The used electric vehicle market is experiencing a dramatic price correction in 2026, driven by an unprecedented surge of lease returns. Industry analysts are calling it an “EV avalanche” that could reshape the zero-emission vehicle landscape for years to come.
According to data from J.D. Power and Cox Automotive, at least 243,000 electric vehicle leases will expire in 2026, potentially reaching 330,000 vehicles. That represents more than triple the volume seen in 2025.
The full analysis can be found here.
Why So Many Electric Vehicles Are Returning
The surge stems directly from federal incentive structures that existed between 2023 and 2025. During that period, the Commercial Clean Vehicle Credit allowed dealers to apply a $7,500 tax credit to leased electric vehicles, dramatically reducing monthly payments and driving leasing rates to historic highs.
More than 1.1 million EVs were leased under these favorable terms. Now, as those 36-month agreements conclude, the vehicles are returning to a fundamentally different market—one where the tax credit expired in September 2025.
Benjamin Zev notes that this creates an unusual dynamic: lessees are turning in their vehicles rather than purchasing them because the buyout prices exceed current market values by significant margins.
Prices Falling Below Original Values
Electric vehicles with fewer than 30,000 miles are now selling for 40-50% less than their original sticker prices. Some specific examples include Chevrolet Bolt models available for under $15,000 and late-model luxury EVs selling for half their original cost.
This steep depreciation isn’t driven by technical problems. Battery longevity data shows modern EV packs lose only 1.5-1.8% of capacity annually, and federal regulations require eight-year or 100,000-mile battery warranties. Instead, pricing reflects oversupply combined with lingering consumer concerns about battery degradation.
Benjamin Zev observes that perception is driving value more than reality in the current used EV market.
What Makes 2026 Different
Several factors converge to create this unique buying window:
- Inventory surge at wholesale: Cox Automotive projects that EV share of off-lease vehicles heading through Manheim auctions will triple from around 5% to 15% between September 2025 and September 2026.
- Gas vehicle scarcity: Fewer gas-powered vehicles were leased during 2020-2024 due to supply chain constraints, creating relative scarcity in the used combustion vehicle market.
- New EV pricing pressure: Average new EV prices have dropped $12,700 since 2022, creating downward pressure on used values.
A Temporary Window for Buyers
Industry experts suggest this pricing environment won’t last indefinitely. As supply stabilizes later in 2026 and battery longevity data becomes more widely understood, the “fear discount” is expected to fade. Prices should eventually align more closely with comparable gas vehicles.
For now, though, 2026 represents a rare moment when modern electric vehicles with substantial remaining warranty coverage are available at prices that undercut traditional economy cars.
Most vehicles entering the market are two- to three-year-old models with around 25,000 miles. They’re essentially still new, but priced like much older vehicles due to market dynamics rather than wear or defects.
The situation reflects how quickly zero-emission vehicle markets can shift when policy, supply, and consumer behavior intersect in unexpected ways.
Leave a Reply