Dealers brace for influx of off-lease EVs in 2026, CDK reports

More than 300,000 off-lease EVs are expected to hit the market, driven by tax incentives from 2022 to 2023 and elevated leasing rates.

On the Dash:

• EV lease returns are projected to exceed 300,000 units in 2026, driven by heavy leasing in 2022–23.
• Most off-lease vehicles will be low-mileage and warranty-backed, supporting CPO and retail opportunities.
• Dealers who align acquisition and pricing with local demand are best positioned to capitalize on the influx.

More than 300,000 electric vehicles are expected to return from lease in 2026, representing an increase of more than 200% from the 123,000 units projected for 2025. The surge stems largely from elevated leasing activity in 2022 and 2023, when federal and state incentives sharply reduced monthly payments, according to CDK Global data.

That leasing wave was driven in part by provisions in the Inflation Reduction Act that allowed leased EVs, classified as commercial vehicles, to qualify for the full $7,500 federal tax credit regardless of domestic sourcing requirements. Dealers were able to pass those savings on to consumers, even when the same vehicles did not qualify for incentives if purchased outright.

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When combined with aggressive state-level incentives, lease payments fell dramatically in many markets, in some cases approaching zero dollars per month. As a result, EV lease penetration climbed from about 15% in 2022 to 67% by March 2025. During that period, nearly 1 million EV leases were written, accounting for close to half of all franchise EV sales.

Most vehicles returning in 2026 will be two- to three-year-old models from the 2022 and 2023 model years, typically with about 25,000 miles. Many will still carry factory warranties, including federally mandated battery coverage of eight years or 100,000 miles. That remaining coverage is expected to support resale demand, particularly among first-time EV buyers.

At the same time, the pre-owned EV market has begun to stabilize after several volatile years. Average used EV list prices hovered near $37,000 in 2025, with nearly one-third of listings priced below $25,000. As the market matures, depreciation rates have moderated, improving value retention for some models.

For dealers, acquisition dynamics are also shifting as many leases written in 2022 and 2023 assumed residual values near 50%, while current market estimates place actual residuals closer to 35% to 40%. That gap is expected to push more off-lease vehicles to auction, creating buying opportunities for retailers that understand their local demand patterns.

As the supply of used EVs grows, dealerships’ success will increasingly depend on a combination of local market insight and customer education. This is because demand is variable, influenced by factors like charging infrastructure, available incentives, and consumer familiarity. By providing customers with a clear understanding of ownership costs and warranty coverage, dealers will be better positioned in this evolving market.

As federal EV incentives decrease, the price gap between used EVs and comparable gas cars is narrowing. Dealerships should prepare for the expected 2026 influx of returned leased EVs to maintain consistent margins and predictable inventory.