If you’re sold on everything about EV ownership except the cost of entry, you’re in luck. We’re about to see a massive flood of off-lease electric cars hit the U.S. market—and pretty much all at once. Why? The short version is that a combination of both pro- and anti-EV policies in the U.S. drove a rapid expansion of insanely good lease deals in certain pockets of the country. As those deals expire, the sheer volume of available used cars will fan the flames of a smoldering buyer’s market that could prove difficult for cost-conscious buyers to ignore.
As I noted above, there are several factors playing into the creation of this cheap EV glut, but the main driver was the Inflation Reduction Act (IRA) of 2022. That law created a new (and now short-lived) framework of EV subsidies that largely benefited domestic manufacturing—especially for shoppers who were purchasing or financing a car outright.
These subsidies lowered the final purchase prices for customers and helped depress both new and used electric car values, but purchasers tend to hold on to their vehicles longer, so the impact of these subsidies on the secondary market is pretty limited. But leases? That’s a whole different story.
“There were a lot of crazy cheap lease deals over the last two years as automakers took advantage of [a] leasing loophole in the IRA,” said Sam Abuelsamid, Vice President of Market Research at Telemetry.
“Leases were considered ‘commercial vehicle’ sales and not subject to North American content requirements. As a result they stacked federal and state incentives in places like Colorado to offer $10/month deals on Nissan Leaf and $0 on Fiat 500e as well as lots of great leases on other brands in California and elsewhere.”
Additionally, those states and others offered (and continue to offer) subsidies and incentives on top of those outlined by the IRA. With properly stacked state and federal incentives, it was possible to spend very, very little to lease an electric car following the IRA’s passage. As a result, a ton of people did.
That explosion of leases began in 2022. Since most leases terms are between 24 and 36 months, the initial wave of off-lease used EVs began to hit the market in late 2024 and the pace will continue to accelerate over the course of the next 12-24 months, likely peaking in 2028—36 months after the mad rush to buy EVs before the IRA subsidies expired in the third quarter of last year.
And with so many used cars hitting the market pretty much all at once, prices will be depressed even more than usual.
“Used EVs have always had a lot of depreciation as people were concerned about battery life, but the reality is the batteries hold up very well (apart from early Leafs) so they are a fantastic way to get into an EV,” Abuelsamid said.
And for many shoppers, affordability is still king—even in the era of politically motivated powertrain choices.
“I think people looking for affordable, relatively low mileage cars in this era of $50k [transaction prices] will look at these and snap them up,” Abuelsamid continued. “Longer term, this will actually help boost used EV residuals, as people owning these vehicles will realize that they don’t have to worry about replacing a battery every few years.”
In turn, he believes that will drive more widespread adoption of affordable EVs as customers get over their unfounded maintenance anxieties.
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