For years, buyers looking to purchase a Tesla were more than happy to pay the high price for one of the automaker’s electric vehicles and wait an incredibly long time for the vehicle to arrive. Owners then faced an interesting proposition: hold on to their vehicles or sell them at a profit on the used market to buyers that weren’t looking to wait months for a new vehicle. Over the past few months, prices for used Teslas have dropped sharply and dealers are struggling to get the automaker’s used EVs off their lots as quickly as they used to, reports Reuters. This is definitely a strange feeling for the automaker, which has been seen as more than just an automaker.
As the outlet points out, prices for used Teslas are falling faster than used vehicles from other automakers. Earlier this November, the used price of a Tesla was $55,754. While that’s high for a used vehicle, it represents a 17% decrease from July when the price for a used EV from the automaker was $67,297. According to data from Edmunds, the used car market fell by 4% during the period from July to November, which could account for some of the drop, but not all of it.
Reuters claims that used Teslas are also sitting on dealer lots longer than vehicles from other automakers. Used Teslas reportedly spent 50 days on average at a dealership in November compared to 38 days for all other used cars.
High gas prices and the increased number of people looking to make the switch to an electric vehicle saw demand for Teslas increase. Additionally, some buyers chose to make a quick buck by purchasing a Tesla before the automaker raised prices and then selling them on the used market before ordering a new vehicle to repeat the process. This drove demand for Tesla’s new cars, which could explain why wait times increased even further.
Things are starting to change now. As Reuters points out, interest rates are rising, fuel prices are far more affordable than they were, new electric vehicles from competitors have arrived, Tesla is increasing production, and extensive changes are being made to the federal EV tax credit next year. All of these factors are causing used Tesla prices to fall dramatically. It’s also creating an environment where Tesla has to decrease the prices of its new vehicles.
To generate demand, which is something Tesla has never had a problem with before, the automaker has introduced price cuts of $7,500 for the Model 3 and Model Y. The catch is that the EVs have to be delivered before the end of 2022.
While seeing prices for used Teslas drop this severely is unusual, the used car market has crashed dramatically over the past few months. Companies like Carvana and CarMax are posting major losses as used car prices for all vehicles decrease.
Source: Reuters
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