### The Rise of Pre-Owned Electric Vehicles: A 230% Increase Projected by 2026
If you’ve considered purchasing an electric vehicle (EV) but found the costs prohibitively high, there’s promising news ahead. Data from JD Power shows that the availability of pre-owned EVs is expected to soar by an impressive 230% by 2026, as approximately 215,000 cars reach the end of their leases. This surge in used EVs could make electric vehicles more attainable for a wider audience, particularly for those in search of budget-friendly alternatives in the expanding EV marketplace.
#### The Impact of the IRS Clean Vehicle Tax Credit
A major factor contributing to this anticipated spike in pre-owned EVs is the updated IRS clean vehicle tax credit, reworked under the Inflation Reduction Act. This refreshed tax credit has made leasing EVs increasingly appealing for many consumers. Although strict regulations regarding battery sourcing and requirements for final assembly in North America have constrained the number of new EVs that qualify for the credit, a loophole permits leased vehicles to be classified as commercial sales. Consequently, any leased EV is eligible for the $7,500 incentive, which can be applied directly to the vehicle’s price during sale or lease.
This leasing advantage has been transformative for the EV industry. In contrast to buying a new EV, where customers face price ceilings and income restrictions to access the tax credit, leasing provides a more direct route to savings. Furthermore, leasing alleviates concerns about long-term battery performance, a typical apprehension for potential EV purchasers. However, data from older EVs—excluding initial models like the Nissan Leaf, which lacked active battery cooling—indicates that battery performance issues may not be as pronounced as previously thought.
#### Leasing Patterns within the EV Sector
The effects of these incentives are already apparent in the marketplace. In 2023, 46% of all franchise EV sales (excluding names such as Tesla, Rivian, Vinfast, and Lucid) constituted leases. This trend has continued into 2024, with JD Power documenting similar leasing frequencies for the first three quarters of the year. When considering Tesla, around 30% of all new EV sales in 2023 were leases. Conversely, the leasing of gasoline vehicles has diminished since the beginning of the COVID-19 pandemic.
The rising trend in EV leasing is predicted to significantly influence the used vehicle market. While JD Power estimates a slight 2% drop in available used EVs in 2025, a remarkable 230% surge is forecasted for 2026 as leases conclude and these cars become available in the secondary market. This new supply of used EVs will likely aid in mitigating the expected shortage of used internal combustion engine (ICE) vehicles, which are dwindling as fewer gasoline cars are leased annually.
#### A More Budget-Friendly Future for Electric Vehicles
In addition to the increasing stock of used EVs, there’s additional positive news for consumers: the prices of new EVs are declining. JD Power has found that the average cost for a new electric compact SUV, after considering tax credits and manufacturer rebates, now stands at $35,900. This marks a substantial reduction of $12,700 compared to the average price for the same vehicle class in 2022.
This price drop, coupled with the anticipated boom in used EVs, could render electric vehicles a more practical choice for a broader demographic. As more affordable options emerge, the shift to electric vehicles could quicken, aiding in the reduction of carbon emissions and fostering a more sustainable future.
#### Conclusion
The EV sector is on the brink of a significant overhaul. With a 230% rise in the availability of pre-owned electric vehicles expected by 2026, driven by expiring leases, consumers will soon have a broader array of budget-friendly options. The updated IRS clean vehicle tax credit has been crucial in facilitating this change, rendering leasing a more attractive choice for many buyers. As new EV prices continue to decline and the stock of used EVs expands, the electric vehicle movement is poised to gain substantial traction in the years ahead.
For those who have been biding their time to transition to electric, 2026 may well be the moment when EVs become more accessible than ever.
