The past few years have seen record electric vehicle sales, and most of those came from very competitive lease programs. In many cases, the payments on the EV were far less per month than a less expensive gas-powered car. But in 2025, we’re going to start seeing the first big wave of after-effects from that trend: a record number of two- and three-year EV leases coming to an end.
If your EV lease is up this year, there are some options you need to consider—and if that end date is coming up soon, it’s best to start planning now.
For many lessees, this may be their first time with an electric vehicle. Even if you are more experienced with leases, having an EV right now may alter your typical strategy when it comes to the next car. There are essentially three pathways, but the first tip is to not wait until you are weeks away from your lease ending to start planning your next move. Ideally, you want to start thinking about this process around three to four months before your lease is up.
Before we get into the various options at lease end, it’s important to discuss a key variable that impacts lease programs: residual value, aka the resale price. Without getting too deep into the math behind leases, the bulk of your payments are calculated based on the difference between the sale price of the vehicle and the residual value—what it’s worth to buy out when your term is over—that is set by the bank. The lender that underwrites the lease predicts that X car with Y miles is going to have a value of Z at the conclusion of the lease. That residual value prediction may play a big role in what you decide to do next.
But as many EV owners know, values for these cars have been dropping dramatically in recent years for a variety of reasons. Here are the options you have if you find yourself in that situation.
Turn It In And Lease Something Else
Most people who lease cars tend to continue that cycle of leasing as they prefer the lower payments and like rolling into a new car every few years. (Most, but certainly not all, luxury brands primarily move new cars this way.) While this may not be the most financially sound strategy in the long run for some people compared to owning a car and paying it off, it’s what works for many drivers. Given the rapidly changing technology, massive depreciation drops, ultra-low payments that EV leases currently offer and the fact that most electric owners don’t go back to gas, for most lessees, the natural next move is to just lease another EV.
Lease programs change month to month and vary from brand to brand. In shopping EV leases for various clients across the country, I’ve seen huge differences in payments from one automaker to another on cars with very similar MSRPs. This is why it it really pays to do some comparison shopping across a few brands to see who is offering the most competitive programs.
Photo by: Kia
If you do end up switching brands, “trading in” your leased car might be tricky as most automakers don’t allow for “third-party lease buyouts.” This means you have to give your car back to the same brand. For example, if you have a Honda Prologue lease and want to switch to a Hyundai Ioniq 5, Honda may require that the Prologue be turned back into Honda and may not allow a Hyundai dealer to buy it out. This will not exclude you from any conquest rebates that may apply on the next deal, but it is recommended that you have a conversation with your leasing company regarding their policies for switching brands.
However, with the federal tax credits that reduce the upfront cost in jeopardy along with other market factors, super cheap EV leases aren’t likely to last forever. There will come a point in time when consumers face some sticker shock and can no longer lease a $50,000 EV with a payment under $300 a month.
If and when that time comes, continuing to lease may no longer be the best play.
Buy Out Your Lease And Keep It
If leasing another EV isn’t in the cards, and you have had a positive experience with your current car, purchasing that vehicle from the leasing company at the conclusion of the term is an option. Sometimes you can do this process directly with the lender, but often they will have you go through a dealership to facilitate the transaction.
Watch out for dealers that tack on “mandatory” fees like “reconditioning” or “certification These are bogus and unnecessary. Remember, any dealer of the same brand can manage a lease buyout, so if one local dealer is trying to pull some nonsense, call around.
If you decide to explore a buyout, this is where a clear understanding of residual value is going to come in. As I mentioned earlier, the residual is essentially a guess that the bank made as to what they think your car could be worth at the end of the term.
GMC Hummer EV at NC Dealership
Sometimes these values are overestimated so that the gap between the sale price and residual is close, making the payments low. But those inflated values can work against you if you decide to buy out your lease—they mean you could end up paying more in the end. EV depreciation is far more accelerated compared to gas cars, and many EVs are going to have a market value a bit lower than the buyout cost.
If you are considering purchasing out your leased EV, scan the market for comparable cars with similar miles and see what they are retailing for, compare that to the purchase price at the end of your contract. If the gap between these two is wide, you might be able to negotiate a lower buyout price with the leasing company.
However, that buyout number is contractually established in your lease agreement. While there is some anecdotal evidence of some folks convincing leasing arms to sell the car at a lower cost, the success rate isn’t consistent.
This is where turning the car into the dealership could work to your advantage. The dealer acts as the middleman for this transaction and if you were to turn the car in and go to another brand, that dealer will often purchase the car from the leasing company and try to retail it. The dealers know what a realistic retail price will be for that car based on age and mileage, and it could be lower than the lease buyout. Rather than hold onto a car and risk further profit loss, the dealer might be willing to sell it back to you at a more reasonable “market price.”
Here’s an example. Let’s say you leased a Kia EV6 with a retail price of $53,000, and at the end of your lease term, your contract says your buyout price is $39,000. Given what we know about current depreciation trends, that price will likely be much higher than the average market rate. You may instead be able to ask the dealer to sell it to you at something more realistic for all involved.
While your results may vary, it’s one of those situations where you have nothing to lose by presenting the numbers and asking for a fair price. If the dealer or bank insists on standing firm with an above-market price, you can give it back and see what other opportunities present themselves in the used market.
Turn It In And Buy A Used EV
Even if various rebates and incentive programs to push new EVs get pulled back, pre-owned inventory is predicted to grow within the next few years and that should keep prices low.
When you examine the total cost over time, a used purchase can sometimes be more advantageous compared to a lease. This is especially true if you plan on keeping the vehicle for seven years or more. Keep in mind that EVs have much lower maintenance costs compared to their ICE counterparts and most battery components are warrantied up to 100,000 miles.
Photo by: Hyundai
Even as EVs age, battery degradation isn’t as much of a serious issue as people think, and it’s not unheard of to have electric vehicles with 200,000 to 300,000 miles on the clock and still retain a high percentage of its usable range.
Keep in mind that a used purchase is still likely to carry payments that are higher than what you are paying on a lease because that’s how loan math works. Interest rates are always higher on used cars. Unlike leasing where hefty down payments are not advisable, bringing money to the table on a loan is always a good idea as it reduces your payments and may keep you ahead of the curve from being underwater on your loan.
If you are close to your deadline and aren’t sure what to do, it’s worth asking your leasing company for an extension. Most leasing companies will offer an extension, usually up to several months beyond the turn-in date, and typically you don’t have to take the full extension.
When buying a used EV, you will be subject to the usual pitfalls of purchasing any used car. Always get out-the-door prices in writing and watch out for extra fees and add-ons that just jack up the total cost.
Also, don’t be afraid to shop beyond your local market, but keep in mind that most dealers will price their used inventory in accordance with the market. There may be very little or no wiggle room off that asking price. The focus is to find the best value, not the biggest discount.
Tom McParland is a contributing writer for InsideEVs and runs AutomatchConsulting.com. He takes the hassle out of buying or leasing a car. Got a car buying question? Send it to [email protected].
