Tesla, GM, and other major American EV manufacturers are expected to take a heavy hit in 2028 when the industry’s biggest time bomb goes off. The news comes as other companies including Ford, Porsche, and Stellantis refine their own EV plans after certain electric gambles failed to pay off.
As anyone who has glanced at the used EV market knows, the battery-powered vehicles depreciate pretty hard. Said battery is also one of the main reasons behind that depreciation. One recent study showed the Tesla Model 3 only retaining around 23% of its original value after six years. The same report told a similar story with other EVs with the likes of the Audi E-Tron dropping over 12% of its value on average every year.
The problem seems to occur across the board too. Obviously a Porsche Taycan is going to lose more value than a Nissan Leaf if we’re talking dollars alone, but the performance vehicle and cheap option both lost the same relative value in percentage terms.
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According to Automotive News, close to 800,000 electric vehicle leases are due to end in 2028, with dealerships expected to take a pretty heavy loss on the majority of them. Depreciation-related losses are likely to total in the billions, with dealers relying on sales and auctions to mitigate the financial impact.
To make matters worse, its been a bumper few years for EV leases with Tesla and GM leading the pack. EVs are expected to make up 15% of all leases by the end of 2026. As things stand, the off-lease value of each EV will come in at around $10,000 less than financers expected.
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The biggest loser in all of this is expected to be Tesla, the company which currently leases the most EVs. That could explain Elon Musk’s recent pivot into robotaxis and domestic robots, along with the death of both the Model S and Model Y. Teslas also depreciate harder than any other electric vehicle, leading to further losses for the largest American EV manufacturer.
As for the winners in this scenario, customers that want to roll the dice on a used EV are likely to see a saturated market with record discounts in a couple of years.
Why are EVs from companies like Tesla depreciating so badly?
You may be wondering why EV values tank so hard over such a short period of time. Part of the value loss is the looming shadow of battery replacement. It’s an expensive repair, sometimes costing tens of thousands of dollars (which may be more than the vehicle is worth). If someone owns an EV for ten years, and saves accordingly, then the significantly lower repair costs will usually balance out with the battery replacement fee.
However, if someone is selling an EV six or more years in, then they’ve arguably benefitted from that lower maintenance bill and left the new owner holding the bag when it comes to a battery swap.
Battery replacement worries aren’t the only driving force behind EV depreciation. When you look at EVs on the whole, it’s essentially an amalgam of rapidly developing technologies. If you compare the specs of an ICE car from 20 years ago to its modern equivalent you may see a slight bump in efficiency and performance but both vehicles will essentially be the same.
Take the 2006 Corolla compared to the non-hybrid 2026 model. Over 20 years, Toyota added about 43 horsepower and 5 mpg of fuel economy to its popular workhorse. Admittedly, 20 years of engine wear will have affected the older ‘Rolla somewhat, but with starting specs of 126 horsepower and a fuel economy of around 30 mpg combined, the older vehicle will still be perfectly usable.
Most of the money spent keeping it usable will have gone on maintenance, which was all paid for by the previous owner and allowed for a higher resale value. And while things like driver assistance features have advanced, you are essentially getting the same functional vehicle either new or second hand.
Now look at the Nissan Leaf. Just ten years ago it only offered 107 miles of range (with a brand new battery), its charging was far slower, NACS charging was off the table, and it only had around 107 horsepower. A 2026 Leaf has triple the range, up to double the horsepower, and a significantly faster charging battery. That’s not counting the same boost in driver assistance tech that ICE vehicles would have also seen over that time period.
The exponential EV technology curve will eventually flatten, and battery tech is rapidly improving. So in a few years, a second hand EV may make sense. But for now, buying a used EV is a pretty bad deal. And that’s awful news for dealerships and financial institutions that make a good chunk of their money from vehicle leases.
