U.S. Consumers Increasingly Lease EVs as Tax Credits Loom: Auto Industry Awaits Policy Changes
In the first quarter of 2025, nearly 60% of U.S. consumers who purchased a new electric vehicle (EV) leased their car, according to Experian. This is a significant increase from the 36% who leased their EVs in the same time period last year. In comparison, only 25% of all new-car buyers leased their vehicle in the first quarter.
The high EV leasing rate indicates a trend that has been building since the tax credits came into effect in the U.S., making monthly EV lease payments attractive to many consumers. However, the Senate Finance Committee recently proposed eliminating the $7,500 EV tax credit, which could impact the market for new EVs.
Some EV buyers are still willing to pay a premium for their vehicles, but others might not see the value if the cars become more costly. Matthew Phillips, CEO of Car Pros, based in Renton, Wash., said that if EVs become less affordable than comparable internal combustion engine (ICE) vehicles, then they will not be very interesting to consumers.
In addition to the tax credit issue, the auto industry will also have to see how changes to federal EV policy impact the market. Meanwhile, some dealership groups anticipate that automakers could offer incentives on their EVs to keep pricing down. Joe Jackson, general sales manager for Bowman Auto Group in Michigan, said that GM has been very competitive on incentives for their EVs and that they are not scheduled to end.
Experian also reported on some first-quarter EV finance figures. About 10% of new-vehicle buyers bought EVs, and the volume of EVs sold has been fairly stable at around 9 or 10% the past few quarters. The lack of growth could indicate that the market is responding to the potential rollback of EV incentives.
Three of the top 10 leased models were EVs: the Tesla Model Y and Model 3 were the top two leased new vehicles in the first quarter, and the all-EV Honda Prologue was No. 7 on the list. Customers who leased the Model Y will pay $426 a month on average, while those who leased the Model 3 will pay $402 monthly; Prologue lessees will pay $486 a month. In comparison, the average monthly payment of all new leases was $595 in the first quarter.
Nearly 90% of new Prologue customers leased their vehicle in the first quarter, with less than 9% buying the car with a loan and less than 2% paying cash. Customers who paid for the Prologue with a loan in the first quarter will pay $708 a month on average. The average payment difference between a lease and a loan for all new cars sold in the first quarter was $142, but some new EVs had even bigger payment differences. For example, customers who leased their Chevrolet Equinox EV in the first quarter will pay $243 less on average than those who purchased the Equinox EV with a loan.
The average credit score for new EV buyers fell from 774 in the first quarter of 2024 to 767 this year. Meanwhile, the average ICE vehicle buyer had a credit score of 750 early last year and that rose to 752 in the first quarter of 2025.
As we can see from these figures, there is a growing trend towards leasing EVs in the U.S., which could be attributed to several factors such as tax credits, lower monthly payments, and increased consumer interest in sustainable transportation options. However, with potential changes to federal EV policy and tax credits on the horizon, it remains to be seen how this trend will continue to develop in the coming years.
