Electric vehicles (EVs) are fueling a notable rise in leasing, with over half of new EV purchases being leases in Q4 2024. During this period, EVs comprised nearly 20% of all new vehicle leases, a sharp increase from just 2.11% in Q4 2020. This shift highlights leasing’s appeal, offering lower monthly payments and sidestepping worries about resale value. Meanwhile, the wider vehicle financing market leans toward newer models, with over 66% of loans targeting vehicles up to three years old, signaling evolving consumer preferences.
Key Highlights
- Leasing Dominates EV Purchases: Over 50% of new EV purchases were leases in Q4 2024.
- EVs Surge in Leasing Market: EVs accounted for nearly 20% of all new vehicle leases, up significantly from 2.11% in Q4 2020.
- Cost Savings Drive Leasing: The average monthly payment for an EV lease is $175 less than a loan, with non-luxury EVs saving even more at $205.
- Top Leased EVs: Tesla Model 3, Tesla Model Y, Honda Prologue, Hyundai IONIQ 5, and Chevrolet Equinox EV top the leasing list.
- Shift to Newer Vehicles: Over 66% of loans target vehicles up to three years old, showing a preference for late-model cars.
Leasing’s rise among EV buyers goes beyond cost. Melinda Zabritski, Experian’s head of automotive financial insights, explains, “Leasing offers consumers the opportunity to buy an EV without worrying about the potential resale value down the line.” This is key as EV technology advances quickly, potentially impacting older models’ value. Popular leased models include the Tesla Model 3 (12.20%) and Model Y (9.08%), alongside the Honda Prologue, Hyundai IONIQ 5, and Chevrolet Equinox EV.
The broader financing market also shows change. In Q4 2024, over 66% of loans went to vehicles up to three years old, up from 63.92% the prior year. New vehicle loan interest rates dropped to 6.35% from 7.16%, stabilizing payments despite a $1,088 rise in average loan amounts to $41,572. Used vehicle financing improved, with loan amounts falling to $26,468 and payments to $525, though fewer used vehicles were financed overall.
Zabritski notes, “With manufacturer incentives, the continued resurgence of leasing, and lower interest rates, we’re seeing consumers across the board shift back into the new market. That said, the market remains fluid. Similar to the EV market, as vehicles come off lease over the next 2-3 years and late-model vehicle availability increases, how will that impact consumer purchasing behavior?” Other trends include slight delinquency upticks (30-day at 3.17%, 60-day at 0.99%) and banks gaining financing share (24.83% for new, 28.68% for used). Over 30% of prime and super prime consumers now favor leasing, underscoring its growing role.
Bottom Line
EVs are reshaping leasing trends, supported by affordability and flexibility, while the market tilts toward newer vehicles. These shifts suggest a dynamic future for automotive financing.
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