EVs are under stress
The past few years have been amazing for vehicle electrification. We’ve seen tremendous technological advancements in the automotive industry and vast improvements to the infrastructure that supports charging. All of that was driven, at least in part, by federal tax incentives for EV buyers, which also helped those interested in electrification – but weren’t ready to buy – lease an EV. Now, those leases are coming back.
Often, those who return leases buy the vehicle outright or choose to lease or purchase something else. In 2026, a record number of leased EVs are set to be returned, and it’s not clear what the next steps will be for those drivers returning their vehicles. With EV tax credits expiring, and automakers continuing to prioritize hybrid powertrains, drivers may choose to ditch electrification. Though EV sentiment remains high, the electrification bubble is showing some stress.
China MIIT
EVs are about to take over used car lots
In 2026, at least 243,000 EV leases will expire, and the figure could reach 330,000. J.D. Power says this is “more than three times the volume of EV lease returns in 2025.” The study also says 94 percent of EV owners say they “definitely will” or “probably will” consider an EV for their next vehicle. Those who are actively shopping for a new vehicle are also interested in EVs, with 24.2 percent saying they are “very likely” to consider going (or staying) electric.
Historically, sentiment hasn’t directly correlated with action. In 2025, only 62 percent of those who returned leased EVs went electric again. With tax credits expiring, the EV market is tanking. Only six percent of new vehicles sold are EVs, down from 12.9 percent in September when EV sales skyrocketed due to the expiration of tax credits.
Why this is great for you, the EV buyer
Edmunds data shows that used EVs are selling well, and the average price ($29,922) is about $1,100 below the average cost for a gas-powered vehicle. Moreover, there are far more used EVs in the attractive and competitive $20,000-$30,000 price bracket than there are gas cars, trucks, and SUVs.
Buyers are also more willing to purchase an EV with technology that’s one generation old, too. Since most EVs rely primarily on software for infotainment systems, it’s more likely automakers will send over-the-air updates to older vehicles. To wit, buying a used EV doesn’t always mean you’re “stuck” with old interfaces and missing out on features. That said, though, upgrades may have a fee attached, but they’re available.
Ford
Buyer behavior and the sheer volume of EVs returning to lots suggest there will be more used EVs available than ever before. Dealerships are remiss in letting cars sit parked on their lots, since every day a car sits idle is a day it depreciates. Moreover, leases written in 2022-2023 assumed EVs would retain about 50 percent of their value. Currently, EVs are only retaining about 40 percent of their value. At around the three-year mark, vehicle depreciation begins to decline significantly. Dealers will price EVs to move.
Final thoughts
With tax credits no longer incentivizing new EV purchases and concerns about the economy, there’s reason to believe that used EV pricing will get aggressive. Currently, it takes 40 days to sell a used vehicle, the longest it has taken since 2016. As dealership lots flood with new and used vehicles, and dealerships see fewer buyers willing to leverage themselves with a loan, look for used EV pricing to drop and for the already-softening lending market to become even more attractive. For those ready (or almost ready) to buy an EV, 2026 could be a great year, even if tax credits don’t reappear.
