TLDRs;
Contents
- EV lease rates in the US have dropped below gas vehicles, averaging $624 compared to $670 for combustion cars.
- Automakers are rushing to pass on the $7,500 federal tax credit before it expires on September 30.
- EVs now account for 71% of all new lease transactions, up sharply from 51% in 2022.
- Battery costs are falling rapidly, with EVs projected to reach price parity with gas cars by 2025.
Monthly lease rates for electric vehicles (EVs) in the United States have now fallen below those of traditional gas-powered cars, signaling a dramatic shift in the auto industry.
According to data from Edmunds.com, the average monthly EV lease currently sits at $624, compared with $670 for combustion vehicles. This pricing gap marks the first time EVs have undercut gasoline models on lease affordability.
Luxury and mid-range EVs are also seeing record discounts. For instance, the Mercedes EQB was available in July for as low as $352 per month, including the down payment, making it one of the most affordable lease options across the market. Other models, such as Honda’s Prologue, have seen similar incentives, with effective monthly costs dropping to nearly $200 in some regions.
Federal tax credits drive leasing boom
Industry analysts attribute the sudden drop in prices to an expiring federal tax credit that automakers are racing to pass along to consumers. The $7,500 EV federal tax credit, which can be directly applied to lease deals, is set to expire on September 30.
Don't tell the Americans!
Cheaper than gas
The average monthly lease rate in the USA – including a down payment – is now cheaper for an EV than for a gas car#alwaysbecharging pic.twitter.com/wYafNhh3TQ— Felix Hamer • electricfelix (@electricfelix) August 18, 2025
Unlike traditional purchase incentives, where individual buyers must navigate complex tax filings, leasing allows automakers to apply the full value of the credit upfront, translating directly into reduced monthly payments. This structural advantage explains the steep discounts now visible on the market.
Leasing has quickly become the dominant financing method for EVs. Just two years ago, only 14% of EVs were leased, by Q2 2024, that number jumped to 46%. Automakers and dealers alike are using this model to maximize consumer uptake before the tax benefit disappears.
The aggressive discounting has translated into a surge in EV leasing activity. As of mid-2024, EVs represent 71% of all new lease transactions, a sharp rise from 51% just two years ago.
Dealers are also strategically moving inventory of vehicles produced before tariffs and supply chain changes raised production costs. By using lease incentives, they can clear lots more efficiently while still presenting attractive deals to buyers.
Automakers view this as both a short-term strategy to hit sales targets and a long-term investment in customer conversion. Once drivers transition to EVs, they are far less likely to return to gasoline-powered cars, strengthening brand loyalty in a competitive market.
Market preparing for cost parity
The current wave of discounts is more than a temporary push. Industry forecasts suggest that EVs are on track to achieve true cost parity with gasoline cars by 2025, largely due to falling battery prices. Average EV prices have already declined from $65,108 to $53,469, while gas-powered vehicles have crept up to $48,334.
Battery costs are expected to drop by 77% through 2030, creating a structural price advantage for electric cars. Automakers are positioning themselves to capture consumer loyalty before subsidies phase out. Companies like Ford are even preparing a $30,000 electric pickup by 2027, signaling confidence that mass-market EVs will be affordable without heavy government support.
For now, however, the combination of expiring tax credits, dealer incentives, and falling EV prices has created a rare moment where leasing an electric vehicle is cheaper than a gasoline car. Consumers looking to make the switch may find the next few weeks represent the best opportunity in years.
