How to bypass nearly every restriction of the EV tax credit by leasing
Last week, the IRS updated the EV tax credit with new battery sourcing requirements set to go into place on April 17, with the effect of lowering purchase credit amounts for many new EVs.
But since the law defines individual and commercial credits differently, those requirements – along with MSRP and income requirements – can be bypassed on consumer-leased vehicles.
The Inflation Reduction Act changed the way EV tax credits are defined, making them simultaneously more complicated and more restrictive but also increasing their availability to more total vehicles in the long run.
There are a lot of new requirements, including maximum MSRP (which differs for cars and trucks/SUVs), income limits for taxpayers, and new battery requirements. Plus, cars need to be assembled in North America to qualify. This means several vehicles no longer get a tax credit after the changes last August.
The tax credit is also nonrefundable, which means that taxpayers need to make enough money to have $7,500 of tax liability to be reduced, but not enough to be above the income limit. Additionally, taxpayers need to wait until they file their taxes in order to take advantage of the credit, which means they have to front the $7,500 and get it back later. But both of these downsides will be fixed next year when the tax credit is due to become available upfront at the point of sale.
“One simple trick” to bypass tax credit restrictions
But all of these complications can seemingly be avoided with one simple trick! – leasing.
Per an IRS note from December, EVs can avoid the foreign-assembly restriction of the law if they are leased, not purchased. This interpretation was originally pushed for by South Korean automakers who felt jilted by the domestic assembly provisions of the Inflation Reduction Act. Hyundai and Kia have been the best-selling non-American EV brands in the US with their excellent Ioniq 5 and EV6 (built on the E-GMP platform), so these changes threatened to take the wind out of their sails (and sales).
The reason for this is due to two different sections of the law: 30D and 45W. Section 30D deals with individual purchase credits, and 45W deals with commercial credits. One is meant to stimulate personal vehicle purchases, while the other is intended to stimulate large commercial EVs like buses and dump trucks but also smaller vehicles for purchase or lease in commercial fleets.
All of the aforementioned restrictions are only present in section 30D of the law, not section 45W. Commercial vehicles can be over 80k MSRP, they can be assembled outside of NA, their battery sourcing isn’t as controlled, and buyers can make more than $150k income.
The “loophole” comes in due to the IRS’ December interpretation of how leases are categorized. IRS states in their fact sheet (topic G, Q5) that businesses that lease vehicles are allowed to claim the commercial EV tax credit for each leased vehicle. This means that as long as the vehicle fulfills the relatively minor requirements of 45W (and is a “bona fide lease” as laid out in Q6 of the same fact sheet), then a lessor (i.e., a dealership) can file for the $7,500 EV tax credit. This applies regardless of whether the lessee is a business or an individual.
Presumably, then, the lessor would be able to pass along those savings in the form of reduced lease payments.
Some brands already offering $7,500 off leases
So far, this particular workaround has not gotten much press. Since these credits are filed for on the back end by dealerships and don’t really require action from the consumer, it’s up to dealers to notice this and offer lease discounts.
But consumers should still know about these deals, as EVs are often cheaper than their MSRP might suggest. For many years, under the old credit, you’d routinely see an EV with around $30k MSRP leasing for approximately $199 per month.
A few manufacturers have already started offering lease discounts. Hyundai is offering significant discounts on the Hyundai Kona EV and the excellent Hyundai Ioniq 5. Polestar has a “Clean Vehicle Lease Rebate” on the Polestar 2 (which it says will expire May 1, though there is nothing in the law suggesting that will happen), and Lucid offers $7,500 off on leases as well. Tesla’s head of policy recently acknowledged that the law allows for this interpretation, but Tesla hasn’t announced any specific lease discount.
As word gets out about this workaround, we would hope to see more companies offer lease discounts and for EV leasing to perhaps become more prominent, especially among those brands that don’t qualify for the full EV tax credit. For example, the Chevy Bolt EV and Bolt EUV, the Ford Mach-E, E-Transit, Escape PHEV, and Corsair PHEV, and the standard range Tesla Model 3 are all expected to have their credit amounts reduced come April 17.
But for all of these cars, due to the way the commercial tax credit works, it looks like leasing could give access to the full $7,500. It’s just on the dealers to file for it and pass it along to the consumer.
However, given that the EV market is still impacted by high demand and low availability, some brands and dealers may think they don’t need to pass along these savings because they’ll be able to sell or lease cars regardless to a populace that ravenously demands the limited available supply. We’re not seeing those “$199 per month” EV lease deals that we used to see (and which we catalog here on Electrek) because EV demand is just so high right now.
Hopefully, if EV demand starts to normalize, this will be reflected in EV lease prices. Then, we might see some big growth in EV leasing as consumers see that better deals are available.
