Prices Of Used Teslas Drop Way Faster Than Those Of Other Brands

The times when Tesla owners could sell their used EVs at a profit are gone. Tesla is cutting new car prices and prices of used Teslas are falling faster than those of other automakers.

According to industry data provided to Reuters, Tesla EVs are also spending more time in dealer lots than before. 

The average price for a used Tesla in November was $55,754, down 17 percent from a July peak of $67,297. The price drop is more significant than the overall used car market’s drop of 4 percent during that period, according to data from research firm Edmunds. Used Teslas spent 50 days on average in dealer inventory in November, compared with 38 days for all used cars. 

Over the past year, demand for Teslas was boosted by rising gasoline prices caused by the Ukraine war. Tesla cashed in on increasing demand by raising prices faster than other automakers, resulting in fatter profit margins.

Demand was also driven by owners who flipped their used yet relatively new Teslas for profit and then used the money to place orders for new vehicles.

Gallery: 2022 Tesla Model 3

For example, nearly a third of used Teslas for sale in August were 2022 models up for resale, indicating that original buyers were looking to flip, according to analysts. In comparison, only about 5 percent of other brands on the used market were 2022 models up for sale, according to Edmunds.

The situation has started to change in recent months as fuel prices are easing, interest rates are rising, Tesla output is increasing, and competition is growing in the EV space. All these factors led used Tesla prices to fall faster than the market, which in turn contributed to price cuts on new Teslas.

Tesla is obviously aware of this and last week doubled a US new-car price cut to $7,500 for Model 3 and Model Y EVs delivered this year, fueling investor worries about dwindling demand.

Last week, Elon Musk said that the “radical interest rate changes” have increased the prices of all cars, new and used. He added that Tesla potentially could lower pricing to sustain volume growth, which in turn would result in lower profit.

The US market is now facing a “used vehicle recession” according to one analyst, and Tesla is leading the retreat. Used car seller CarMax last week reported an 86 percent drop in third-quarter profit.

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