LeftieBiker wrote:if I lease a Bolt but don't buy it, I guess I lose about 66% of the credit.
No, if you lease a Bolt and don't buy it, you get (almost) the full benefit of the credit. It's only if you plan to buy it at lease end, and you have to pay the full inflated residual, that you'd lose about 2/3 of the credit.
LeftieBiker wrote: I know a modest amount about leases - all of it learned here! - but could you please explain about the residual inflation and exactly how it affects the lease?
A car lease is just a loan with a balloon payment (the residual), where the car can be turned in in lieu of making the balloon payment. Of course, the residual is supposed to be an accurate forecast of the market value of the car at the end of the lease. Making that forecast is hard to do and open to being manipulated by the manufacturer/captive leasing company for whatever reason.
So let's say you want to lease a $40,000 EV which qualifies for a $7,500 tax credit. The leasing company could use the $7,500 as a capital cost reduction. Let's say an accurate prediction of the residual value will be 40% of the original price (ignoring tax rebates), or $16,000. The total lease payments can be split into two parts: depreciation (principal repayment) of $32,500 - $16,000 = $16,500 ; and interest on the outstanding balance, which starts at $32,500 and decreases down to $16,000 as you make payments.
I like to think of the interest as having two parts: the interest on the residual portion, which is the same each month, and the interest on the unpaid depreciation, which is decreasing each month. [If you choose to may a one payment lease, i.e. $X down and $0 per month, then you can avoid paying any interest on the depreciation. But that creates a risk as far as the vehicle being totaled and losing your down payment, unless you can insure it properly.]
Instead of giving you a capital cost reduction, the leasing company could instead choose to inflate the residual; the depreciation would end up being the same, but the interest would be a little higher, and if you actually buy out the car at the inflated residual, you'd not benefit from the tax credit at all. In the example above, the residual would now be $23,500, or about 59%; the depreciation would be unchanged at $16,500, as would the interest attributable to the depreciation; but the interest each month attributable to the residual would be higher. If you don't buy the car at the end of the lease, you'll have gained most of the advantage of the $7,500 tax credit in terms of reduced depreciation, except you'll have paid interest on that residual inflation each month. So, e.g if your interest rate is 2%, and the lease is 3 years, you'll get about 94% of the benefit of the tax credit (100% - 3 * 2%).
There is one case where the inflated residual is preferable to the capital cost reduction (all other things being the same, and assuming you're not going to buy the car), and that is when the state charges sales tax on capital cost reductions. For example, I hear that California does that, and the sales tax rate is about 9%. So in the above example, even though a residual inflation would cost you 6% of the tax rebate in extra interest, if you saved 9% of the tax rebate on reduced sales tax, you'd come out ahead.
Hope the above helps, if something's not clear just ask.