But EV demand might not normalize until ICE cars die out, which is a trend we’re seeing signs of in China right now and which could repeat in other markets as well.
Electrek’s Take
We noticed this “loophole,” if you want to call it that, a little while ago but thought it was too good to be true. If leasing means the foreign assembly provision could be bypassed, as we learned in the IRS note in December, then why can’t other 30D provisions be worked around?
But this isn’t necessarily solely a positive development. On the one hand, it makes the process much simpler for the consumer since you can just lease any car, and the tax credit gets dealt with by someone else. No need for a fancy flowchart; just go in and get a cheaper lease.
But on the other hand, it also undermines the whole point of the law. The IRA was passed to encourage domestic manufacturing, particularly of green vehicles. And it has done so – the Biden Administration says that $45 billion in EV manufacturing investments have been made since the law was passed, and it looks like there’s more to come.
These boosts in manufacturing are important, because as mentioned above, EV supply lags far behind EV demand, and I believe the best way to accelerate EV adoption is to actually start building them. Knowledge of this workaround could jeopardize the strides we’ve made in EV manufacturing commitments.
If companies can easily get around those domestic assembly provisions with a lease, then that could give them less incentive to accelerate their domestic EV manufacturing plans. US Senator Joe Manchin, who was instrumental in crafting the domestic assembly provisions of the IRA and getting the law passed in the first place, has spoken out against this lenient interpretation of the commercial credit, even calling it a “betrayal.”
That said, leasing makes up a small percentage of the car market (less than one-fifth) and an even smaller percentage of the EV market (about one-tenth). Many consumers just would rather not lease. There are plenty of people who could get away with – and even save lots of money from – not owning a car. But part of the psychological draw of owning a car is the idea of freedom that it gives you, and leases take away some of that freedom – it’s not your car, and you’re not allowed to use it exactly how you want: mileage restrictions, worries about penalties for scratches or dings at lease end, etc.
So there’s still some incentive for manufacturers to announce more car and battery factories since it’s unlikely that leasing will make up a majority of EV sales, even with big incentives. Even when lease deals were rampant, they still didn’t make up a majority of EV sales.
Of course, demand is still much higher than supply. So companies should be announcing car factories and battery factories everywhere all the time. Nobody is ramping up fast enough, so they should all take any excuse to ramp up faster, both due to the market and the ever-important threat of climate change.
So even though everything about these tax credits has been somewhat, let’s say, “inartful” in its implementation, I think, on the whole, we’ve gotten close to an end-point of a law that expands the availability of tax credits to more people, while still also encouraging increased domestic manufacturing and a multipolar EV manufacturing environment. This will have beneficial aspects both for US EV adoption and for the industry in general.
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Tesla’s Chairwoman Robyn Denholm complains that everyone is talking about the high-profile departures at the automaker, but no one is talking about the people they are hiring.
Can she name one? Literally, name just one.
At Electrek, we have been closely reporting on the talent exodus at Tesla.
The issue has been ongoing for a few years, but it clearly accelerated following a significant wave of layoffs in April 2024.
To name a few:
- Omead Afshar, Vice President of Sales and Manufacturing for North America and Europe, departed in June 2025. Afshar was a close confidante of CEO Elon Musk and was instrumental in the ramp-up of Gigafactory Texas.
- Milan Kovac, head of the Optimus humanoid robot program, announced his departure in June 2025.
- Drew Baglino, Senior Vice President of Powertrain and Energy Engineering, left the company in April 2025. A long-time Tesla veteran, Baglino was a key figure in the development of Tesla’s battery and powertrain technology.
- Rohan Patel, Vice President of Public Policy and Business Development, also departed in April 2025. Patel was the face of Tesla’s government relations and policy efforts.
- Rebecca Tinucci, Senior Director of the Supercharger business, left in April 2025. Tinucci oversaw the significant expansion of Tesla’s global charging network.
- David Lau, Vice President of Software Engineering, departed in April 2025. Lau played a crucial role in the development of Tesla’s vehicle software and its Autopilot and Full Self-Driving features.
- Troy Jones, Vice President of North American Sales and Service, left in July 2025. Jones was a long-serving executive responsible for a significant portion of Tesla’s sales and delivery operations.
- Pete Bannon, Vice President of Hardware Engineering, who was involved in the development of Tesla’s custom chips, including the Dojo supercomputer, left in August 2025.
Recently, the Financial Times released a report highlighting the talent exodus at Tesla and Chairwoman, Robyn Denholm, complained that the media only focuses on the departures and not the people “joining” Tesla, which she described as “still a magnet for talent”:
“There are always headlines about people leaving, but I don’t see the headlines about people joining. Our bench strength is outstanding . . . we actually develop people really well at Tesla and we are still a magnet for talent.”
