Tesla Drops Model 3, Y Monthly Payments as EV Leasing Gains Popularity

12.10.2023 - 21:59 / pcmag.com

Leasing a Tesla just got more appealing, as the company lowered the monthly payment on its two most popular models.

The Model 3 is now $329 per month, down from $380 in September and $399 in January. The Model Y is now $399 per month, down from $499 last month, according to Electrek.

Tesla offers 24- and 36-month leases, both with a $4,500 down payment (which is unchanged despite the lowered monthly payments). Keep in mind that seven states do not allow Tesla leases due to local dealership laws. That includes Delaware, Kentucky, Nebraska, New Hampshire, Oklahoma, South Carolina, and Wisconsin, according to the Tesla website.

Tesla has continuously slashed its purchasing prices throughout 2023. As a result, the Model 3 and Y are the cheapest they've ever been, starting at $38,990 and $43,990, respectively.

Both currently qualify for the $7,500 federal tax credit, although a note on the Tesla website says it expects the Model 3 to only qualify for $3,750 beginning next year, which is likely related to plans to include a larger portion of foreign-sourced materials in its batteries.

Even with the lower sales prices and tax credits, buyers may prefer leasing. Limited charging infrastructure and lack of experience owning an EV can make the shorter-commitment option of leasing more appealing.

As such, more people are choosing to lease an EV instead of purchase, according to Green Car Reports via Experian. In June 2023, 22% of new EVs on the road were leased (78% purchased), as compared with 13% leased (87% purchased) in June 2022. The Tesla Model 3 became the seventh-most-leased vehicle in the US last month, making it the first EV to crack the top 10.

A loophole in the EV tax credit eligibility rules also encourages leasing, as it allows buyers to enjoy the $7,500 credit on any EV, even if it's not among the handful that qualify for the same credit if purchased.

Noticing the momentum around EV leasing, Hyundai introduced a month-to-month EV "subscription," reducing the commitment even further as compared to a traditional multi-year lease. Other startups like Autonomy also offer monthly subscriptions for a range of EVs across brands.

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