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Electric vehicles (EVs) continue to rise in popularity, making up 8.35% of new car purchases in the second quarter (Q2) of 2024, according to Experian's State of the Automotive Finance Market report. But, as rising vehicle prices and high interest rates make buying a new EV potentially cost-prohibitive, many car buyers are turning to leasing as a more affordable alternative. In 2024, 46% of new EV purchases are leases, a rate nearly double what it was in 2023.
To get a handle on why consumers are leasing new EVs faster than they're taking out loans, here's a closer look at the data driving this trend.
Electric Vehicle Leasing Increases
According to Experian, leasing is the most popular way to finance a new EV in 2024. In Q2 2024, nearly half (46.56%) of new EV purchases were financed through leasing, up from just 21.73% in 2023 and 14.10% in 2022. During this period, 36.80% of new EV purchasers financed their vehicles with loans, while 16.64% paid cash or used another means of payment.
How Consumers Are Financing EV Purchases
What Could Be Driving the Popularity of EV Leasing
Affordability is a key factor when deciding whether to lease or buy an EV. Although the potential benefits of leasing apply to all kinds of vehicles, here are a few EV-specific considerations that may tip the scales.
- New EVs carry a relatively high price tag. According to Cox Automotive, the average transaction price for new EVs was $56,328 in September, 2024, compared to an average transaction price of $48,397 for all new vehicles. Leasing can be a cheaper option than financing a purchase with a loan.
- Installing a home EV charger adds to the cost. Installation and equipment costs start at a few hundred dollars and can range into the thousands.
- High interest rates on loans make affordability a factor. Rates in 2024 were up significantly from 2022. For example, 49- to 60-month auto loans had an average interest rate of 5.04% in 2024 versus 3.23% in 2022, according to Experian data.
- Leasing may require a lower down payment. The typical down payment on a lease ranges from $0 to $3,000.
- Lease payments are usually lower than loan payments. Because lease payments are typically based on the amount the car's value depreciates over the lease term—and not the total value of the car—monthly payments are lower than they are when you purchase with a loan.
- Federal tax credits may help when you lease an EV. Although regular federal clean vehicle tax credits don't apply when you lease, commercial clean vehicle tax credits of up to $7,500 are available to leasing companies, who can pass along savings to their customers in the form of incentives. Consumers who benefit from leasing incentives don't have to meet the IRS vehicle eligibility or income requirements for regular EV tax credits.
Whether you own one or lease one, driving an EV could save you money in the long run. The conventional wisdom is that money saved on fuel costs and routine maintenance helps balance out the additional cost of purchasing an EV. To the extent leasing makes EVs more affordable, that balance may be easier to achieve.
Top 10 New Electric Vehicle Models
The top 10 new EV models reflect the growing variety of choices. Tesla Model Y is the most popular new EV, with a 36% share of the market, followed by the Tesla Model 3 with a 9% market share. Two other Tesla models, the Cybertruck and the Model X, also appear in the top 10.
A mix of other auto manufacturers round out the top 10, including familiar brands like Ford, Hyundai, Cadillac and Toyota, as well as relative newcomer Rivian. Here are the 10 most popular new EVs and how they stack up in the current market.
| Top 10 New Electric Vehicle Models | |
|---|---|
| EV Model | Market Share |
| Tesla Model Y | 36.4% |
| Tesla Model 3 | 9.19% |
| Ford Mustang Mach-E | 4.42% |
| Hyundai IONIQ 5 | 3.94% |
| Rivian R15 | 2.77% |
| Tesla Cybertruck | 2.74% |
| Cadillac LYRIQ | 2.39% |
| Toyota bZ4X | 2.29% |
| Ford F-150 Lightning | 2.21% |
| Tesla Model X | 2.14% |
Source: Experian data as of Q2 2024
How Monthly Payments Compare Across Top EV Models
Average monthly lease payments for the top 10 EV models begin under $400 and all fit comfortably under the $1,000 mark. By contrast, the lowest average monthly loan payment in this group is for the Volkswagen ID.4 at $619; the highest is for the Rivian R1S at $1,208 monthly. Clearly, leasing an EV can save substantially over financing one with a loan, though savings can vary from model to model—and deal to deal.
| Average Monthly Payment for the Top 10 Leased EV Models | ||
|---|---|---|
| EV Model | Average Monthly Loan Payment | Average Monthly Lease Payment |
| Tesla Model Y | $649 | $518 |
| Tesla Model 3 | $692 | $437 |
| Hyundai IONIQ 5 | $777 | $414 |
| Toyota bZ4X | $714 | $394 |
| BMW i4 | $901 | $748 |
| Nissan Ariya | $757 | $411 |
| Rivian R1S | $1,208 | $849 |
| Ford Mustang Mach-E | $707 | $579 |
| Volkswagen ID.4 | $619 | $506 |
| Tesla Model X | $805 | $464 |
Source: Experian data as of Q2 2024
How Monthly Payments Compare for the Top 10 Leased Cars
Leasing may also help bring the monthly cost of driving an EV in line with driving a comparable gas-powered vehicle. The top 10 leased cars overall include two EVs, the Tesla Model Y and Tesla Model 3 (indicated below).
Average monthly lease payments for the top 10 leased cars, shown here, range from $390 for a Chevy Equinox to $630 for a Jeep Grand Cherokee. At $518, the Model Y has a higher monthly payment than gas-powered SUVs Nissan Rogue and No. 1 Honda CR-V, but costs considerably less than the Grand Cherokee. The Model 3's $437 average payment is just slightly higher than a Honda Civic or HR-V.
| How Monthly Payments Compare for the Top 10 Most-Popular Leases | ||
|---|---|---|
| Rank | Model | Average Monthly Lease Payment |
| 1 | Honda CR-V | $482 |
| 2 | Tesla Model Y* | $518 |
| 3 | Honda Civic | $403 |
| 4 | Ford F-150 | $601 |
| 5 | Chevy Silverado 1500 | $589 |
| 6 | Nissan Rogue | $462 |
| 7 | Chevy Equinox | $390 |
| 8 | Tesla Model 3* | $437 |
| 9 | Honda HR-V | $418 |
| 10 | Jeep Grand Cherokee | $630 |
*Electric vehicle
Source: Experian data as of Q2 2024
The Bottom Line
Leasing a new EV has its pros and cons. Some experts maintain that leasing costs more overall than buying. Still, leasing can help you save on monthly payments and capitalize on federal clean vehicle tax credits (even when you may not qualify on an EV purchase).
Getting the best lease rates, terms and incentives generally requires good credit. According to Experian data, new EV purchasers have an average credit score of 770. If you're thinking about a new EV, check your credit score and report at Experian for free to get a clearer picture of what your financing options might be, whether you're looking to loan or lease.