Tesla and EV Makers Face $8 Billion Off-Lease Loss Risk

Electric vehicle manufacturers, led by Tesla, Inc., face potential earnings losses as a surge of off-lease vehicles enters the used market with values far below projections. Industry data indicates these vehicles could be worth between $5,000 and $20,000 less than expected, with an average deficit of $10,000 per car.

Cox Automotive reports that 3-year-old EVs maintained only 40% of their original value by the end of 2025, a sharp decline from 90% in early 2022. Experian PLC estimates that the volume of off-lease vehicles will peak in 2028 at 800,000 units, which could cost the broader industry $8 billion.

Tesla, Inc. is the most exposed automaker due to its high lease volume, totaling 229,000 vehicles last year—a figure that exceeds the combined lease totals of General Motors Company and Ford Motor Company. However, Tesla's direct financial risk may be limited because Tesla Finance manages only a small portion of its portfolio, while third-party lenders such as Ally Bank and JPMorgan Chase cover the majority of these leases.