of ownership has been $140 a month. That comes out to 20% of purchase price for lots more months than the 50% you have described.

So help me out, what about this lease makes it a good deal?

 

like my tesla you bought your rav4 hybrid at the right time and is the right vehicle. Leases are a good deal if you plan to keep it only 3-5 years, and buy a faster depreciating vehicle.

 

For a same price of car, lease or finance, the total price you pay to own a car is roughly the same if one buys out the car at the end of lease term. Toyota BEV bZ4X is not eligible for the tax credit of $7500 for purchase. If you purchase a bZ4X, you get no incentive. But if you lease a bZ4X from TFS, the tax credit of $7500 is applied as discount by TFS to the capital reduction. As long as you plan to keep the car after the lease term by buying out the car, then predetermined residual value (cost of the car minus depriciation) does not matter. You will be buying a car with a full $7500 discount (minus some leasing fees).

Besides, if the predetermined residual value is set to 50% and at the end of the lease the car has depreciated only $7500. Then you have an equity. You can buy the car at preset 50% of sales price, then sell it at full value. If you do this you may end up recouping entire cost of the car. Remember, the $7500 lease cash lowered the initial cost, and the car has depreciated only $7500. So, ignoring fees and tax for the sake of argument, at the end of 3 year lease, you would have driven the car net $0.

 

Leases provide a lower payment since you are not financing the residual value past the lease period.

They can provide a new car after each lease period. Obviously no real equity buildup, they have restricted mileage per year without extra cost, includes a “rent” fee and interest.

Still lower payments especially for those who don’t want to purchase it with a big down payment.

 

It is true that for the same price car, lease will be less monthly payment. This is one big reason a person lease an expensive car that is too expensive to purchase even with extended financing terms like 6 or even 8 years.

But for EVs that do not qualify for the tax credit but the lease company is offering to pass the credit to the consumer, it makes perfect sense to lease to buy. While you do not own the car leased, as long as the lease contract is clear on the end of lease buy out option, you can realize the potential equity the car has by buying (and then selling) the car.

I have leased numbers of cars in the past and in many of cases I ended up with equity. I purchased end of lease cars twice with equity. For other cars, I used the equity to leverage the next lease deal to get discount.

 

OK, what is the purchase price, what is the residual value you can buy at the expiration of the lease? What do the numbers show.

Don't cherry pick my depreciation and apply it to a hypothetical lease today. I got a huge discount at purchase because I knew how to deal. 15% lower than MSRP. I was able to pick my vehicle, my time, skip financing, my dealer, my state I was buying in, etc. Give me my deal or I buy elsewhere.

You all know I am a TCO type person. I don't care what you traded, I don't care about anything except about what the per mile per year costs are.

Teach me how to buy or lease a brand new that matches my lifestyle/needs/wants with 3 year total warranty max loaded with features car/SUV for the least cost per unit owned or driven.

Match my $140 a month depreciation. 7 cents a mile fuel. Normal insurance costs. Normal tire costs. Typical hybrid maintenance costs. 6% per year cost of paying cash. And don't look back and say you loaded up on Apple or Tesla without looking at the market today or the risks of doing that. I had money in the market too.

 

Your personal purchase price of RAV4 Hybrid is irrelevant to this thread topic discussion. The topic of the thread is that very few EVs now qualify for the fed tax credit of $7500. The loophole on this new law is that the EVs owned by the leasing company do not have the North American built restriction. So the Toyota, Hyundai, and Kia BEVs which no longer are eligible for the $7500 credit for consumer purchasing can still get a $7500 lease cash discount. It's simply that for those EVs, leasing to buy is cheaper than straight purchasing with financing.

As for your challenge to match your car's cost, I am sorry but my purchase of 2020 PP and 2021 PP both beat your figure easily. My final True Cost to Own for 2021 PP was minus $0.132/mile. Yes, it means I was paid $0.132 for each mile I drove the car. My 2020 PP TCO was even better at minus $0.444/mile. And this number includes fuel, insurance costs, tire costs, maintenance costs, and every penny I spent on the car like tax, registration, toll cost, accessories cost, etc.

 

Does buying out a lease count as a separate purchase transaction? If so, and other requirements met, the $4000 used EV credit might also apply.

 

Good point. I have not read any information on this. If allowed, it would be loophole x2. Making a lease to buy a best choice for a BEV that offers lease cash incentives and end of lease buy out option.

But as I remember, the used EV credit has to be from an approved dealer only. For the end of lease buy out, the transaction is between the lessee and the lessor. Although a dealer may handle this transition, technically the dealer is not the one selling the car, that is unless the dealer is the leasing company. Not sure, if manufacture backed lease company (lessor) would qualifies as an approved dealer.