2023 Taycan $7500 Tax Credit with Lease vs No tax Credit purchase.

[Go2mars]

My Taycan 4S is in production and scheduled for delivery in mid April 2023. As of the first few days in January 2023, the only way to get the $7500 tax credit is through leasing as it is not available through purchase (see link below). Is leasing worth it?. I am trying to understand is it better to lease then refinance to purchase the car with a $7500 tax credit vs. purchasing the car and getting no tax credit.

Basically are the extra expenses of leasing then turning that lease into a purchase greater than $7500?

This question is for those who have experience leasing then buying the car and for those with Tycans on order now around Jan 2023. Is everyone switching to an initial lease?

https://www.forbes.com/wheels/advice/ev-tax-credit-lease/

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[annieland]

Well that was an interesting article, I had no idea. I can advise on a lease-to-buy car purchase, but you have to note that this law states the $7500 credit goes to the leasing company. You would have to do some serious due-diligence on if the company your dealer works with is apt to pass that credit onto the consumer. I doubt they have any obligation to. So that's a big risk there, unless you get that ironed out in writing ASAP.

But in general, leasing to capture a savings can definitely work out under the right circumstances. In mid-2020 I arranged the purchase of the highest trim Kia Stinger for my husband, and for some insane reason (probably covid) they had an $11,000 cash incentive on leases. After negotiating the price of the car all the way down to what the SM threw up his hands and finally agreed to, I signed the lease and got the extra $11k off. At this point I had already arranged financing with my credit union at a super low rate, and it only took about a week to finish the payoff process, costing about $15 in accrued interest.

So it can easily be done, whether the payoff is from you or a lender, but I'd watch it here with this 2nd hand credit. I don't know if there's any precedence as to what leasing companies are doing about this.

 

[wemct]

I leased my 2020 Taycan 4S mainly because I was nervous that it was Porsche's first EV and I wasn't certain about the progression of battery technology 5 years down the road. Last month received an offer from my local Mercedes dealer to purchase the car. I received about $25k above the lease buyout price (the used car market has dropped since then). The dealer resold it and made a decent profit in less than 2 weeks.

 

[Tomato]

That lease $7500 is good news if you're already decided to lease. But if you're still deciding whether to lease or purchase, don't let that be the deciding factor. Even if Porsche passes the entire $7500 to the consumer, you won't come out ahead because Porsche lease money factor rate is ridiculously high and the residual is low. I think MF is at 0.0032 or 7.7% and RV is at 52% for 36m/10k mi lease.

You would end up paying much more in depreciating charge and interest over the lease term than the puny $7500 cap cost reduction rebate that PFS would give you.

 

[annieland]

That lease $7500 is good news if you're already decided to lease. But if you're still deciding whether to lease or purchase, don't let that be the deciding factor. Even if Porsche passes the entire $7500 to the consumer, you won't come out ahead because Porsche lease money factor rate is ridiculously high and the residual is low. I think MF is at 0.0032 or 7.7% and RV is at 52% for 36m/10k mi lease.

You would end up paying much more in depreciating charge and interest over the lease term than the puny $7500 cap cost reduction rebate that PFS would give you.

I'm pretty sure the OP was intending to payoff the lease almost immediately. But if not, then noooo to that kinda lease deal, that's for sure!

 

[Go2mars]

Well that was an interesting article, I had no idea. I can advise on a lease-to-buy car purchase, but you have to note that this law states the $7500 credit goes to the leasing company. You would have to do some serious due-diligence on if the company your dealer works with is apt to pass that credit onto the consumer. I doubt they have any obligation to. So that's a big risk there, unless you get that ironed out in writing ASAP.

Porsche called dealerships two days ago to announce they will pass along the $7500 with a lease. I have never done a lease and have lots to learn. Thanks for this response

 

[RAHRCR]

Be sure to read the fine print here (from the same article):


Leasing Doesn’t Guarantee a Tax Credit
Although the leasing companies that buy clean vehicles can claim the federal tax credit for each clean vehicle, consumers who lease those vehicles aren’t guaranteed the incentive.

