Deals on used electric cars are coming as lease returns are expected to rise

We may start getting great deals on used electric vehicles as early as 2026 as EV lease returns are expected to grow exponentially.

While the EV revolution has been going on for more than a decade now, the used EV market is still immature because EVs have only been delivered in large volumes in the past few years.

2026. That will be the year of the used EV.

JD Power is out with a new report that predicts a 230% increase in electric vehicle returns by 2026:

New EV lease volumes increased 355% in 2023 and 88% in September 2024. Only EV (excluding Tesla) EV lease volumes were the highest, increasing 438% in 2023 and 109 % in September 2024. As a result, EV recovery rates are expected to dip slightly in 2025 before rising by 230% in 2026. This trend is in contrast to what is happening across the industry where the total number of leases for gas-powered vehicles is lower than pre-pandemic levels, creating a possible shortage of used-vehicle availability in 2025 and 2026.

After projecting an almost flat year in 2025, the report expects a big increase in 2026 based on current leasing data:

The reason for the operation is simple. The most reported “lease zone” to gain access to the tax credit has resulted in an increase in EV leasing:

Due in large part to the Clean Vehicle Tax Credit provision, which allows car dealers to pass on a $7,500 tax credit to all EV leasers, nearly half (46%) of all EV franchise sales and 21% of all EV price (including Tesla) in 2023 was leased. This trend continued during the first nine months of 2024, the share of total franchise leasing and Tesla EV volume reached 30%. Meanwhile, gas-powered car rental rates were lower than pre-pandemic levels. Industry-wide, 2.4 million gas-powered vehicles were leased by 2023. Although that represents a 17% increase compared to 2022, it is still significantly lower than the pre-pandemic average of more than three million leases per year, which is likely to be a shortfall in the availability of used cars in 2025 and 2026.

While some of those renters will keep their vehicles, many will restore and upgrade them, resulting in used EVs available for sale.

Used EV prices have already fallen sharply, in part due to Tesla's price cuts to keep up with its rapidly expanding production capacity between 2020-2023.

Now, these new “new” used EVs hitting the market in 2026 will likely put a lot of pressure on used EV prices.

Electrek's Take

I'm excited about the used car market for older people even if it means EV prices will drop by 2026.

Most people buy used cars and until now, they have been limited in their EV sources. It sounds like 2026 will be the year that the used EV market will grow into a big impact, and low-income people will be able to get off electric.

It will be a big step in the EV revolution.