Zaptec/UnsplashPeople who decided to take the plunge and purchase an electric vehicle (EV) during the Obama administration were probably more than happy to take advantage of the $7,500 tax break that came along with it. And while it was a really good deal at the time for many, the changes made by the Inflation Reduction Act added a few extra rules to the credit, altering it slightly.Now, one CEO is sounding the alarm about the leased EVs. He's saying that many finance companies treated these EVs as "commercial vehicles," allowing them to collect the credit, which was then included in the payment. That caused lease rates to skyrocket.The credit has since expired, helping to tank the current market value of some EVs. And some are saying that is going to do a number on the people who show up to turn their leased EVs in, exchanging their car for a big bill they may not have planned for. AdvertisementAdvertisementWill Betteridge, Founder and CEO at Fair has broken down what this means in a LinkedIn post, telling EV drivers exactly what they should do if their lease is about to run out. Hundreds of Thousands of EV Leases Are Expected to End in 2026According to a July 20, 2026, report from Recurrent Auto, up to 500,000 leased EV vehicles are expected to be returned in 2026, with as much as double that predicted in 2027. Betteridge predicts that those cars are going to come back with a lower residual value than was originally written in the contract due to the expiration of the subsidies. That, coupled with the volatile EV market—Betteridge says automakers slashed prices on new EVs to keep them moving after the credit vanished, while the price of used EVs went up as a result of the conflict in Iran—people could owe several thousand dollars more than they expected to when their lease is up.The Numbers Look Scary for Some EV Leaseholders In his LinkedIn post, Betteridge uses the example of a lease signed in 2023 on a $55,000 EV. "Set the residual at a typical 55 percent, so $30,250 on the contract," he wrote. "If the car comes back worth 45 to 50 percent of the original price, the market value is $24,750 to $27,500. The gap is $2,750 to $5,500 per car, and the lessor eats it at the return desk."AdvertisementAdvertisementThat's just the small picture, according to Betteridge, who says that those figures could add up to around $1 billion in residual losses in 2026 alone. And while he admits that this is just a theory and not a fact, it still raises some questions about what people should do when their lease expires.Buying Out Your Lease is a Personal Choice If all of this math is giving you a headache, you should consider the simple formula that Betteridge suggested. All you need to do is verify what your buyout price would be, then check it against some live listings for your specific make and model to compare the two. You should walk away from EVs with a buyout that would be more than the market value. However, if you run the numbers, and the opposite is true and the market value is sitting above the buyout, then you have earned some equity in your vehicle, giving you more options.That being said, Betteridge advises against weighing your choices for too long because changes in the cost of oil could cause that market value to shift, giving you a small window to decide. Buyer (and Lessee) BewareAccording to Consumer Reports, as of March 2026, there are still benefits to driving an EV. Many EV drivers will save hundreds of dollars a year on charging costs compared to fueling their cars (depending on where you live and how much you drive).AdvertisementAdvertisementBut, those initial savings may not add up to much when you consider the long-term depreciation of these cars. Not only that, but they still cost more up front than many gas-powered options. According to the publication, that number added up to around $6,500 more as of February 2026.Of course, none of this will help those who are already facing the looming expiration of their EV lease and wondering exactly what they should do when it comes time to hand their keys over to the dealership for good.If you want more stories like this, follow Guessing Headlights on Yahoo so you don't miss what's coming next.