Kia plans to encourage shoppers to lease one of its electric vehicles to make the most of an Inflation Reduction Act provision.
While recently speaking with Auto News, Kia America’s sales chief Eric Watson noted that EVs only currently qualify for the $7,500 tax credit if they have battery components mostly assembled or made in North America as well as materials extracted in the U.S. or in a country the U.S. has a free-trade agreement with. However, a provision in the law will allow the $7,500 to be used as a discount on an EV’s price rather than as a tax credit until 2032. Additionally, the made-in-America requirements don’t apply.
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With this important element of the Inflation Reduction Act finalized, Kia will increase its focus on leasing and believes EV leases could account for 30-40% of its electric sales, up from the current 15%.
“Now that it’s all settled, every brand is going to see how they can use those provisions to best position their electric vehicles and build their business going forward,” Watson said. “Leasing will be a key component of how Kia develops and sells its EVs until it can qualify for partial or full tax credit.”
Both the Kia EV6 and Nio EV are manufactured in South Korea and therefore do not meet the requirements to receive the $7,500 tax credit. However, should customers opt to lease one, they will get a $7,500 discount.
The first EV from Kia to be eligible for the tax credit will be the EV9, recently unveiled as a luxurious three-row crossover. It will initially be imported from South Korea but from next summer, will be built at the company’s plant in West Point, Georgia. It is also expected to be priced from just below the $80,000 price cap set by the government for electric SUVs that can receive the tax credit.
