Electric Car Leases: Are EV Deals Are Worth It?
Leasing an electric vehicle has advantages, and in some cases it can be a better option than buying.
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Electric vehicles (EVs) are growing in popularity, and so are electric vehicle leases. EV purchases hit a record 1.3 million in 2024, according to Kelley Blue Book. And, for the last quarter of the year, Experian Automotive notes more than half of new EV purchases were leases,.
How do electric car leases work?
Leasing an EV is really no different than leasing any other type of car.
A lease contract lets you use a vehicle for a set period, typically two to three years, and return or buy it (if you have the option) at the lease’s end.
With a lease, you don’t pay for a car’s full value. Your monthly payment is based on the difference between the new vehicle’s cost and its expected value at the end of the lease, called the residual value. In other words, you pay for the amount the car depreciates while you’re driving it, along with your finance charge and any taxes or fees you add to the lease amount.
Because a lease’s intent isn’t for you to pay the full value of the car and eventually own it, you finance less, resulting in lower monthly payments.
» MORE: How to lease a car
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Is it cheaper to lease an electric car?
Even without special offers, leasing an electric car usually has a lower upfront cost and more affordable monthly payments when compared to getting an auto loan. For EVs, the average lease payment was about $175 less than an auto loan payment in the fourth quarter of 2024, according to Experian.
EVs tend to have higher sticker prices than gas-powered cars, so paying less upfront and monthly might enable you to drive a newer or more premium EV without stretching your budget.
» MORE: Should you lease or buy a car?
Electric vehicle lease deals and lower payments
During the COVID-19 pandemic, fewer people leased vehicles. That later contributed to a shortage of used cars for dealerships to sell, because fewer cars were being returned at the end of leases. To get buyers to return to leasing and reestablish the cycle of off-lease vehicles, many car manufacturers are now offering enticing lease deals that include EVs.
For example, recently Kia advertised a lease on the 2025 Kia Niro EV Wind, with monthly payments of $149 for 24 months and $3,999 due at signing. Toyota offered a lease deal for the bZ4x with monthly payments of $279 per month for 36 months, with $2,999 at signing. You can find lease specials for your area on car manufacturer websites.
Advantages of electric vehicle leases
Access to the latest technology. Leasing allows you to upgrade to a newer model every few years, so you’re not stuck with an outdated vehicle as the industry advances.
Limited long-term commitment. Most lease terms last only two to three years, so it’s a great option for anyone who’s still figuring out if EV life is right for them.
Federal tax credit. Currently, certain new EVs are eligible for a federal tax credit of up to $7,500. If you buy an EV, both you and the vehicle must meet numerous conditions, and many EVs don’t qualify. But when you lease, these restrictions don’t apply. The transaction is considered a commercial sale for the leasing company, and they receive the tax credit. In most cases, the dealer then passes all or some of the credit to the lessee.
Fewer worries about depreciation. New cars can lose about 20% of their original value in the first year and then about 10% annually in the next four years. If you finance to buy a car, and suddenly its market value drops, you could end up owing more than the car is worth. However, when you lease, you only pay for the expected amount of depreciation during the lease term.
» MORE: Lease buyout loans
Potential downsides to leasing an EV
Mileage restrictions. Leases come with mileage restrictions, usually about 12,000 miles annually. If you surpass your limit, you may pay a fee of about 25 cents per excess mile when the lease ends. EV drivers do tend to drive less, so mileage limits may be less of a concern when compared to leasing a gas car.
No equity or ownership. At the end of a lease, you have no equity or ownership in a vehicle. The car provides no trade-in value to put toward acquiring another vehicle. Also, when you continuously lease, your car payment never ends.
Potential fees. Leases can have fees you might not anticipate, and these can add up. In addition to mileage fees, you could be charged for excessive wear and tear when the car is turned in. If you decide to end the lease early, there may be an early termination fee. The leasing company could also charge an acquisition fee to set up the lease, along with a disposition fee to cover preparing the car for resale when you return it. Before you sign a lease agreement, read it carefully to determine the exact fees you will have.
Why an electric car lease might be a smart move
With possible lease deals and incentives, lower upfront costs and short-term flexibility, leasing can be a great way to drive a new EV. It’s especially worth exploring, if rising car prices and payments have pushed financing affordable transportation out of reach.
As the EV landscape continues to evolve, technology advances and more models become available, an EV lease gives you the freedom to adapt without the long-term commitment of car ownership.