However, she couldn’t name a single one.
To be clear, we primarily report on higher-profile and senior-level departures (directors and above), but we track all of them.
Just for example, here are a dozen people at important but not senior roles at Tesla who departed over the last month but were never reported:
Basil Sobchak
- Time at Tesla: 10 years, 6 months
- General Role: Vehicle Service Lead
Patrick Barr
- Time at Tesla: 8 years, 7 months
- General Role: Facilities Maintenance Lead
Luke Sanders
- Time at Tesla: 7 years, 1 month
- General Role: Production Management (Model Y – Fremont)
Indra K Vijay
- Time at Tesla: 6 years, 1 month
- General Role: Software Engineering Management
Logan Roy
- Time at Tesla: 5 years, 3 months
- General Role: Mechanical Engineering (Battery Structures)
Lexi Hayden
- Time at Tesla: 4 years, 4 months
- General Role: Technical Program Management (Semi Validation)
Francisco Fernández
- Time at Tesla: 4 years, 3 months
- General Role: Supply Chain Management
Andrew Wells
- Time at Tesla: 3 years, 8 months
- General Role: Construction Management (Gigafactory Texas)
Aleksi V.
- Time at Tesla: 3 years, 3 months
- General Role: Production Management (Drive Unit & Battery)
Page Bailey
- Time at Tesla: 2 years, 1 month
- General Role: Engineering (Production & Components)
Sam Thorpe
- Time at Tesla: 2 years, 1 month
- General Role: Technical Program Management (Lithium Refinery)
Harika Kasula
- Time at Tesla: 1 year, 7 months
- General Role: Manufacturing Controls Engineering (Cybertruck)
However, we cannot produce the same thing about new hires, not only for the last month, but for the last year.
With all the departures, Tesla almost exclusively promotes internally to fill the position, and the vast majority of new hires are at the intern and junior levels.
There is one part of Denholm’s statement that is accurate: Tesla is still able to attract talent, but only from recent graduates, and even then, there’s room to worry.
In 2020, Tesla ranked number one in places where engineering students want to work.
Tesla has now slipped into 9th place this year, according to Universum:
This is obviously still good, but it is on a pronounced downtrend.
Electrek’s Take
Look, turnover in large companies is absolutely normal, but the story is much bigger than that.
First off, Denholm remains a joke. She is complaining about the media not reporting on new Tesla hires, but the company hasn’t announced any new hires in years, and I literally can’t find any.
If she is going to claim that, she should at least name a few. Is she capable of doing that, or is her entire job about trying to secure increasingly more ridiculous compensation packages for Elon Musk?
On the other hand, I can find dozens of critical veteran Tesla employees leaving over the last year and hundreds of experienced employees.
The talent exodus is real, and the fact that Tesla’s chairwoman is dismissing it should be worrying.
We are referring to many of the individuals responsible for the company’s success, who are being replaced by juniors and interns.
Now, I’m the first to admit that this is not all bad. Fresh eyes and young talent can do a lot, but it doesn’t dismiss the fact that there’s a talent exodus at Tesla.
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Kia plans to introduce a new electric vehicle, codenamed CB, to its growing lineup. The new EV is part of an agreement that Kia reached with its union this week.
Kia agrees to build a new EV in Korea
While many automakers are scaling back, Kia is doubling down on electric vehicles, batteries, and other EV technology.
After reaching an agreement with its labor union on Tuesday, we are learning Kia has another EV in the pipeline, and it’s not the EV2, EV3, EV4, EV5, EV6, or EV9. So, what is the “secret” new electric car?
Okay, so it’s not exactly a secret, at least not anymore, but more of a new development. According to local sources (via KEDGlobal), little is known about the model. Since it’s still in the early stages of development, Kia has yet to determine exactly how big it will be or what segment it will launch.
Kia will begin producing the new EV, codenamed CB, at its Hwaseong Plant 2 in South Korea by 2030. The electric vehicle was just one of several new projects Kia agreed to with its labor union.
The company also confirmed plans to begin building its second electric van, the PV7, at its dedicated Hwaseong EVO plant, starting in 2027. Kia currently produces the mid-size PV5 van at the facility, marking the first model in its Platform Beyond Vehicle (PBV) lineup.
The PV7 will measure 5.9 meters in length, slightly longer than the PV5, which is up to 4.7 meters (Long Wheelbase version).
Kia’s agreement comes as the company looks to take a lead in electrification over the next few years. It also outlined plans to advance battery packs, power electronics (PE) modules, and other core EV components to help establish a domestic supply chain.
