While there was once a period when Tesla owners could successfully resell their electric vehicles for more than the original cost, those days are long gone. In fact, Tesla’s own new car prices have decreased significantly in recent months – and it appears that used Teslas are now depreciating faster compared to other auto brands on the market.
Industry data supplied to Reuters indicated that Tesla EVs are now spending longer periods of time in dealerships, compared to before.
Last November, the average cost of a used Tesla drastically diminished by 17% from its July high of $67,297 to an astonishingly low price tag of $55,754. This steep drop is more noteworthy than that observed in the broader applied car market where prices decreased by only 4%. Edmunds research firm also reported that Teslas remained in dealerships for 50 days on average compared to 38 days for all other secondhand cars.
During the last twelve months, Tesla experienced an unprecedented surge in demand due to increasing gas prices caused by the Ukraine war. Taking advantage of this opportunity, Tesla capitalized on its popularity and raised prices more rapidly than other car companies, resulting in larger profit margins.
The demand for Tesla was further increased by owners who sold their slightly used yet still relatively new vehicles to make a profit and then reinvested that money back into ordering brand-new Teslas.
In comparison to other brands on the second-hand market, a striking degree of Teslas up for resale were 2022 models in August. Analysts estimated that nearly one-third of used Tesla cars available at this time fell under this category. On the contrary, Edmunds reported only about 5 percent of other brands’ used cars were from 2022 model years.
As fuel prices have gradually decreased, interest rates are climbing higher and greater competition is seen in the electric vehicle landscape, so it’s no surprise that used Tesla prices have been falling faster than other car markets. This has led to even more price reductions on new Teslas! In recent months, these elements have made a considerable shift in the market conditions and changed things for both buyers and sellers of Teslas alike.
Last week, Tesla boldly reduced the price of its Model 3 and Model Y EVs delivered in the US this year to only $7,500—almost half their original cost. Unfortunately, such a drastic move raised concerns among investors about the waning demand for electric vehicles.
Last week, Elon Musk revealed that the drastic alterations in interest rates have risen prices for both new and used vehicles. He further suggested Tesla may lower its pricing to drive up volume sales which could diminish profits.
The US market is now in the throes of a “used vehicle recession”, as reported by one analyst, with Tesla at its helm leading the fall. CarMax, an esteemed used car retailer, has recorded a staggering 86 percent drop in third-quarter profit recently.