Leasing is quickly cementing itself as the cheapest way for most American drivers to access electric vehicles. Even though polls have revealed that plenty of U.S. drivers are interested in switching to battery electric vehicles (BEVs), high purchase costs prevent them from making the move.
With outright EV purchases out of reach for many drivers, many are turning to leases to get a taste of electric vehicle technology without having to shell out tens of thousands of dollars. Leasing allows them to rent electric cars for only a few thousand dollars per year, making it a significantly cheaper option for drivers who want to use electric cars without breaking the bank.
New Energy Innovation Research analyzed the cost of leasing vs. purchasing 14 electric vehicle models and compared the costs to similar fossil fuel-powered car models in all 50 states. This analysis covered state fees and taxes, financing and leasing costs, federal and state EV tax credits and rebates, fueling costs, and insurance and maintenance costs. The institution found that leasing EVs is often cheaper compared to operating comparable petrol- and diesel-powered cars. For instance, leasing a Ford Mach-E and a Tesla Model Y saved drivers $7,500 and $5,000 respectively annually compared to operating similar conventional vehicles.
A reduction in electric vehicle lease prices, lower EV maintenance and operating costs, increasing interest rates and new tax incentives from the 2022 Inflation Reduction Act (IRA) have also contributed to the rise in EV leasing uptake. Even though it’s not quite what the government envisioned when it pledged to support the transition to EVs, leasing is a great way to boost access to battery electric vehicles.
Recent increases in fuel costs may also be encouraging drivers to switch to electric cars for their lower operational costs. An energy crisis that was exacerbated by the Russia-Ukraine war caused energy prices to soar worldwide, and drivers around the country are still paying more to fuel their cars. The cost savings offered by charging an EV compared to refueling an ICE car may be attracting money-conscious drivers to electric vehicle leases.
Fossil-fuel-powered vehicles have been the dominant form of road transportation for close to a century and have facilitated significant advancements in our civilization. However, the fossil fuels they consume are incredibly toxic to the environment, making replacing internal combustion engines (ICE) with cleaner alternatives a critical goal for the U.S. and other nations.
Efforts to accelerate EV adoption in recent years have been repeatedly held back by high EV prices and poor public-charging infrastructure. Making EVs more affordable for regular drivers and investing in charging infrastructure will be critical to boosting EV adoption in the country and meeting emission reduction goals.
EV companies such as Workhorse Group Inc. (NASDAQ: WKHS) may gain a competitive edge by working out mutually beneficial agreements with leasing companies so that they can deepen the penetration of their electric vehicle models.
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