Electric vehicles make up nearly 20% of all new car leases

If you’ve noticed more electric vehicles (EVs) on the road lately, there’s a good chance they're leased.

Driving the news: According to Experian's most recent State of the Automotive Finance Market report, more than 50% of all new EV purchases in Q4 came through a lease.

Why it matters: Leasing has become the dominant way to get into an EV, driven by cost perks, automaker incentives, and a "loophole" in the federal tax credit. But a potential policy change proposed by the Trump administration could end this advantage for consumers and dealers in the coming months.

By the numbers:

• Leasing an EV is $175 cheaper per month on average than financing one. For non-luxury EVs, the savings grow to $205 per month.

• Automakers are piling on lease incentives to move EVs. Last November, incentive spending on EVs hit the highest level since the pandemic, reaching 14.9% of the average transaction price.

Worth noting: The Tesla TSLA ( ▲ 3.8% ) Model 3 and Model Y remain the most leased EVs. Honda’s Prologue, Hyundai’s IONIQ 5, and Chevrolet’s Equinox EV are gaining ground as automakers push aggressive deals.

Zooming in: The $7,500 federal EV tax credit is far easier to claim on a lease than on a loan. Lessees do not have to meet strict income requirements or adhere to the same vehicle assembly conditions. And while the White House can’t cut the $7,500 credit outright, it can pressure the IRS to adjust the criteria.

If that happens:

• Luxury EV brands—which rely heavily on leasing—could see demand drop sharply.

• Mainstream EVs lose a major affordability advantage, potentially slowing adoption.

What we're watching: Regardless of what happens with new EV leasing, the used EV market is about to balloon. By 2026, the number of EVs coming off lease will surge by 230%, according to J.D. Power.

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