The end of the federal EV tax credit isn’t a setback for consumers; it’s about to trigger a wave of used electric vehicles hitting the market, creating unprecedented opportunities for buyers. Between 2023 and 2025, over 1.1 million EVs were leased under favorable terms, subsidized by a now-expired federal program. This artificially inflated the number of leased EVs, and now, those leases are maturing, flooding used-car lots with supply.
The Lease Boom and Its Aftermath
The now-defunct Commercial Clean Vehicle Credit (IRS 45W) dramatically increased EV leasing rates, peaking at nearly 58% of new EV sales in the second quarter of 2025. As these leases expire, most drivers will likely return their vehicles rather than buy them out, due to unfavorable buyout prices. Cox Automotive projects the share of EVs in off-lease auctions will nearly triple from 5% to 15% between September 2025 and September 2026, escalating to almost 19% by 2027. Already, one in five cars at Manheim auctions in California are EVs.
This shift is significant because the pandemic distorted the traditional lease market. Previously, a majority of leased vehicles were returned, but rising prices made buying out leases attractive. Now, the pendulum has swung back, and EVs are likely to depreciate faster than gas-powered vehicles.
Which Models Will Dominate the Used EV Market?
The most abundant models will likely include the Tesla Model Y and Model 3, Hyundai Ioniq 5, Volkswagen ID.4, and Ford Mustang Mach-E. Plug-in hybrids, like the Jeep Wrangler 4xe, will also see a surge in availability. Automakers are already strategizing ways to manage this influx, potentially extending leases or offering discounted buyout options.
Dealers who adapt to cater to the growing demand for affordable EVs – including those new to the market or seeking reliable, certified pre-owned options with battery warranties – will likely succeed.
What Does This Mean for Current EV Owners?
If you own an EV and plan to trade it in, now is the time to do so. Popular models like the Tesla Model Y and Nissan Leaf will depreciate more rapidly in the coming years due to increased supply. While prices won’t collapse, the surge of off-lease vehicles will exert downward pressure on wholesale values.
Conversely, the relative scarcity of gas-powered vehicles on used-car lots may drive up their prices, making used EVs even more attractive. This is a simple play of supply and demand: as EV inventory increases, their prices fall, while limited gas-car supply keeps their values higher.
In conclusion, 2026 promises a golden era for used EV buyers as lease returns flood the market, creating a buyer’s advantage. The shift is not just a market correction; it’s a consequence of a temporary subsidy program that reshaped the automotive landscape.
