The looming spike in electric vehicle lease returns
Potential implications across the auto industry
The number of electric vehicle leases in the United States has been strong in recent years. But as these leases come to an end, a large pipeline of off-lease returns is arriving on the secondary market. EV residual value is already tracking below expectations, which could only continue to deteriorate if supply outpaces demand. Learn how auto companies can navigate these challenges and build consumer confidence to help create a pipeline of future buyers.
The residual value of electric vehicles
To date, the volume of off-lease battery electric vehicles (BEVs) entering the used market has been relatively low. However, forward projections suggest BEVs will represent nearly 10% of all lease maturities in 2026 and roughly 25% in 2028. This rapid increase in secondhand BEV supply is happening at a time when used BEVs are already underperforming residual value expectations, creating a potential problem for OEMs and their captive finance companies.
The implications extend beyond near-term used vehicle pricing. Residual performance can affect both captive and new vehicle profitability through incentive requirements, dealer inventory risk, and long-term consumer confidence in BEV value.
Early and coordinated action is important for value management
A fragmented lease-end strategy can amplify residual value losses and risks, driving away loyal customers. OEMs and captives should consider building an integrated lease-end process that prioritizes customer engagement and retention.
Used BEV demand should be created, not assumed
Many US consumers remain cautious about range, charge time, price, battery replacement cost, and public charging access. Yet current BEV ranges, improving infrastructure, and lower maintenance costs are shifting those perceptions.
Always-on software updates can be a value lever
Consumer research indicates many buyers are more likely to keep a vehicle longer if it receives regular software updates that add features, safety enhancements, or performance improvements.
Used BEV performance over the next few years is expected to influence both short-term residual outcomes and the long-term viability of BEV leasing and sales. As off-lease volumes scale, effective outcomes will likely depend on cross-enterprise coordination rather than any single tactic. Fragmented approaches to customer engagement, lease-end decisions, incentives, and remarketing could amplify losses. Organizations that align earlier, with clear visibility into expected residual outcomes and a shared plan to manage risk, are expected to be better positioned to stabilize used BEV performance.
