The used car market in Germany is booming. But the leasing of electric cars is facing a dramatic imbalance. More and more leased returns are flooding the lot, but buyers aren’t coming. Combustion-engine vehicles are easily finding new owners, while used electric vehicles are sitting like lead at dealerships, their residual values steadily declining. (wiwo: 02.09.25)
Residual value plummets
The residual value of electric cars has been plummeting since 2023. Although the worst of the price decline is considered over, the gap between them and combustion engines remains large. According to data from Berylls, the average residual value of a used electric car is around €6,400 lower than that of a gasoline-powered car. While this sounds tempting for bargain hunters, it means significant losses for manufacturers and banks.
An Audi e-tron Sportback demonstrates the scale: Three years ago, the new price was over €86,000. Today, with 45,000 kilometers on the clock, it’s listed on the used car market for just under €38,000.
Lease Returns Flood the Used Car Market
The return of lease contracts is noticeably exacerbating the situation. Most electric cars were purchased with three- or four-year contracts. Now, the 2021 and 2022 models are returning simultaneously. Back then, the environmental bonus made purchasing easier, which significantly increased the number of leasing contracts.
Industry expert Christopher Ley emphasizes: “The electric cars are returning with significantly worse residual values than expected.” The values are well below those of comparable combustion engines.
Pressure on dealers and manufacturers
The situation is dangerous for dealers. Burkhard Weller, head of a large car dealership group, made it clear: “This way, the residual value risk lies with the manufacturer’s bank and not with the customer – or us.” Leasing protects buyers from losses, but the burden remains with car manufacturers and financial institutions.
The manufacturers themselves are also feeling the pressure. In recent years, they have relied heavily on sales of electric vehicles to meet EU CO₂ targets. The financial consequences of this strategy are now becoming apparent.
Technological leaps are slowing sales
A major problem lies in the rapid pace of technological advancement. New electric cars have improved batteries, shorter charging times, and modern software. This makes older models less attractive. Many buyers prefer the current generation.
Interest in the used car market remains correspondingly low. Even rental car companies are avoiding returns because their range and technology are not convincing.
Residual value stagnates, days on the road increase
Berylls analyses show that while residual value has stabilized at a certain level, the number of days on the road is steadily increasing. “Used electric cars have been sitting like lead in yards for months, and the lead has now become even heavier,” warns Ley. Every additional month incurs high costs for dealers.
While the sharp drop in residual values comes as no surprise to anyone in the industry, the extent of the losses was significantly greater than expected.
Leasing as a Solution?
Simply writing off vehicles is considered risky. Experts are calling for new strategies. Electric cars should not be sold immediately, but rather brought back onto the market through leasing or flexible subscription models. This would allow the vehicles to be used multiple times.
A so-called multi-cycle model would offer additional advantages for manufacturers. At the end of the vehicle’s life, they could reclaim important raw materials. This would create a sustainable cycle in the used car market.
Outlook for the Coming Years
The situation remains critical for automakers. European CO₂ targets must be met by 2027. Therefore, many manufacturers are pushing their electric vehicles onto the market with great vigor. Today, they face the challenge of absorbing the financial consequences of weak demand.
Groups with models such as the Škoda Enyaq or the VW ID.3, ID.4, and ID.5 are suffering particularly badly. Without new concepts for leasing, sales, and residual value protection, the wave of used electric cars threatens to overwhelm the market in the long term.