Dealers and auto lenders should look for an uptick in leasing for electric vehicles to continue this month, according to reports.
"It's that time of year," Cindy Allen, CEO of Texas-based dealership data solutions provider StoneEagle, tells WardsAuto. "Dealers, OEMs bind together to pull the necessary levers to clear the inventory and make room for the new models. That's kind of a normal thing this time of year."
The likely tradeoff, of course, is thinner margins on the inventory that's being cleared out. According to a report from StoneEagle, front-end gross profits on leases – all leases, not just EVs – turned negative in July for the first time since early 2020.
"Our data shows that dealers leaned on aggressive lease strategies, particularly in EVs, to clear aging inventory ahead of expiring EV tax incentives," Allen says.
Deadline Essentially Extended
Some context: The earlier expectation was that EV buyers had to take actual delivery by Sept. 30, when the $7,500 EV tax break is set to expire. But on Aug. 21, the IRS published guidance that says EV buyers still qualify for the incentive as long as they get their orders in by the deadline, even if actual delivery takes place later.
LINK TO IRS GUIDANCE:
https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-under-public-law-119-21-139-stat-72-july-4-2025-commonly-known-as-the-one-big-beautiful-bill-act-obbb [[Jim--I'll hyperlink this]]
The actual wording is trickier. The IRS says that to qualify for the tax incentive, the buyer has to "acquire" an EV by the deadline. But in a "Frequently Asked Questions" section of the notice, the IRS states, "a vehicle is 'acquired' as of the date a written binding contract is entered into and a payment has been made. A payment includes a nominal down payment or a vehicle trade-in."
With the deadline approaching, manufacturers are making "call to action" appeals to likely EV consumers. "Federal Tax Credit Expires in Three Weeks," says the subject line of an email Tesla sent out Sept. 9 to consumers who had expressed an interest in the brand.
Exception to the Rule
EV buyers are responding, often through leases, says Melinda Zabritski, head of Automotive Financial Insights for Experian Automotive, tells WardsAuto.
According to the Experian State of the Automotive Finance Market report for the second quarter, published on Aug. 28, leases account for 57.7% of EV financing, up from 47% a year ago.
Overall, "leasing is down a bit," Zabritski says. Leases overall declined to 23.6% of new-vehicle volume in second-quarter 2025, vs. 26.1% a year earlier, according to Experian.
