For most of the past two years, Tesla, which has spent months buying new cars (ATS-US) buyers actually have another unusual choice: keep the new electric car they just picked up or sell it to impatient people for a profit.
But the days of this hyped Tesla electric car are over, which poses a potential threat to the prices of new cars that have already announced price cuts.
Prices for used Teslas have fallen faster than those of other automakers, according to industry data, and the cars have been in dealerships longer.
The average price of a used Tesla in November was $55,754, down 17% from a high of $67,297 in July. According to Edmunds, the overall used car market was down just 4% in the same period. The average used Tesla remained in dealership inventory for 50 days in November, compared to a 38-day average for all used vehicles.
Rising gasoline prices due to the war in Ukraine have increased demand for Tesla, one of the few long-range electric vehicles on the market. Tesla itself has raised prices faster than other cars, increasing profitability. Some buyers of new Teslas take advantage of the market boom to sell their new vehicles at a profit and thus reorder new vehicles; this cycle drives demand for new Tesla vehicles.
But now easing fuel prices, rising interest rates, increased Tesla production and increased competition for electric vehicles are driving used Tesla prices down faster than the market and have a knock-on effect on the prices of the new Teslas.
Adding to investor concerns about sluggish demand, Tesla last week doubled price cuts on new U.S. vehicles for the Model Y and Model 3 that will ship this year to $7,500.
Nearly a third of used Teslas sold in August were resold as 2022 models, analysts said, suggesting the original buyer was targeting the resale. That compares with about 5 percent for the rest of the used-car market, according to research firm Edmunds.
“You can’t sell a Tesla for more than you paid for it, and that’s been the case for most of the last couple of years,” said Karl Brauer, executive analyst at iSeeCars.com. Tesla.”
Musk said on Thursday (23) that “aggressive interest rate changes” have raised the prices of all new and used cars and Tesla may lower prices to maintain sales growth, which will lead to reduced profits.
Indeed, Tesla isn’t alone: The US used-car market is booming as global auto manufacturing encounters roadblocks, but it’s now facing a “used-car recession.” An analyst said used car seller CarMax (KMX-USA) reported an 86% drop in third-quarter profit last week.
But Tesla is the big brother of the recession: the drive to drive up the price of its cars relative to other brands is exaggerated compared to other brands. Ivan Drury, director of analytics at Edmunds.com, pointed out that because Tesla “was pretty much the only product available in the used electric car market for a long time.”
