300,000 Used EVs Hit Market as Leases Expire

Published: March 25th, 2026

A wave of affordable electric vehicles is flooding the used car market this year, creating what industry analysts call an unprecedented opportunity for budget-conscious buyers. Roughly 300,000 EV leases are expiring in 2026—some projections put the number closer to 500,000—driven by a leasing boom that peaked in 2022 and 2023 when federal tax credits made leasing the most attractive path to EV ownership.

The timing couldn’t be more significant. Used EV sales jumped 28.8% year-over-year in February, reaching 30,879 units, even as new EV sales dropped 26.8% over the same period. Meanwhile, the used gas car market faces a supply crunch from slow new car sales in 2023 and 2024, leaving fewer traditional options for shoppers.

The value proposition

At $20,000 to $30,000, a typical used gas vehicle might be a five-year-old Toyota Camry or RAV4 with 50,000 miles, according to Recurrent, a company that tracks the EV market. In the same price range, buyers can find a Tesla Model 3 or Volkswagen ID.4 that’s a year newer with 20,000 fewer miles.

For vehicles under $20,000, the gap widens further. The average used EV is two years newer than a comparable gas car, with 40,000 fewer miles on the odometer.

“For the same amount of money, you’re getting a newer used car with lower miles on it and more technology,” said Scott Case, Recurrent’s cofounder and CEO. “And also, right from the jump, you’re saving a substantial amount of money in gas prices.”

The average used EV listed for $34,821 in February, down 8.5% from a year earlier. More than half of used EV inventory now sits at $30,000 or less. The price gap between used EVs and gas vehicles has narrowed to just $1,334—the smallest margin on record. Eighteen of 26 major brands now offer used EVs at prices equal to or below their gas-powered equivalents.

Why the market shifted

The flood of lease returns traces directly to policy changes three years ago. When federal tax credits and manufacturer incentives peaked in 2022–2023, leasing became the most cost-effective way to access EV technology. Those three-year leases are now expiring en masse.

Battery electric vehicles made up just 2% of lease returns in 2025. That share is projected to hit 8% in 2026, according to JD Power data. Internal combustion vehicles, meanwhile, will drop from 93% of lease returns last year to 82% this year. Over the next three years, roughly 1.1 million used EVs are expected to enter the market from lease returns alone.

The supply surge comes as new EV sales contract. When the Trump administration ended federal EV tax credits last September—including incentives for used EVs—industry observers predicted a collapse in demand.

“Everyone thought, ‘That’s it for EVs—there aren’t going to be more sales,'” Case said. “I think to an extent that was true on the new side—there was just a ton of pull-forward demand and Q4 was really, really soft.”

But used EV dealers reported a different story. “We work with used EV specialists all over the country and almost immediately—October 1st, the day after the deadline—we were hearing from dealers all over that were selling used EVs,” Case said. By December, used EV sales were up 10.2% year-over-year. Total used EV sales in 2025 climbed 35% compared to 2024.

New EV prices have also dropped, with the average transaction price falling to $55,300 in February. Manufacturers are offering an average of $7,870 in incentives—equivalent to 14.2% of the purchase price—to move inventory. The price premium over gasoline vehicles narrowed to a record low of $6,532.

Supply and demand dynamics

Used EV inventory is turning over faster than traditional vehicles. Days’ supply for used EVs sits at 42 days, below year-ago levels. Tesla maintains the tightest supply at just 35.5 days, indicating strong demand relative to availability. New EV days’ supply stands at 130 days, down 27% from January but still elevated compared to last year.

Tesla dominated used EV sales in February, moving over 12,000 units through non-Tesla dealerships alone. Chevrolet, Ford, BMW, and Hyundai rounded out the top five brands.

The used gas car market, by contrast, faces inventory constraints. Weak new car sales in 2023 and 2024 created a supply bottleneck, reducing the pool of affordable traditional vehicles entering the used market. This scarcity has inadvertently strengthened the competitive position of used EVs.

EVs currently represent 3.3% of the Manheim Used Vehicle Value Index, a small but growing share. Used EV prices have fallen roughly 25% from 2023 peaks, driven in part by rapid technological improvements that make newer models more attractive. But for budget-conscious buyers, that depreciation creates opportunity.

“For consumers who have found new car sales to be too high and have wanted to get an electric vehicle but have found it too pricey in the past, they’re now going to have two or three-year-old vehicles that are top quality, and still under EV battery warranty,” said Corey Cantor, research director at the nonprofit Zero Emission Transportation Association.

Quality and warranty considerations

The vehicles hitting the market now differ significantly from earlier generations of EVs. Lease returns in 2026 primarily consist of 2023 model-year vehicles—a generation that benefited from substantial improvements in battery technology, range, and charging infrastructure.

“We’re looking at vehicles that were purchased in 2023. Those EVs are pretty good,” an Edmunds analyst noted. “We’re not really talking about 10-year-old compliance EVs.”

Most of these vehicles remain under manufacturer battery warranties, which typically cover eight years or 100,000 miles. This protection addresses one of the primary concerns buyers express about used EVs—battery degradation and replacement costs.

Cox Automotive expects depreciation patterns to stabilize in 2026, moving away from the extreme price swings of 2023–2024 as the market matures and supply-demand dynamics normalize.

What happens next

If current projections hold, lease returns could nearly double in 2027, potentially bringing close to 1 million additional EVs to the used market. This sustained supply increase could further compress prices and expand access to electric vehicles for middle-income buyers who previously viewed them as financially out of reach.

The convergence of rising gas prices, limited used gas car inventory, and abundant used EV supply creates what Case characterizes as a “very undervalued” market segment. For buyers willing to navigate charging infrastructure considerations and adjust to electric vehicle ownership, the math increasingly favors used EVs over comparable gas vehicles—particularly when factoring in fuel savings over the vehicle’s remaining lifespan.

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