Some buyers of electric and plug-in hybrids are experiencing a serious shock this weekend in terms of monthly rental numbers.
That’s because compared to just a few days ago, a wide range of EV and PHEV models no longer eligible for the federal EV tax credit—Called the Clean Car Credit.
Toyota RAV4 Prime XSE 2021
The spike may be most obvious though for Toyota RAV4 Prime on demand and Prius Prime. As we see at the time of writing, Toyota’s “deal” rental price for the RAV4 Prime, through Tuesday qualifying for the full $7,500 EV tax credit, has increased to $643 a month with $4,293 due at signing ($2,000 off). Until recently, the same lease terms ran $490/month, with $3,140 at signing – so customers pay nearly $7,000 more over the life of the lease.
In Los Angeles, electric car rental contracts tend to be lower, the official rental price of the Toyota BZ4X currently stands at $745 a month with $3,395 at signing.
Tesla Series of 2022 (Courtesy of Tesla, Inc.)
One Tesla Model Y Long Range, much higher than the BZ4X, which starts at $789 a month for rent, with $4,500 off. Tesla hasn’t dealt with the tax credit for several years, and this is working in its favor now; you have to really want BZ4X to pay the same amount.
Likewise, rental transactions on Chevy Bolt EVstarted at $219 a month earlier this month, no change later
2023 Chevrolet Bolt EV
Tesla and GM vehicles will be able to once again qualify for the revised tax credit starting in 2023, if they meet the cuts to several other provisions in the bill, including price caps $80,000 for SUVs, pickups and vans and a $55,000 cap for cars.
Like CarsDirect note, Toyota’s leases are regional in nature, but it appears that special rental programs for both electric vehicles and plug-in hybrids have been phased out “pretty much everywhere after one night”.
The reason was simple math: The carmakers’ captive finance companies were able to claim the EV tax credit and credit it with the cost of the lease – effectively reducing it. the amount of the entire rent at the beginning. So now it looks like they’re just passing most of that money on to shoppers.
With so many vehicles currently ineligible, anyone shopping to rent an electric car in recent weeks or months will be in for some long and wide sticker shock, for most electric vehicles and vehicles. plug-in hybrid.
2022 Ford Mustang Mach-E
There are exceptions. Late Tuesday, after the bill was signed and the Internal Revenue Service and Department of Energy provided some quick turnaround guidance, we reviewed the shortlist of Qualified US-built vehicle. That’s a very elite list of vehicles that will continue through 2022 with the tax credit — including the Ford F-150 Lightning, Escape PHEV and Mustang Mach-E, Nissan Leaf, Jeep Wrangler 4xe and Chrysler Pacifica End appropriate, without pushing too far into the luxury pricing zone.
2023 Volkswagen ID.4
In the meantime, there will be some nuances of challenge in the market to navigate. Volkswagen followed similar guidance earlier in the week regarding the tax credit — stating that “Any ID.4 financed by a VCI lease on the day after () the Inflation Reduction Act was signed into law. will no longer qualify for the $7,500 Zero Emission Bonus. “
But VW is in a particularly strange situation with the ID.4 because Version 2023-model of ID.4 will likely qualify for the tax credit at least for the rest of 2022, while the German-built 2022 versions won’t.
While VW and Toyota are certainly not alone, leave that up to dealers — and some very confused shoppers — to figure that out.