This Labor Day is a good time to save money on an electric vehicle, Edmunds says

Labor Day is typically a time when car dealerships offer special promotions as new model year vehicles make their way onto the lot. This year, one of the best deals to be found is on electric vehicle leases, with a $7,500 federal tax credit set to expire on Sept. 30. According to data from auto research firm Edmunds, the average sales price for a new EV in July was $55,689, a decrease of more than 4% from the previous year, as EV prices have been gradually dropping due to soft demand.

Leasing an EV has become increasingly popular, making up 70% of all EV transactions in July. The $7,500 federal tax credit can save leaseholders an average of $208 per month over a 36-month lease, making it a more attractive option than purchasing for many consumers. Additionally, a $4,000 tax credit for used EVs is also set to expire on Sept. 30.

Ivan Drury, director of insights at Edmunds, recommends leasing over buying for those who are new to EV technology, as EVs tend to depreciate faster than gas-powered cars. He notes that the technology is continuously improving, making future models more advanced than current ones.

The IRS has recently clarified that consumers can still claim the EV tax credit if they sign a contract for a vehicle before Sept. 30, even if the vehicle is not delivered until after that date. This flexibility allows consumers more time to take advantage of the tax credit before it expires.

Jessica Caldwell, assistant vice president of insights at Edmunds, emphasizes the importance of raising awareness about EVs before the tax credit deadline passes. She warns that consumers who wait until after Sept. 30 may miss out on the opportunity to claim the credit.

According to the U.S. Department of Energy, drivers of fully electric vehicles can save up to $2,200 per year on fuel costs compared to traditional gas-powered vehicles. With the tax credit deadline approaching, now is a great time to consider leasing an electric vehicle to take advantage of these savings.