Leasing an EV is the cheapest way to get a new car, study says

Leasing an electric vehicle is the most affordable way to get a new car of any kind, considering favorable government EV incentives amid high interest rates, according to a new study from a nonpartisan energy and environmental policy firm.

The study, released by Energy Innovation on Wednesday, said leasing an EV can save drivers more than $400 per month compared to leasing a comparable gasoline vehicle or buying an EV or combustion engine vehicle.

"The financials work out quite a bit in favor of electric vehicles many of the times, especially when there's a fairly close MSRP between the gas vehicle and its electric vehicle counterpart," said Rachel Goldstein, a research and modeling manager at Energy Innovation and report co-author. "Those operations and maintenance costs, those fueling costs of the EVs, are just going to win out."

As EVs remain more expensive upfront than their gasoline-powered counterparts, leasing could present an attractive option for those looking to spread out costs and still reap the benefits of lower fueling and maintenance costs.

Energy Innovation found, for example, that leasing the Tesla Model Y is on average $425 less per month than leasing the gasoline-fueled BMW X4 and leasing the Kia Niro EV is $367 less per month than leasing the gasoline version of the Kia.

The savings from leasing derive from a combination of the $7,500 tax credit for leased EVs baked into the Inflation Reduction Act and high interest rates that can punish owners seeking to buy a car. While lease payments can also be impacted by interest rates, the lessee is not paying interest on the full value of the vehicle, so monthly payments are generally lower.

Goldstein said roughly half of dealers pass the tax savings on to consumers. Nissan, Tesla and Chevrolet are not passing the credit on to customers, while Ford, Hyundai, Kia, Volvo, Volkswagen and BMW are, according to the report.

Even once the tax credit dries up, Goldstein said, leasing an EV will still be the least expensive option for many vehicles because fueling and maintenance costs are less for electric vehicles than for gasoline vehicles. If gasoline prices increase as they did last year, leasing an EV could bring even more savings.

"Of course, the margin of savings increased when everybody got the benefit" of the tax credit, but "many EVs still win out on a total cost of ownership basis," she said.

There were a few exceptions. The Ford F-150 Lightning was more expensive than its gasoline alternative in about one-fifth of states, which Goldstein attributed to higher electricity prices or cheaper gasoline prices, as well as EV fees that vary by location. Three EVs, including the Nissan Leaf, were more expensive than comparable gasoline vehicles in Hawaii because of high electricity prices.

The calculations factored in primary expenses, which include the vehicle lease prices, monthly total financing costs, monthly loan repayment, fuel and maintenance costs and incentives.

The study featured 14 vehicle comparisons.

Editor's note: This article was updated to reflect Ford now factors the IRA EV tax credit into its financed leases. The Energy Innovation report misstated that fact.