January 17, 2025
What’s new: Dealers with EVs in their current inventories should be aware of recent developments that could have an impact on the availability of federal tax-based EV lease and sales incentives in 2025.
How it works: The changes in incentive availability could show up in a number of ways:
On the plus side
The IRS renewed for 2025 a safe harbor that lessors rely on in offering lease promotions based on EV tax incentives. This should permit lessors to continue offering those promotions.
On the negative side
Some tax-based EV incentives may become less available this year.
- First, “30D” tax incentives for consumer purchases are only available if the vehicle contains a certain percentage of components and battery materials from domestic sources, and those percentages go up each year on January 1. As a result, the number of vehicles offered by NADA members that qualify for these tax incentives went down on January 1, 2025, and currently stands at eleven.
- Second, since 30D incentive qualification is measured on the day the dealer sells the vehicle to the consumer (rather than on the day the vehicle is sold to the dealer by the OEM), some vehicles that qualified for the tax credits in 2024 do not qualify as of January 1st.
President-elect Trump and the Republican Congress have indicated that they would like to undo the EV tax incentives. This is especially true for the tax credit that auto lessors have been using to support EV lease promotions. As a result, dealers could see a reduction or elimination of clean vehicle tax credits, including the lease programs that have been supporting upwards of 80% of EV deliveries vanish at some point.
Why it matters: Dealers carrying EVs in their current inventories may consider taking advantage of the EV tax credits, and the lease programs based on them, before the potential foregoing changes occur.