Tesla Resale Values Plunge: EV Market Shift Impacts Used Car Prices
Tesla’s Used Car Prices Plummet as EV Market Evolves
In a significant shift for the electric vehicle (EV) market, used Tesla prices have been in a freefall since 2022, signaling a potential erosion of the company’s once-dominant position. Recent price cuts and a large-scale sell-off by rental giant Hertz have accelerated the decline in Tesla’s resale values, industry experts report.
Longtime Tesla investor Ross Gerber has responded to the market changes by selling approximately half of his stake in the electric car company. Gerber’s personal experience trying to sell his own Tesla at a fair value in the saturated used-car market underscores the broader trend of diminishing resale values for the brand’s vehicles.
The decline in used Tesla prices has been dramatic. In mid-2022, a used Model Y could fetch up to $70,000. Today, that same vehicle is worth less than $40,000 on the used market, according to data from Recurrent. This sharp depreciation has hit Tesla particularly hard, as the company accounts for roughly 42% of the used EV market.
Several factors have contributed to the price decline. The increasing supply of used EVs hitting the market has made them more affordable overall. Hertz’s decision to remove 30,000 Teslas from its fleet has further accelerated the decline in used-market values. As supply increases, owners are forced to lower listing prices to remain competitive.
The new car market has also played a role in driving down used Tesla prices. Tesla slashed prices by about $15,000 last year and has continued to lower them throughout this year. When factoring in the $7,500 federal tax credit, a new rear-wheel drive Model 3 can now be purchased for around $31,490. This aggressive pricing strategy has put pressure on the used market, with the average price for a 2018 Model 3 now standing at $29,303, according to Recurrent.
These developments suggest that Tesla is maturing into a more conventional car company. The previously high residual values on Elon Musk’s vehicles were unsustainable in the long term, analysts say. Tesla’s share in the new EV market fell below 50% for the first time in the second quarter, according to Cox Automotive, as competition from legacy car companies like Ford, Volkswagen, and GM intensifies.
As the EV market continues to evolve, shoppers now have more choices and are no longer limited to Tesla. While this shift presents challenges for the company, it also validates Musk’s early bet on the EV segment, as the broader automotive industry embraces electric technology.
