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Buying vs. leasing an electric vehicle

Understand the pros and cons so you can make the right decision for your household

Vicky Volvovski
May 5, 2023

Swapping your gas powered car to an EV or a plug-in hybrid (PHEV) comes with many benefits – lower energy and maintenance bills, better performance, and less pollution. Once you’ve made the decision to swap, you’ll need to consider if you want to buy or lease the vehicle. 

Why lease?

Financial reasons

When you lease an EV or PHEV, you’ll pay lower monthly payments. 

Additionally, the rules for getting the $7,500 federal tax credit for electric vehicles changed in April 2023, making it harder to get the credit when you buy an EV or PHEV.

However, leased vehicles are eligible for the commercial version of the federal tax credit. Leased vehicles don't need to meet the strict sourcing and assembly requirements, so many dealerships are encouraging people to lease EVs and PHEVs and passing the $7,500 credit to them.

Ability to upgrade

Additionally, because electric vehicle technology is improving and maturing quickly, leasing means that you'll be able to upgrade to the newest technology every few years more easily. 

You may hear rumors that EVs depreciate faster than their gas-powered counterparts. While that was true in early models with limited range batteries, according to a study by Consumer Reports, EVs with >200 mile range batteries depreciate at the same rate (or slower) than their gas-powered counterparts.

Why buy?

Buying an EV or PHEV may mean that you are eligible for the $7,500 federal tax credit. As of April 2023, there are many restrictions, so you'll want to get familiar with the requirements to make sure you and the car you choose qualify.

State and local tax incentives are usually only applicable to buyers, not people who lease EVs or PHEVs.

As with owning a gas-powered car, owning an EV or PHEV means you have full control over decisions about the car and won’t be penalized for damage, miles, or any modifications. 

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