Used EV Market Shifts: What Off-Lease Cars Mean for Prices

A wave of used electric vehicles is about to flood the market. Around 123,000 EV leases expired in 2025, and the numbers are expected to climb sharply: 300,000 in 2026, 600,000 in 2027, and 660,000 in 2028, according to The Verge. Because 76 percent of US car sales are already used vehicles, this influx could reshape used EV prices in ways we haven't seen before.

The evidence is already visible in dealership lots. AutoNation is selling a 2023 Hyundai Ioniq 5 with just 18,000 miles for $28,000 — down from a $58,000 price tag three years ago. That's a 52 percent drop in value over roughly two years, well beyond what happens with gas-powered cars.

This timing matters. New EV sales fell 36 percent year-over-year from late 2024 to late 2025, and the decline continued into early 2026. Fewer people buying new EVs combined with more used ones flooding the market means downward pressure on prices is likely to intensify.

Why EVs Depreciate Differently

The traditional car market works on predictable patterns: a vehicle loses value at a steady rate, dealers get consistent trade-in values, and lease companies can forecast their returns with confidence. EVs break that model in two ways.

First, battery technology improves quickly. A 2023 EV with a 300-mile range becomes less attractive once 2024 models offer 350 miles or faster charging. With gas cars, year-to-year improvements are incremental and less obvious to a buyer. With EVs, each generation feels noticeably better.

Second, leases return vehicles to the market all at once, rather than spreading them out. This creates inventory spikes rather than a steady trickle. When thousands of used EVs hit the market simultaneously, prices have to adjust downward.

The numbers reflect this strain. The average new car in 2024 cost $46,992, while the average used car was $27,113 — a gap of roughly $20,000. For EVs, that gap is tightening in ways that traditional cars don't experience. A three-year-old EV now competes on price with the average used car, even though it started out as a premium product.

This creates problems downstream. Dealers take smaller profits when they resell trade-ins. Lease companies face bigger losses on the vehicles they get back. And automakers need to rethink how they price lease deals to account for steeper value drops.

A Pattern from Earlier Technology Shifts

We have seen this before, when smartphone early adopters watched their phones lose value rapidly as each new generation brought meaningful improvements. Today's EV market follows a similar arc. Better batteries, faster chargers, longer range — these aren't minor tweaks. They're features that make older models feel outdated faster than gas engines do.

The smartphone parallel extends further. In the early days, people who bought first-generation iPhones or Android phones paid high prices to subsidize development. As factories ramped up and technology became standard, prices fell sharply. The EV market is entering a similar transition, and the lease expiration wave is accelerating it.

The broader context here is that this transition may happen faster for EVs than anyone expected. When thousands of reasonably modern used EVs become available at lower prices, adoption could shift into a different gear.

Federal Incentives and Used Car Competition

Used EV buyers miss out on the federal $7,500 tax credit that goes to new purchases, but lower prices may make up for that gap. A $28,000 used EV sits in a different price bracket than a new EV that costs $40,000 or more even after tax credits. That comparison alone changes the economics for a typical buyer.

Some states add their own incentives. California's Clean Vehicle Rebate Project includes used vehicles, creating price variations by region that could influence where used EVs concentrate and how fast inventory moves.

What Automakers Do Next

Carmakers face a real dilemma. If they keep building cars at current volumes, they risk flooding a market where used alternatives offer strong value. If they cut production, they protect prices but sacrifice growth ambitions.

Tesla's recent price cuts on new vehicles suggest the company is already reacting to this dynamic. Traditional automakers with higher production costs have fewer options. Some may struggle to compete against both Tesla's pricing flexibility and the rising wall of cheap used EVs. This could speed up consolidation as weaker competitors fall away.

Looking ahead, the math is straightforward: if 660,000 leases expire in 2028, the used EV market will see inventory volumes that far exceed current annual new EV sales in many categories. This flood of affordable used EVs could push EV adoption much faster than current incentive programs alone.

One further point worth considering: energy companies, power grid operators, and oil forecasters will all need to rethink their projections. EV adoption driven by used car affordability, rather than subsidies for new cars, may reshape transportation and energy planning in ways that aren't yet fully accounted for in their forecasts.