Discounted leases could result in financial losses for automakers.

To increase sluggish sales of electric vehicles, automakers are resorting to discounts.

Some EVs and buyers are not eligible for the $7,500 federal tax credit, but leasing offers a loophole that bypasses the restrictions.

Leasing allows customers to test drive EVs without the obligation to purchase the vehicle at the end of the lease term.

According to Barclays, while this may benefit customers and promote EV adoption, automakers could suffer if they provide steep lease discounts instead of upfront incentives on purchases.

Dan Levy, senior equity research analyst at Barclays, expressed growing concern about the profitability of aggressive lease offerings in his June 11 note, stating that OEMs are using some new schemes to delay EV losses.

In the first quarter of 2024, approximately 25% of car buyers leased vehicles, but among electric vehicle (EV) buyers, that percentage rose to more than one-third. Additionally, over 70% of EV purchases at dealerships were leased vehicles, according to data from car shopping website and provider Edmunds.

""A neighbor of mine shared a great lease deal on an EV, which I found hard to believe when I checked the numbers," said Levy."

A dramatic rise in EV leases was discovered through further research by Levy.

When leased electric vehicles are returned to dealerships at the end of their terms, automakers are obligated to sell them into the used market. The prices of used EVs have decreased, and the influx of new vehicles may further lower prices.

According to Ivan Drury, director of insights at Edmunds, neither the automakers nor the guidebooks can accurately predict the true value of this vehicle.

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