A Wave of Used Electric Cars Is About to Hit the Market—and Change Prices

Electric cars that people leased are coming back to the market in huge numbers, and it could change how much used EVs cost. About 123,000 leased electric cars were returned in 2025. That number is expected to jump to 300,000 in 2026, then 600,000 in 2027, and 660,000 in 2028, according to The Verge. To put this in perspective, used cars already make up 76 percent of all US car sales. Adding this many electric cars to the used market could push prices down significantly.

The price drops are already happening. AutoNation recently advertised a 2023 Hyundai Ioniq 5 with just 18,000 miles for $28,000. Three years ago, the same car cost $58,000. That is a 52 percent drop in price in roughly two years—much steeper than what normally happens with regular cars.

This timing matters. New electric car sales dropped 36 percent from late 2024 to late 2025. Fewer people are buying new EVs, which means the sudden flood of used ones is hitting a slower market. That combination puts real pressure on prices.

The Problem for the Car Industry

Car companies and dealers depend on prices staying relatively stable and predictable. Electric vehicles are breaking that pattern in two ways.

First, electric car batteries improve faster than regular car engines do. A new battery technology that comes out today might make last year's model feel outdated. With regular cars, year-to-year improvements are usually smaller, so older cars hold their value better.

Second, lease agreements all end around the same time, dumping thousands of cars onto the market at once. If these cars were spread out over years, the market could absorb them gradually. Instead, they arrive in waves.

The numbers show how steep the problem is. A new car cost about $46,992 in 2024 on average. A used car averaged $27,113. That is a $19,879 gap. With electric cars, that gap is getting even bigger because they lose value so fast. A three-year-old EV that originally cost $58,000 might now cost less than the average used car.

This squeezes profits everywhere in the car business. Dealers can't charge as much when they take in trade-ins. The companies that own the lease agreements face bigger losses. And car makers have to rethink how much they charge for lease deals.

We Have Seen This Before

This pattern appeared in a different industry not long ago. When smartphones first came out, early buyers paid high prices for the first iPhone or early Android phones. Within a few years, each new generation was noticeably better—faster processors, better cameras, longer battery life. Phones lost value quickly because the improvements were real and meaningful.

Electric cars are following the same path. Battery chemistry gets better. Charging takes less time. Cars go farther on a single charge. These are genuine improvements, not small tweaks. That makes older EVs feel outdated faster than older gas cars do.

The smartphone market shows us what usually happens next. Prices drop sharply as the technology becomes normal. Production ramps up. Costs come down. Eventually, prices stabilize at a new, lower level. The EV market appears to be in that middle phase now, moving faster than anyone expected.

The Incentive Picture

The federal government currently offers a $7,500 tax credit for buying a brand-new electric car. Used EV buyers don't get that credit. But a used EV for $28,000 might be a better deal anyway than a new one for $40,000 or $45,000, even after you subtract the tax credit.

Some states add their own incentives for used electric cars. California's rebate program, for example, includes used vehicles. This creates different pricing in different parts of the country depending on what incentives are available where people live.

What Happens Next

Car makers face a real choice. They can keep making as many new electric cars as they do now, but then used EVs will be cheaper and take sales away from new ones. Or they can make fewer new cars to keep prices higher, but then they miss out on selling to more customers.

The broader situation is worth considering. If nearly 700,000 leased electric cars come back in 2028 alone, that single year's inventory could be bigger than total annual new EV sales in many market segments. This flood of used cars might actually help more people buy electric vehicles than any government incentive program could. The effect would come through normal market forces—lower prices—rather than through tax credits or rebates.

The real impact goes beyond just car dealers and manufacturers. Power grid planners, people building charging stations, and oil companies making demand forecasts all need to rethink their plans. Used electric cars becoming cheap and plentiful might get the country to switch from gasoline faster than expected.