We might start to get some great used electric car deals starting in 2026 as EV lease returns are expected to surge in a big way.
While the EV revolution has been going on for over a decade now, the used EV market is still quite immature because EVs have only been delivered in large volumes for the last few years.
2026. That is going to be the year of the used EV.
J.D. Power is out with a new report that states an expected 230% increase in electric vehicle lease return in 2026:
Lease volumes for new EVs surged 355% throughout 2023 and 88% through September 2024. Franchise-only (excluding Tesla) EV lease volumes were even higher, rising 438% throughout 2023 and 109% through September 2024. As a result, returning EV lease volumes are projected to dip slightly in 2025 before spiking 230% in 2026. This trend runs counter to what’s happening industry-wide where total lease volumes for gas-powered vehicles have been lower than pre-pandemic levels, creating a likely shortage in used-vehicle availability in 2025 and 2026.
After projections for a roughly flat year in 2025, the report expects a massive increase in 2026 based on current lease data:
The reason for the surge is quite simple. The highly reported “lease loophole” to get access to the tax credit has resulted in a surge of EV leases:
Due in large part to a provision in the federal Clean Vehicle Tax Credit, which allows auto dealers to pass along a $7,500 tax credit to all EV lessees, nearly half (46%) of all franchise EV sales and 21% of total EV sales (including Tesla) in 2023 were leases. That trend continued throughout the first nine months of 2024, with the lease share of total franchise and Tesla EV volume reaching 30%. Meanwhile, lease volumes for gas-powered vehicles have been lower than pre-pandemic levels. Industry-wide, just 2.4 million gas-powered vehicles were leased in 2023. While that represents a 17% increase from 2022, it is still considerably lower than the pre-pandemic average of more than three million leases annually, which will likely create a shortage in used-vehicle availability in 2025 and 2026.
While some of those leasers are going to keep their vehicles, many are going to give them back and upgrade, resulting in a surge of used EVs available for sale.
Used EV prices have already come down greatly, partly due to Tesla slashing prices in order for demand to keep up against its rapidly growing production capacity between 2020-2023.
Now, these fresh “new” used EVs to hit the market in 2026 are likely going to put a lot of pressure on used EV prices.
Electrek’s Take
I am excited for more mature used car markets even if it means that EV value will drop in 2026.
Most people buy used cars and so far, they have been quite limited in their EV options. It does sound like 2026 will be the year when the used EV market will expand into something more impactful, and lower-income people will be able to get off of gas.
It’s going to be a big step in the EV revolution.
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