First Take: Nissan keeps 85% of EV Tax Credit Via Lease
- Thread starter SageBrush
- Start date
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There is no documentation for the title claim, AFAI see. I hope it's mistaken.
I missed that. Well, they're going to have to do better than that. If past behavior is any indicator, poor sales, or just the approach of the end of a sales quarter, will bring more money from them to the lessee.
Nubo
Well-known member
SageBrush said:
That's not what I got -- the main point seems to be LEAF losing its eligibility for the credit altogether, and Nissan lowering leasing cost to compensate. Am I seeing the wrong story or am I missing something?
I read the article as Nissan lowering the monthly lease payments on the LEAF because it no longer qualifies for the Federal tax credit. Do you expect them to lower the lease amount for a tax credit that they don't get? The article does not mention whether they also reduced the MSRP cash price or offer other purchase incentives to be more competitive.
THE FEDERAL TAX CREDITS FOR ALL NISSAN EVS ARE GONE AS OF 4/18/2023. THERE IS NO TAX CREDIT THAT NISSAN CAN PASS ON.
I guess that sometimes simple math isn't so easy.
cwerdna
Well-known member
Apparently, there is a "commercial lease" (https://www.irs.gov/credits-deductions/commercial-clean-vehicle-credit) loophole for BEVs (maybe PHEVs too) which gets around all the assembly, battery minerals and battery components restrictions.Flyct said:
There's been a fair amount of coverage on this:
https://electrek.co/2023/04/05/how-to-bypass-nearly-every-restriction-of-the-ev-tax-credit-by-leasing/
https://insideevs.com/news/629402/us-treasury-ev-tax-credit-applies-leases/
https://www.eenews.net/articles/treasury-omits-leased-evs-from-made-in-america-mandate/
https://www.businessinsider.com/automakers-electric-vehicles-tax-credits-commercial-vehicle-7500-2023-1
https://www.businessinsider.com/electric-vehicle-tax-credit-loophole-leasing-incentives-automakers-dealers-2023-3
https://www.cnbc.com/2023/04/10/7500-new-ev-tax-credit-workarounds-to-irs-rules.html
"Alternatively, consumers also appear poised to get a tax break worth up to $7,500 for leasing new electric passenger vehicles.
And this tax benefit doesn’t carry the manufacturing requirements attached to purchases of new cars, Malmgren said. That means a larger number of vehicles are likely to qualify at first — making the provision somewhat of a loophole for consumers who’d like to lease a car.
“There are very few restrictions that apply,” Malmgren said."
https://www.nytimes.com/2023/04/20/business/electric-vehicle-tax-credits-consumers.html (https://archive.is/uXy6N if you get hit by a paywall)
"Some automakers whose models are no longer eligible are now pushing leased electric cars. That’s because the law allows leased vehicles to qualify as commercial vehicles, which the Inflation Reduction Act exempts from the restrictions that apply to cars bought by individuals.
...
To make up for the loss of the tax breaks, Hyundai and other automakers are trying to lure buyers through leases. Under the administration’s broad interpretations of the law, leased electric cars are eligible for tax credits even if they are made overseas and are not subjected to the government’s rules on sourcing requirements for battery components and minerals, household income caps and vehicle price thresholds.
Car dealers can pass along the commercial credit to consumers by lowering the price of the car in lease transactions, which could reduce monthly payments.
...
The use of credits for leased vehicles has angered some automakers and lawmakers who say it subverts the intent of Congress. Consumers can lease any electric vehicle for the $7,500 credit. For example, a couple making more than $300,000 — the income limit for married people for the tax credit — can lease a $148,000 Mercedes-Benz AMG EQS and claim a $7,500 credit even though the car is made in Germany and far exceeds the $55,000 price cap for electric sedans to qualify for the credit.
Treasury officials have said their decision to allow a tax credit for leased cars is legally sound. The Inflation Reduction Act exempted commercial vehicles from the restrictions to encourage rental car companies, local governments and other owners of car and truck fleets to buy electric vehicles."
https://www.pcmag.com/news/the-electric-vehicle-tax-credit-loophole-you-need-to-know-about from Jan 26, 2023 says
"Act quickly, though, because the US Treasury is reissuing its tax credit requirements in March, when some suspect it will reduce the commercial credit from $7,500 to $3,500. If passing on commercial credit savings to consumers catches on, the feds may shut that down as well." --- I'm not sure if anything has happened on this front as I haven't followed but https://www.irs.gov/credits-deductions/commercial-clean-vehicle-credit still says $7,500. I don't see any changes at https://www.irs.gov/newsroom/topic-g-frequently-asked-questions-about-qualified-commercial-clean-vehicles-credit in 2023 yet that would affect this.
