Millions in losses prompt Ally Financial to escalate lease depreciation

Auto lenders are facing higher losses tied to lease terminations, especially as electric vehicles come off lease with lower-than-expected residual values. Ally Financial accelerated its lease depreciation rates after losing $10 million on lease terminations in the first quarter , largely tied to plug-in hybrid vehicles, Chief Financial Officer Russ Hutchinson said during the bank’s April 17 earnings call. This follows $11 million of lease termination losses in Q4 2025, Hutchinson said during the bank’s earnings call in January, noting that the losses were expected as plug-in hybrid residual values fell after the EV tax credit was eliminated in September 2025 and OEMs pushed incentives on new models. “We assess depreciation rates quarterly, and we accelerated depreciation on certain leases maturing in the near term, primarily due to these impacted models,” he said on the Q1 call. EV values fall 22.6% since 2023 EV values have fallen sharply since 2023, when most of the leases now ending were originated. In fact, the Exponential Markets Used Electric Vehicle Index — which measures the wholesale price of used EVs in operation and inventory awaiting sale — declined to 90.08 as of Jan. 2, down 22.6% compared with the Jan. 4, 2023, reading of 116.31. As of April 23, the index was 101.56, a 12.7% decline from 2023. Exponential Used Electric Vehicle Index [caption id="attachment_58360908" align="aligncenter" width="2560"] (Courtesy/Big Wheels)[/caption] Incentivizing lease buyouts Because EV residuals are “a lot lower” than anticipated three years ago, lenders face bigger losses when those cars come back to the dealer and are sold at auction, Zander Cook , co-founder of lease buyout fintech Lease End , told Auto Finance News .. Consumers “aren’t willing to buy out those EVs” when they are in a negative equity situation , he said. Burley, Idaho-based Lease End allows lessees to digitally complete lease-end processes and buyouts and works with lenders such as Ally, Capital One , Fifth Third , PNC , TD Auto and Westlake Financial , Cook previously told AFN . Lease End is working with lenders to incentive consumers to buy out their lease by “offering them a price lower than their residual value,” Cook said this week, noting that this helps offset losses for lenders. “We're going to almost double our volume this year compared to last year in lease buyouts,” he noted, adding that EVs are a growing part of that volume. Hybrid and EV share of lease buyouts grew to 9.1% in 2025 from 6% in 2024, according to Lease End’s 2026 annual lease buyout report, published April 8. Hybrids represented 7.3% of buyouts, up from 5% a year prior, while EV buyouts made up 1.8%. The report sourced data from 19,287 Lease End buyout transactions in 2025. Ally’s lease termination mix is expected to shift in 2027, Hutchinson said. “Approximately half of the leases we originated over the past two years have OEM residual value guarantees, while the other half reflect a more diversified mix of OEMs,” he said. “This will continue to reduce lease gain and loss volatility over time.” While Ally has “worked through the worst of” lease termination losses, other lenders are “going to start hitting the brunt of it this year,” Cook said. Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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Millions in losses prompt Ally Financial to escalate lease depreciation

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