Conclusion : With falling prices, increasing model diversity and a flood of off-lease vehicles on the horizon, there’s never been a better time to buy or lease an electric vehicle. However, policy changes and market uncertainties could further reshape the sector’s trajectory.

The U.S. electric vehicle market is poised for substantial change over the next two years, according to a new study from JD Power. got by Inside EVs. The study found that a complex interplay of factors is expected to impact the prices of new and used electric vehicles, making these vehicles more accessible to a wider range of consumers.

One of the most striking findings of the study is the expected influx of off-lease electric vehicles entering the market. By the end of 2026, more than a quarter of a million electric vehicle leases are expected to expire, which could significantly increase the availability of affordable used electric vehicles.

This trend is especially notable given historical EV rental data. The study reports that leasing volumes of new electric vehicles saw a remarkable 355% increase throughout 2023, followed by an 88% increase through September 2024. As a result, JD Power forecasts an increase of 230% of rental volumes returned by 2026.

The expected influx of off-lease electric vehicles coincides with a continued decline in new vehicle prices. This combination of factors creates an interesting dynamic for consumers, particularly those nearing the end of their current EV lease.

The study adds that many renters may find it more economical to lease a new electric vehicle rather than purchase their current vehicle at the end of their lease term, as prices continue to fall and automakers continue to introduce new models.

The average monthly payment for current electric vehicle lessees is $584, according to the study, with an average residual value of leased vehicles of $29,645. The expected monthly cost to buy out the lease is $477, while the average monthly lease payment for a new electric vehicle in the same class is $457.

Meanwhile, the average price of a new electric vehicle, including incentives, fell to $35,900, a substantial drop of $12,700 from the 2022 average of $48,500.

This price drop is accompanied by an expansion of the electric vehicle market. Major car manufacturers are diversifying their electric offerings. General Motors already offers nine electric models, with more in development. BMW, Hyundai, Kia and Stellantis are also expanding their electric vehicle portfolios and more affordable versions of existing models are being introduced. These developments will likely lead to further price declines.

At the same time, consumer attitudes towards electric vehicles are changing. An overwhelming 94% of current EV owners indicated they would likely consider an EV for their next vehicle purchase, suggesting the market for new and used EVs will likely remain robust. There could be a further rise in the used electric vehicle market in 2028 and 2029, as many of those leasing new electric vehicles in the coming years may choose to end their contract and upgrade to models more recent.

However, some market uncertainties will affect buyers. For example, the future of tax credits and incentives for electric vehicle purchases remains uncertain, and changes in these policies could have a significant impact on market dynamics.

The study also noted a projected 2% decrease in recurring electric vehicle rentals for the coming year ahead of the expected rise in 2026 – a short-term fluctuation that highlights the complexity of the evolving electric vehicle market.