The year 2026 could see an influx of affordable used electric vehicles (EVs) as a wave of lease returns is set to expand the secondary EV market, which remains relatively young despite over a decade of growth in EV sales. According to a recent J.D. Power report, a 230% increase in EV lease returns is anticipated in 2026, marking a pivotal year for used EV buyers.
The substantial growth in EV leases has been driven by a federal Clean Vehicle Tax Credit “lease loophole,” enabling dealers to transfer a $7,500 tax credit to EV lessees. This provision has fueled a leasing surge, with 46% of franchise EV sales and 21% of total EV sales (including Tesla) in 2023 being leased. This trend continued through 2024, with leases accounting for 30% of all franchise and Tesla EV sales.
The anticipated surge in returning EV leases in 2026 contrasts with the broader auto market, where gas-powered vehicle leases remain below pre-pandemic levels, leading to an expected shortage of used gas vehicles. While some lessees may retain their vehicles, many are expected to return them, adding to the pool of used EVs available for sale.
With used EV prices already declining due to production increases and price cuts by manufacturers like Tesla, the influx of lease returns in 2026 is expected to add further downward pressure on prices, creating potential opportunities for budget-conscious buyers.
