Electric vehicles were once among the strongest performers in resale value, driven by limited supply and soaring demand. But the trend is starting to reverse. A new wave of market pressure will hit the price of used electric cars, and owners who wait too long could see thousands of dollars wiped off the value of their vehicles.
Electric vehicle lease returns are about to flood in, with the vehicles expected to hit the used market next year, according to Cox Automotive. Increased supply combined with slowing consumer demand has created a perfect storm of depreciation. Couple that with rapid advances in battery technology and the extended range of new models, and older electric cars are starting to lose their appeal by comparison.
For current electric vehicle owners, timing is more important than ever. Selling now before the market becomes saturated can protect resale value and avoid the steep price drops predicted by industry analysts. The impending shift signals that the used EV market is entering a correction phase, and those who act early may come out ahead.
In order to provide you with the most up-to-date and accurate information possible, the data used to prepare this article was obtained from various manufacturer websites and other authoritative sources, including CarEdge, Consumer Reports, JD Power and Kelley Blue Book.
A wave of electric car rental returns is coming
A flooded market means falling prices
Tesla
Through a variety of factors, Cox Automotive predicts that there will be a massive influx of electric vehicles into the second-hand market, which will have a considerable impact on the value of used electric vehicles. With so many used models available for sale, supply will exceed demand and depreciation will hit EV owners even harder than it does now.
The chain reaction of tax refunds
Until September of last year (2025), federal incentives would give you a $7,500 tax credit if you bought an all-electric vehicle. This means dealers are able to offer some attractive EV deals. Between January 2023 and September 2025, more than 1.1 million electric vehicles were leased. According to sources including TransUnion and S&P Global Mobility, almost half of the electric vehicles on the road will be leased by the second quarter of 2024.
While the first of these really attractive deals started appearing in January 2023, they really started to become super popular in April. Some have already speculated that a large number of leased electric vehicles will hit the second-hand market in April this year, since the most common lease term is 36 months.
Volatile car market changes how people approach leasing
Bertel King / Geek Guide
When you lease a car, the deal usually sets a higher buyout price. This means that surrendering a lease is often more attractive than purchasing a lease. About 60% of leased vehicles are returned at the end of the lease period. However, when the epidemic hit the automobile market that year, automobile prices fluctuated significantly, causing the market value of the automobile to be higher than the purchase price.
Since the pandemic, things have shifted dramatically in the opposite direction, especially for electric cars and plug-in hybrids. Buyout prices in lease deals are now well above the market value of the vehicle. This obviously means that an increasing number of EV drivers are expected to return leased vehicles rather than purchase them. These rentals will obviously pile up on the secondary market.
Depreciation will continue to worsen, so now is the time to sell
Trade-in your electric car before market disruption
Honda
If you own an electric car, you’ve probably come to terms with the fact that electric cars depreciate significantly. The trade-off is that they are one of the cheapest vehicles on the road to maintain and keep running. However, the longer you wait, the depreciation on your electric car will only get worse. If you’re considering trading in your car, now might be a good time to take action.
It makes financial sense to trade in your old one for a new one as soon as possible
If you’ve already purchased a car and know you need to trade it in, the sooner the better.
—Jemery Robb, interim chief economist, Cox Automotive
The laws of supply and demand are very simple. When the supply of something exceeds demand, the price will fall. With a large number of electric vehicles expected to be returned to dealers, the used car market will be swamped. This will have a knock-on effect on the value of every electric car on the road.
While there is now a glut of electric cars about to hit the used market, the opposite is true for gasoline cars. Gasoline-powered vehicles are relatively scarce on used lots, analysts say. This could mean that we could see an increase in second-hand prices for internal combustion engine vehicles in the coming months. If all this goes as expected, electric cars will become too cost-effective to ignore.
There are several types of electric vehicles expected to be hardest hit
If you own one of these cars, consider trading it in for a new one
Any popular electric vehicle is expected to be affected by the influx of used cars onto the market. However, some models may be hit harder than others. Cox Automotive expects the Ford Mustang Mach-E, Volkswagen ID.4, Hyundai Ioniq, Tesla Model 3 and Tesla Model Y to be most affected.
Depreciation is not great and will get worse
Generally speaking, electric cars depreciate much faster than any other type of car. The chart above shows the current average depreciation rates for these vehicles, according to CarEdge. Lease deals for these five popular electric vehicles are getting a big boost and are likely to be hardest hit when leases are on the used market.
Dealers need some kind of plan to handle this wave. One example of a plan some of the automakers could come up with is convincing some existing customers to lease for longer than the initial term. Whatever they do, they need to find a way to protect the value of their second-hand fleet.
As consumers, EV owners need to find the best ways to soften the blow of this seemingly imminent event. Conversely, if you’re considering buying a used electric car, your best opportunity may be right around the corner.
