If you’ve been wanting an electric car but everything seems too expensive, there’s some good news on the horizon. A whole lot of EV leases are due to expire in 2026, which should lead to something of a glut, according to data analyzed by JD Power.
We have the revised IRS clean vehicle tax credit to thank. This was revamped under the Inflation Reduction Act, and while tough new battery sourcing rules and a requirement for final assembly in North America have meant many fewer EVs are eligible for the tax credit when bought new, a loophole that considers a leased vehicle to be a commercial sale means any leased EV is eligible for the $7,500 incentive, which can now be subtracted from the price of the EV at the time of sale or leasing.
In 2023, 46 percent of all franchise (i.e. not Tesla, Rivian, Vinfast, or Lucid) EV sales were leases, a trend that JD Power says it has seen through the first three quarters of 2024 as well. Once Tesla is included, about 30 percent of new EV sales this year have been leases. By contrast, fewer gasoline-powered cars are being leased each year since the start of the pandemic.
That means there will probably be a shortage of used ICE vehicles in 2025 and 2026. Used EVs might also be a little scarcer next year, JD Power says. It expects a 2 percent drop in the number of used EVs next year, but a 230 percent increase in 2026 as 215,000 cars end their leases.
JD Power also has some good news about new EV prices—they’re getting cheaper. The average price for a new electric compact SUV, once tax credits and manufacturer incentives are included, is $35,900, $12,700 less than the price in 2022 for the same class of vehicle.
Buying a car second hand is always better for the environment than buying new ones.
So, a good second hand ev market us a win win
I can’t stand this line of thinking. Where do used cars come from? From handing down new cars. You can’t buy a new used car, so someone has to keep buying new cars to supply the used car market. I’m all for prolonging the life of cars and reducing buying new cars for something newer and shinier (my daily has been two smaller 1998s in a row), but buying used “for the environment” is greenwashing your hands of the fact that it was, in fact, a newly-manufactured car at one point. Paying for a used car incentivizes people to continue buying and selling their new cars. And yeah, the manufacturing pollution sucks for a new car, but so does the operational pollution of older vehicles. What’s the break-even for the manufacturing pollution of a 2020 car vs the continued operational emissions of a 2000 car? A decade? So by 2030, buying that new 2020 might be cleaner than continuing to prop up that 2000.
Yeah, I’m excited for a better used EV market. Saving pollution is a side effect of me needing them to be more affordable. I hope a used 2nd gen Leaf will be compatible with me in 2026. I love saving gas like it’s a competition. I hypermiled and aero-nodded a 97 Taurus. I wanted 4x4 and got a 98 Geo tracker in 2020. I needed a pickup and got a 98 4cyl Ranger in 2022. I commute half my days on a 60mpg motorcycle. I have never bought a new vehicle in 20 years of driving, but used cars aren’t manufactured as used.