GerryAZ said:
So far as I know the msrp has not changed and Nissan is not giving dealers cash, which is why I say the lowered price is for leases only.
The opposite: No EV credit for purchases, full EV credit on leases to Nissan.
Nissan's pricing strategy nowadays is somewhere between ridiculous and obscene. I've ordered popcorn for the show, and I sure am glad to only be a spectator.
WetEV
Well-known member
Flyct said:
Not for commercial use.
And buying a car and leasing it to you is commercial use.
An interesting loophole, eh?
knightmb
Well-known member
If Nissan was smart(er), they would let you lease a Leaf for 1 month with the ability to buy and apply the rebate to some extent to make the price lower right away instead of the consumer trying to do it through tax time. Not everyone can benefit from the tax credit, but Nissan can and still have a high MSRP that is still lower than all the competition. Unless there is something in the law that prevents it, I often wonder why these obvious "sales tactics" are not used more, but I know the answer is greed because it's the (st)dealership that depends on this to work. 
LeftieBiker said:
Funny.
I think the confusion is from people not realizing that the federal EV tax credit is in play with a lease, and the money goes to Nissan. The loophole is obviously new and not well publicized to the world-at-large, but I'm surprised that the forum-regulars have not caught on.
Gerry (as usual) was the smart guy who wondered about the inconsistency with purchases
DougWantsALeaf
Well-known member
Knight, I agree with you. I think we are still in a case of EV demand outstripping demand...though only modestly now. The Leafs at our local Nissam are still turning, so I think it's going to take a bit further shift before Nissan gets more generous with sharing the Lease subsidies from the government.
knightmb
Well-known member
DougWantsALeaf said:
I often wonder how much effort it would take to start a "dealership" for Nissan that only sells the "Leaf" and nothing else. :lol:
It would be a fun job to be selling new Leaf(s) at way below MSRP and since the supply is limited, no need to keep much staff on call to show anything except what Nissan allocates from time to time. Would also try to sell new battery packs "as-is" as well. :twisted:
cwerdna
Well-known member
The commercial lease loophole is relatively new but it wasn't necessary for Nissan to bother with on Leaf until April 18, 2023. Leaf had qualified for the full $7500 Federal tax credit on new vehicle purchases until that date.
It was something Nissan could try taking advantage of on Ariya since by the time US deliveries happened (IIRC), it no longer qualified for any Federal tax credit thanks to the "IRA" taking effect in mid Aug 2022.
It was something Nissan could try taking advantage of on Ariya since by the time US deliveries happened (IIRC), it no longer qualified for any Federal tax credit thanks to the "IRA" taking effect in mid Aug 2022.
WetEV
Well-known member
knightmb said:
Can't do that, the car can't be for sale if the tax credit is being claimed. Darn fine print.
WetEV
Well-known member
SageBrush said:
Looks like tasty FUD to me. Really nicely done, Sage. I'm impressed.
Title seems to me to be incorrect. Lease to purchase at fixed price isn't allowed. So only the lease payments matter. You are just renting a car, you can't buy it for a fixed price at end of lease. That's not allowed, assuming I'm reading the law correctly. I might be wrong, I am not a lawyer.
If I compare the Nissan Leaf lease rate with the Chevy Bolt lease rate, the lease cost seems more equal than the MSRP.
10,000 miles, $1000 down, 36 months, top credit.
Bolt from Chevy's page is $465/month
https://www.chevrolet.com/electric/shopping/configurator/model?designCode=&make=chevrolet&model=bolt-ev&radius=250&year=2023&zipCode=98233
LEAF from Nissan's page is $351/month
https://www.nissanusa.com/shopping-tools/lease-finance-payment-calculator/all/nissan-leaf/2023/nissan-leaf-s-40-kwh-lithium-ion-battery/17013
Default models and options, of course you would want to compare what you want/need rather the the defaults.
WetEV
Well-known member
WetEV said:
