Quick background. ⏳ The new EV tax credit requirements have changed the industry (and then changed it some more). For example, in April, EVs qualifying for credits dropped dramatically due to new sourcing rules for batteries and minerals. As a result, only about a dozen cars, mainly from U.S. manufacturers, are eligible for tax credits when purchased.
When purchased, you say? 🤔 The Inflation Reduction Act of 2022 has introduced a "leasing loophole." Essentially, leased EVs are categorized as commercial vehicles with different sourcing requirements. This means that practically any EV make or model can still benefit from the complete $7,500 tax break if leased rather than bought outright. However, here's the twist: the dealership technically bags the tax break, not the consumer.
Whoa, free money? 🤑 More like free incentives! EV manufacturers, particularly those from abroad, are passing on the savings to consumers through improved leasing terms. This strategy has already caused a surge in leasing numbers, with Hyundai and Kia reporting significant increases.
And you can too! 👍 Promoting customer leasing options could be a dealer's ticket to increase revenue in this period. Provide better terms to make EVs more affordable, driving up your customer base and market share, and return some used inventory acquisition that was lost when leasing lost appeal.
Speaking of used Evs... 🔋 Pay attention to the used EV market. The Inflation Reduction Act has introduced a tax break for used electric and fuel-cell vehicles. So once the leases return, they qualify for a whole new round of tax-based incentives.
And nothing will ever change again?? 👩⚖️ Remember, the IRS is still refining the clean commercial vehicle credit details, so staying informed is crucial to maximizing this opportunity before it gets amended.