At almost any other time, franchised auto dealers would greet tens of thousands of low-mileage lease returns streaming onto their lots as a welcome windfall. But the wave approaching in 2026 is unlike anything the industry has seen before, and the risks are not only commercial. They are deeply operational.
More than 300,000 electric vehicle leases, many originated under the generous $7,500 federal tax credit provisions of the 2022 Inflation Reduction Act, are expected to begin hitting the market this year. These vehicles were leased into a very different consumer environment: EV enthusiasm was peaking, incentives were flowing, and residual values were set with optimism. Today, consumer sentiment has shifted; new EV inventory sits unsold on dealer lots, and returning vehicles are expected to be worth considerably less than their contracted residuals.
For captive and private lenders with EV lease exposure, that mismatch is likely to produce consequential write-downs. For dealers, it will mean added pressure to move inventory in a market where local EV demand may not yet exist. But there is a third risk that is quieter, less visible, and arguably more consequential in the long run, which is hiding in the calculation layer of every one of these transactions.
A Perfect Storm of Complexity
The used EV transaction is not simply a used car transaction with a different powertrain. It arrives bundled with a set of financial, regulatory, and technical variables that existing dealer management systems and loan origination platforms were not necessarily designed to handle with precision.
Consider what a dealer or lender must now accurately compute for a single used EV transaction: potential eligibility for state and local incentives for used EV purchases (where applicable), battery degradation-based pricing adjustments, state-specific registration surcharges and EV ownership fees, lease-end disclosure requirements that vary by jurisdiction, and the correct treatment of each fee type within the calculation.
Each of these variables are moving and many are state-specific. And each can materially affect the total amount financed, the disclosed payment, and ultimately the compliance integrity of the transaction.
The Regulatory Patchwork is Not Stabilizing
One of the most underappreciated dimensions of this challenge is that the regulatory landscape governing EV-related fees is not converging; it is fragmenting. States are actively experimenting with how to replace traditional fuel tax revenue as more drivers move away from gasoline. The approaches vary widely and continue to evolve.
Some states have imposed flat annual EV surcharges. Others are adjusting those fees annually using CPI indices. Still others are piloting vehicle miles traveled programs. Several have introduced alternative fuel assessments that interact with existing registration structures in ways that are not immediately obvious to compliance teams.
These fees do not exist in isolation. As they become more common, they are increasingly embedded in the total transaction cost, affecting the amount financed, installment calculations, and disclosures.
What is ‘new’ today may not be permanent. EV charges are still evolving year over year, and historical assumptions can quickly become outdated.
Static Systems in a Dynamic Environment
Here is the fundamental problem: many of the DMS and LOS platforms currently in use were built for a world where fee tables were relatively stable, residual values were calculated on well-understood depreciation curves, and the tax credit landscape was straightforward. That world no longer exists for EV transactions.
Systems must be able to account for state-specific differences in registration fees and EV-related charges, which, while not fundamentally different from other vehicle fees, are evolving alongside broader regulatory changes. Systems that lack state-specific logic will apply uniform assumptions across jurisdictions where the rules are materially different. And systems that do not incorporate battery condition data into pricing will produce residual estimates that are increasingly disconnected from real-world value.
For dealers and lenders, the consequences range from disclosure errors to violations resulting in exam exposure or customer disputes. For the broader industry, a pattern of inconsistent or incorrect calculations on used EV transactions could erode consumer confidence at precisely the moment when the market needs it most.
Opportunity Within the Complexity
It would be a mistake, however, to read this challenge as purely a risk management problem. Dealers and lenders who invest now in getting the calculation layer right will have a meaningful competitive advantage as the lease return wave crests.
The used EV buyer is not the same as the buyer who passed on an EV lease three years ago. Prices are lower, selection is improving, and range anxiety is diminishing as charging infrastructure matures. There is real demand to be unlocked, but it will require transaction processes that inspire confidence, not confusion. A buyer who encounters inconsistent disclosures, unexpected fees, or unexplained payment variances is unlikely to complete the deal.
Entrepreneurial dealers and forward-thinking lenders who can offer transparent, accurately calculated, compliantly disclosed used EV transactions will be well-positioned to capture that demand. The calculation infrastructure is not a back-office detail. It is a customer-facing competitive asset.
The New Industry Needs
The operational and compliance complexity surrounding used EV transactions is widening faster than the systems designed to close it. As adoption increases and the transaction volume of EVs grows, complexity is moving into the calculation and compliance layer, not out of it. Fee types are multiplying. Registration structures are diversifying. Tax treatments are evolving. The assumption that a standard vehicle finance calculation engine can handle all of this without modification is no longer tenable.
Auto finance leaders have a narrow window to get ahead of this. The lease returns are coming regardless of whether the systems are ready. The question is whether the industry will greet them with the precision and compliance integrity these transactions demand, or whether the calculation gap will become a liability that compounds the residual losses already baked into these vehicles.
The answer starts with an honest assessment of what your current systems can and cannot do and a willingness to close that gap before the wave arrives.
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Sarah Milovich is General Counsel and Vice President of Compliance with Carleton, the country’s leading provider of financial calculation software, loan origination compliance support, and document generation software. Please visit