A tax loophole that encouraged consumers to lease, rather than buy, electric vehicles in recent years means a flood of used EVs will be hitting the market soon.

Why it matters: The expected wave of lease trade-ins will help fuel the next phase of EV adoption by giving price-conscious buyers more affordable choices.

The big picture: There aren't many crystal balls in the auto industry, but lease returns are rather easy to predict.

• Since vehicles are typically leased for two or three years, companies already know when those cars will be turned back for resale.
• It's much harder to predict when customers will trade in cars that they purchased outright or financed.

By the numbers: Nearly 1 million EVs were leased from the beginning of 2022 through the first quarter of 2025, according to Experian data analyzed by Cox Automotive.

• EV lease rates jumped from around 15% in 2022 to 67% by March 2025. Tesla, in particular, saw a spike in lease rates, per Cox. The industry's usual lease rate is about 25%.
• The surge had everything to do with a wrinkle in how the 2022 Inflation Reduction Act was written.

Flashback: The IRA provided a variety of clean energy incentives, including consumer tax credits of up to $7,500 for EV purchases.

• Few vehicles qualified, however, because of strict sourcing rules designed to exclude cars made with batteries or components from China.
• A separate tax credit for businesses buying EVs for commercial fleets didn't have those same restrictions.
• The industry soon found a workaround: Leasing is considered a commercial sale because the vehicle owner is the bank or finance company, not the driver who "rents" the car for two or three years.
• That became known as the "leasing loophole" under the IRA — the bank received the tax credit from Uncle Sam, but typically passed it on to the consumer to lower their monthly lease payment.
• As a result, leasing soared in popularity.

Fast-forward: Now, the first wave of those vehicles is arriving back at dealerships.

• Roughly 123,000 leased EVs (and plug-in hybrids) will return to the secondhand market this year, according to Recurrent Auto, a data firm that tracks the EV market.
• In 2026, the number will more than double to 329,000 EVs. By 2027, 650,000 leased EVs will be turned in.
• That's more than 1 million used EVs hitting the market in the next three years.

Where it stands: Used EV sales — supported by a $4,000 federal tax credit — are projected to surpass 100,000 units in the second quarter, marking a new milestone, per Cox.

Yes, but: That used-EV tax credit, like those for new EVs and the leasing loophole for commercial vehicles, is likely going away soon.

• President Trump and congressional Republicans have vowed to unwind President Biden's EV-friendly policies.

The bottom line: EV sales momentum could slow as a result of changing policy, but maturing leases mean there will be plenty of secondhand EVs for sale over the next few years.

Catching you up on news you might have missed ...

⚠️ President Trump suggested having DOGE look into the subsidies Elon Musk receives from the federal government, which he claimed would imperil Musk's ability to produce electric vehicles. (Axios)

🚗 Speaking of Tesla, it claims to have made the first "autonomous delivery" of a car, a Model Y that drove itself about 15 miles from the factory to the buyer's apartment complex. (TechCrunch)

🤖 Humanoid robots playing soccer. Need we really say more? (AP)

General Motors gave the Chevrolet Equinox a makeover for 2025, and the transformation couldn't be more stark: The previously soft and dowdy compact SUV is now rugged and muscular, like a baby Chevy Traverse.

Why it matters: The head-turning redesign seems to have worked. Equinox sales are up 22% so far this year, in one of the industry's most competitive segments.

• It's the second-best seller in Chevy's lineup, behind the Silverado pickup.

I test-drove the Equinox LT AWD, which starts at $30,600. With optional safety and convenience packages and the "Midnight Edition" appearance package, the final sticker price was $35,225.

Pros: The Equinox looks good, inside and out.

• The redesigned interior has a pair of larger screens — an 11-inch gauge display behind the steering wheel and another that's home to the Google-based infotainment system.

Cons: The Equinox is powered by the same 1.5-liter turbocharged, four-cylinder engine in the previous model.

• It doesn't have a hybrid option, which seems like a glaring omission in this segment, where hybrid sales are growing.
• Virtually every other player, including the Toyota Rav4, Honda CR-V, Ford Escape, Hyundai Tucson and Kia Sportage, has a hybrid offering.

Yes, but: Chevy does offer the Equinox EV, a fully electric model, which is fantastic, but looks different from its gasoline brother.

I test-drive vehicles in my role as a juror for the North American Car and Truck of the Year awards. Opinions are my own.