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EV Leases End: Automakers Face $8 Billion Hit
30 Apr
Summary
- 800,000 off-lease EVs expected by 2028.
- Automakers may lose $10,000 per returned vehicle.
- Newer EVs offer better range, charging, and tech.
By 2028, an estimated 800,000 off-lease electric vehicles are expected to flood the used market. This significant rollover of vehicles returning from two- and three-year leases presents a challenge for automakers, who may face substantial losses on these units.
Analysts predict that each returned EV could result in an average loss of about $10,000, totaling nearly $8 billion. This situation arises because the residual values of these vehicles may be significantly lower than initially projected when the leases were initiated.
The gap between forecast and current prices is wider for electric cars than for gasoline-powered counterparts. Newer EVs often feature enhanced battery technology, longer ranges, faster charging capabilities, and improved software, making three-year-old models less desirable.
Aggressive price reductions by manufacturers like Tesla have also contributed to declining used EV values. When new car prices drop sharply, the value of pre-owned models typically falls even further, impacting the financial returns for automakers on leased vehicles.