The leasing companies arefree to pass the credit to customers in the form of reduced lease rates—or not. It was the same situation under the old eligibility rules, which were changed and dramatically tightened when the Inflation Reduction Act (IRA) passed in August 2022.

 

[Icebergmikey]

Just called my SA, the $7500 is back on through a lease!

 

[Payton48]

I'm going to run the numbers this week. Strategy is to lease, with Porsche providing a $7500 incentive (essentially passing through the tax credit they're receiving) as cap cost reduction, then buyout the lease by financing. The current finance rates offered by most places will almost certainly be lower than the lease MF.

 

[TheSauce]

Can someone calculate what the difference would be if you were to purchase the vehicle outright in cash vs lease to get the $7500 then immediately pay out the lease and buy the car cash?

 

[oailamc]

Can someone calculate what the difference would be if you were to purchase the vehicle outright in cash vs lease to get the $7500 then immediately pay out the lease and buy the car cash?

I was in the same situation and decided to just pay over lease. My SA said that if I wanted to lease, they asked that I hold on to my lease for at least 5 months or else the dealership gets dinged. I didn’t want to screw them over as they’ve been great to work with and I want future allocations. Also, leasing rate through PFS is 12% according to my SA. So all that work plus lease acquisition cost, it wasn’t worth looking in to it further.

 

[JerryLNK]

I chose to lease my 22TAYCAN because of the newness of this BEV technology. The $7,500 tax credit was applied to my lease by the dealership. I had thought after reading the new EV tax credit regulations effective 2023 that the Taycan is ineligible for the tax credit because the car is made outside the U.S. This Forbes article is insightful.

I plan to buy this car at lease expiration. I will have some equity in the car to use as a trade-in or to sell at some point, if demand continues to push-up or keep constant the used Taycan market. This choice to lease, however, was not part of an economic strategy. More of a hedge on the technology. And from my experience, the technology is exceptional and the most recent software update turned my 22 to a 23 from a range and PCM interface perspective.

Happy miles to everyone!

 

[TheSauce]

Here's a quick calculation without factoring in sales tax, title, misc fees: With $120k MSRP 36months/10k mi lease, basing on December 22 money factor of .00320 and 52% residual with $7500 rebate as cap cost reduction. You're looking at $2160 monthly payment. If you want to buy out the lease after taking delivery, you'll have to pay $140k($2160 x 36m + $62400) to end the lease and keep the car. So it will cost you $20k more than just paying cash. Correct me if I'm wrong but that should be pretty close.

Well that settles it thanks

 

[Payton48]

Here's a quick calculation without factoring in sales tax, title, misc fees: With $120k MSRP 36months/10k mi lease, basing on December 22 money factor of .00320 and 52% residual with $7500 rebate as cap cost reduction. You're looking at $2160 monthly payment. If you want to buy out the lease after taking delivery, you'll have to pay $140k($2160 x 36m + $62400) to end the lease and keep the car. So it will cost you $20k more than just paying cash. Correct me if I'm wrong but that should be pretty close.

If you end the lease early, you would need to pay the RV but not the full $2160 x remaining months on lease. That amount includes interest which you would not be paying (similar to paying off a loan early). You would pay the sum of remaining monthly principal + RV + probably some fees incl acquisition.

 

[Go2mars]

Well that settles it thanks

You will have to pay all remaining payments.You are not charged simple interest on a lease like on a finance. There's no principal amount that is reduced each month in a lease. Your payoff is just one less payment amount each month. A lease payment includes the depreciating cost + money factor. That is why you are taxed only on the payment amount in most states or tax on the entire cap cost.

If you're on a lease now, try asking for your payoff amount, they will even break it down for you. You'll be quite surprised on that figure.

Talking from experience ending my last 3 leases early.

So the conclusion is … not worth the lease just buy and forget the $7500?

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