As your commute time increases or you find yourself returning to the gas pump again this week, you might be curious about a more energy-efficient ride. The electric vehicle market continues to evolve in both advancements and challenges. In our last post, we discussed the new and used federal tax credits, eligibility, and other factors to consider. Since then, we have observed the following changes:
Make and Models have been added and removed on both the new and pre-owned qualified vehicle lists
EV sales growth has slowed, while hybrids (HEVs) and plug-in hybrids (PHEVs) sales are up
We have seen higher depreciation rates reflected in prior year vehicles as newer models, technologies, and competitors enter the market
If you are interested in buying an electric vehicle, here are two strategies we are discussing with our clients:
Opting for a Lease
Conventional wisdom may say that leasing ends up costing you more than purchasing, however with warranties, lower monthly payments, and new EV technology, a lease could prove to be a better choice
Many manufacturers offer a Lease “Bonus” which reflects the $7,500 federal tax credit that is passed to the consumer
These benefits should be weighed against the drawbacks such as continual payment cycle, inflexibility to end leases early, and mileage restrictions
The average lease payment is about $600 per month vs the average auto loan payment finance a car at $740 per month. Experian: State of Automotive Finance Market Q1 2024
Buying a Pre-Owned EV
Front-loaded depreciation poses the opportunity to buy at reduced prices which are more competitive prices to gas-fueled vehicles
More buyers may qualify for up to $4,000 tax credit on a vehicle under $25,000 which can represent a higher discount off the purchase price than a new vehicle credits
Recent Client Example:
Goal: 2021 Ford Mustang Mach-E Premium (Original MSRP $50,300)
Opportunity: For sale by a local dealer in 2024 for $24,979
Savings: Minus $4,000 (confirmed eligibility)
Result: $20,979 + Tax Title and fees not including ongoing fuel savings
Whether you are in the market for a car, home, or have other changes to your financial life it can be valuable to discuss the potential impacts with a trusted financial planner. We are here to listen, educate, and guide you every step of the way!
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