Three Trends That Will Shape the U.S. Auto Market in 2026

Trend 2: EV share will slip in 2026 as incentive-driven shoppers pull back

With the expiration of the federal EV tax credit, we expect EV market share to edge down in 2026. EV share is likely to land around 6%, compared to the 7.5% we anticipate for 2025. The shift reflects a cooling among shoppers who were previously motivated by subsidized lease offers on electric models rather than by the vehicles themselves.

That transition is already visible in the data. EV lease penetration fell to 53% in November, down from 71% in September before the credit expired. While still higher than the industry-wide leasing average, the decline highlights how sensitive the segment has been to payment-driven shoppers. At $712, average new EV monthly payments remain elevated, reflecting higher vehicle prices and pushing many mainstream buyers to the sidelines.

The good news is that there is some relief on the horizon. More affordable models, including the redesigned Nissan Leaf and the return of the Chevy Bolt, will broaden the segment and likely reenergize interest. But while these vehicles will help diversify the EV shopper base, they won’t fully replace the deal-seeking buyers who were previously motivated by ultra-low lease payments.

Trend 3: Off-lease inventory will rebound in 2026, offering shoppers affordable used alternatives the 2025 market lacked

After years of lean supply, 2026 will bring a meaningful increase in off-lease vehicles returning to the market. The sharp drop in leasing activity in 2022 left 2025 with unusually thin inventories of lower-mileage, near-new vehicles, limiting affordable choices for many shoppers. As leasing began to recover in 2023, the resulting 2026 lease returns will start to help fill a gap that was especially visible in 2025.

A healthier flow of off-lease returns will give consumers more flexibility — especially those priced out of the new-vehicle market or looking to avoid today’s higher monthly payments.