Why don't dealers pass on Federal Rebate savings in lease?

Model 3 leases like crap and certainly more than a lower trim gc 4xe.

There is a lot more to a good lease than whether the paperwork shows $7,500 as a line item. This has been discussed many times before.

You should start your own thread on what you need in a car, which state, budget etc etc.

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I thought it was not for leases- it was only for purchase. Also I did try to find model 3 rwd in socal to purchase before end of year and no inventory was available.

gotcha- thanks!

Thanks, just did. Appreciate the insights max_g

When a lender originates a lease on a PHEV or EV that qualifies for the tax credit, they receive that tax credit the following year when they file their taxes. If the lender passes some or all of that through as a cap reduction at origination, they are essentially giving the lessee an interest-free loan on that money. And in today’s rate environment, that is a lot of interest income to eat.

Chrysler Capital on the 4XEs has been passing all of it through and has decided to continue that same strategy. Ally has elected to pass some amount on for several models but I am not sure what gas equivalent they are using to base the math on:
$5,644 on 22 Ford Escape PHEV
$5,255 on 22/23 Kia Niro PHEV
$7500 on 23 Kia Sorento PHEV
$6,179 on 22/23 Mitsubishi Outlander PHEV
$4,480 on 22 Toyota Prius Prime
$6,689 on 22/23 Toyota RAV4 Prime

US Bank, on the 4XEs chose to bump their RVs by $7,500 to have a similar effect on payment but resulted in higher interest portions of the payment. So far they haven’t elected to do that this year.

Ultimately the payment determines which lender gets the deal and each lender can pull either level to try and beat the other lenders on payment and originate the volume.


@sachmo22 The Sorento is a great SUV. Either that or the Outlander PHEV… and both are 3-row if that means anything.

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Sorento PHEV is “3 row” but 6 seats.


It appears that Merc EQS is passing $7500 still.


Tesla reduced the MSRP of their vehicles by $3750/7500 in December. Their vehicles were not eligible for tax credits in 2022. They should have started receiving tax credits on leases on Jan 1, based on current interpretation of the IRA.

*contingent on income eligibility, correct?

helpful. can one go directly to a bank to start lease process for a car? for eg., how do I start w ally on this? I always have done it at the dealership typically through the manufacturer’s finance unit (E.g., ford finance etc.)

No income eligibility under the commercial use section of the IRA. This is the potential loophole that earners above the income thresholds are anxious to see come to fruition. No battery or minerals requirement, no income limits. But the leasing company also isn’t obligated to pass through the credits to the lessees.

Some call it a loophole, some call it exactly how the law is written

You go to a dealer that offers leases through ally

Will those that call it exactly how the law is written sell insurance to the captive finance companies that don’t think the law is that clear? If 3.4M EVs are sold in 2023 (5% of 68M) and 680,000 of those EVs are leased (20%), you’re looking at $5.1B in tax credits for leased vehicles. If there are those that believe the law is crystal clear, then they should be willing to insure that $5.1B so the captives can have confidence in the credits…should be easy money, right?

I agree that the law is written such that leases should qualify. But being right doesn’t mean the IRS will agree.

It was the IRS that issued the guidance saying leases do qualify.

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Also no requirement that the vehicle be assembled in North America.

Well then what’s taking so long??? :grin: I’m ready for some cheap EV leases. I’d settle for cheaper.

Your assumptions are a little off. SAAR on new cars is expected to come in around 15M (not 68M which I’m assuming you came to by including used cars).

So 5% of 15M is 750k total EV/PHEVs sold this year and depending on the lease pen of this group. 20% is a pretty safe bet but it could go higher depending on how the lenders choose to push more volume to leases. That means 150k leased PHEV/EVs that get the $7500 credit. Some will be lower based on the comparison against equivalent gas models but we’ll stick with $7.5k for this. That makes it $1.125B.