Sales of electric vehicles have been falling since September, when federal tax credits of up to $7,500 ended under a law championed by President Trump.
But the battery-powered car business is set to get something of a boost from the waves of slightly used models rolling into dealerships over the next three years.
Lease contracts for about 300,000 two- and three-year electric vehicles will expire this year, up from just 123,000 in 2025, and many of those cars will return to the market as used cars. They will be followed by 600,000 in 2027 and nearly 660,000 in 2028, according to Cox Automotive, a market research firm.
The surge is giving consumers affordable electric car options when gas prices have topped $4 a gallon and new vehicle prices are near record highs.
“These off-lease cars will increase the consideration of EVs for many used car buyers,” said Stephanie Valdez Streaty, director of Cox. “A big reason many consumers have shied away from new EVs is the price. But these used vehicles are a much better deal. And with higher gas prices, people are willing to look at them.”
A large lease return could also encourage sales and leasing of new electric vehicles, as many people who give up those cars will look for new rides. Some surveys found that the vast majority of people who drive electric cars say they would choose another for their next vehicle.
But the biggest effect will be on used cars, which are bought by far more Americans than new cars.
Vic Spanos, owner of Spanos Motors, a luxury used car dealership in Daytona Beach, Florida, can already see that.
“Right now we’re getting more people interested in electric cars than conventional cars,” he said. “Our customers tend to be middle to upper class, and they see the value in used electric cars, as second cars, as cars for kids in college.”
The wave of used electric vehicles is the result of the Inflation Reduction Act, signed into law by President Joseph R. Biden Jr. about climate and energy. Under the 2022 law, purchased vehicles qualified for the full $7,500 credit only if they were assembled in North America and met other conditions. But all electric vehicles were eligible for a $7,500 credit if they were leased.
The credit for the leased vehicles went to the financial arms of the automakers, who generally passed those savings on to consumers to boost demand. In some cases, automakers offered leases with monthly payments as low as $199 for cars that would normally cost significantly more.
As a result, many buyers choose to rent rather than buy. According to CDK Global, a provider of software and data services for car dealers, in 2022 leases accounted for about 15 percent of all new electric vehicle transactions. By 2025, this number has risen to more than 60 percent.
Mr. Trump’s One Big Beautiful Act ended tax breaks on Sept. 30 and resurrected the electric car market.
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In the last three months of 2025, sales and leases of new electric vehicles fell 36 percent compared to the same period in 2024. They then fell 27 percent in the first quarter of this year.
Amid the unrest, the values of used electric vehicles have fallen. In 2023, leased electric vehicles were generally expected to be worth about 60 percent of their original price after three years on the road. Instead, three-year-old models are worth about 45 percent, and sometimes even less.
In Downers Grove, Illinois, about 23 miles west of Chicago, Castle Volkswagen is offering a pre-leased ID.4 Pro S with 33,000 miles on the odometer for just under $23,000. This model cost about $52,000 when new in 2023.
AutoNation, a major chain store, is listing the 2023 Hyundai Ioniq 5 SUV for $28,000. It has only 18,000 km on it. Loaded with options including all-wheel drive and a panoramic sunroof, it was listed at $58,000 three years ago.
Teslas also fell in value, but fared better than cars from other brands. AutoNation is also offering a Tesla Model Y with all-wheel drive and a long-range battery for $34,000 — about 60 percent off the original price.
And while new electric models are typically more expensive than comparable gasoline vehicles, used versions are priced similarly, said Dave Thomas, director of content marketing for CDK Global.
“Used EVs tend to have low miles and lots of technology and luxury features,” he said. “So buyers are finding that these leased cars are a really strong value.”
Car buyers seem to be taking notice. Ms Valdez Streaty said sales of used electric vehicles rose 20 percent in the first quarter to more than 100,000 vehicles.
But the impending end of all these leases will not be good for everyone.
The finance divisions of the car companies that own these leased cars may now have to take big losses on vehicles that are not worth as much as they estimated when they signed the leases two or three years ago.
For example, a car company might have estimated that a $70,000 car it leased to someone for three years in 2023 would be worth $45,000 when it is returned in 2026—a figure known as the car’s residual value. This automaker will have to record a loss of $10,000 if the car sells for $35,000.
“That’s the downside of it all,” Mr Thomas said. “It’s definitely hurting financial companies.”
Car manufacturers usually sell returned cars on lease to their dealers or to wholesale auctions where any car dealer can buy them. Dealers then sell the cars to individuals at a higher price.
Mr. Spanos, a dealer in Florida, sees a big, new opportunity in used electric vehicles because prices have fallen so much. Dealers also tend to make a lot more money on used cars because automakers play a big role in determining how much new vehicles sell for by offering discounts and other incentives to entice buyers.
Mr Spanos, who started the business 30 years ago with his brother, has about 90 vehicles in stock and only seven or eight are electric. But in the coming months, he aims for electric models to make up roughly half of his inventory.
“There is more activity in the EV space,” he said. “Because now you can get one without paying a premium.”
It may even add an almost new Tesla Cybertruck. Tesla temporarily reduced the price of a certain version of the boxy pickup by $20,000 for 10 days in February, and Mr. Spanos ordered one without knowing whether he would drive it himself or sell it to a customer or at a wholesale auction.
“It made sense to me with the discount,” he said. “Worst case, I can sell it at auction and make money.