In Europe, Kia plans to nearly triple EV production within the next two years. Kia’s CEO, Ho Sun Song, told Automotive News Europe earlier this month that the company plans to build about 100,000 EV2 models, its smallest electric car, at its Zilina plant in Slovakia in 2027.
Kia expects to build an additional over 80,000 EV4 models, its first electric hatch, at the facility by 2027. Combined with EV4 Fastback, or the sedan version, which is produced in South Korea, Song said that “the EV4’s combined global production is expected to reach approximately 100,000 units.”
The first EV4 rolled off the assembly line at the Zilina plant in August, marking a milestone as the first electric vehicle Kia built in Europe.
Kia is already gaining traction in the region. Through August, Kia sold 71,179 electric vehicles in Europe, marking a 56% increase compared to the same period in 2024.
The EV3 has been Kia’s biggest hit, ranking as its second-best-selling vehicle behind the Sportage. It’s the seventh top-selling EV in Europe, behind the Tesla Model Y, Model 3, and Volkswagen’s ID.3, ID.4, and ID.7. Through the first eight months of the year, Kia sold over 45,000 EV3s in Europe.
With the EV4 and EV5 rolling out and the EV2 set to launch in 2026, Kia expects to gain an even bigger share of the market.
Electrek’s Take
Kia already offers, or plans to offer, an electric vehicle in nearly every segment with the EV2, EV3, EV4 (hatchback and sedan), EV5, EV6, and EV9.
The new EV, codenamed CB, could be an even smaller EV1 entry-level model as Kia doubles down on affordability. On the other hand, it could also be a possible EV7 or EV8, something to sit in between the EV6 and the three-row EV9.
Since it’s still in the early stages of development, it could be just about anything: an electric pickup, off-roader, luxury car, etc.
What do you think (or hope) it will be? We should learn more about it as it gets closer to launch. Stay tuned.
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When most folks think of electric trikes, they picture big cargo haulers or mobility-style cruisers with two wheels in the back and a basket full of groceries. But there’s another category of three-wheeled electric bikes that’s more fun, more niche, and undeniably cooler: sidecar e-bikes.
Yep, they actually exist. And they’re awesome.
Sidecar electric bikes are just what they sound like: an electric bike with a third wheel off to the side, usually supporting a passenger-sized pod or platform. They’re the bicycle version of the old-school sidecar motorcycles.
Unlike traditional trikes, where the third wheel adds stability or cargo capacity behind the rider (or occasionally in front of the rider in the case of “tadpole” trikes), sidecar e-bikes carry their payload beside you, often evoking that vintage motorcycle vibe. They’re rare, quirky, and a guaranteed head-turner.
So why don’t we see more of them?
For starters, sidecar e-bikes are usually custom-built or smaller-batch productions, which means they come with a higher price tag than your typical two-wheeler or three-wheeler. And while they can definitely carry a kid, a dog, or even big cargo, they’re not quite as nimble or efficient as your average e-bike.
While there are retail options like the Mod Easy Sidecar e-bike (which the Austin, Texas-based company modified below as part of a promotion with a local distillery), the number of retail sidecar e-bike options pales in comparison to traditional electric trikes.
But what they lack in practicality, they make up for in pure fun. There’s just something inherently joyful about cruising around town with your doggo (or kiddo) riding shotgun in a sidecar. It turns a boring commute into a joyride and transforms everyday errands into rolling adventures. I’ve test-ridden a few over the years, and every time I do, I feel like I’m starring in my own two-wheeled road trip movie.
From a usability standpoint, sidecar e-bikes offer a unique middle ground between a cargo bike and a passenger trike. You get added capacity, sure, but you also get separation – whether that’s space for a wiggly toddler, a hyper dog, or just a bag of ice you don’t want melting on your lap. They also provide a lower center of gravity than a rear-mounted child seat or rack, which can make for a smoother, more balanced ride, especially when turning.
But despite that separation, they can actually be more fun to ride together. Parents can keep an eye on their kids in the sidecar instead of being blind to whatever they’re doing in the back of the trike. The same goes for a pup, which the owner can watch to see if they’re having a good time or ready to arrive at the dog park already.
Many models even offer the ability to remove the sidecar entirely, converting back into a typical two-wheeled e-bike, a neat trick not found on most other e-trikes.
But there are drawbacks. The first major one is the higher price than a typical e-trike due to the lower volume production.
Storage can be awkward, too, since the added width makes it tough to fit through tight doorways or narrow bike paths. Handling also takes some getting used to, since the asymmetrical design can pull a bit to one side, especially during acceleration or on uneven pavement.
Still, for those looking to stand out and haul their precious cargo with style, sidecar e-bikes are an underappreciated gem in the micromobility world. They’re not for everyone, but that’s kind of the point. If you want a bike that puts smiles before specs, you might just be a sidecar kind of person.
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