Elon Musk is known for making bold claims about Tesla vehicles, and in 2019, he made one of his most bizarre declarations. He stated that those buying a new Tesla vehicle were acquiring ‘an appreciating asset, not a depreciating asset.’ However, a look at the prices of used Teslas shows that he was wrong. Very wrong
When Musk made this statement, he asserted that Tesla vehicles would soon be able to drive themselves and owners could use them in autonomous ride-hailing services, generating income. However, anyone with even a basic understanding of the car market knew that there was no chance a Tesla could defy the industry norm and somehow appreciate over time.
A look through Edmunds shows that the average Tesla Model 3 is being listed for $29,552 while the new model starts at $40,630 before you add the $6,000 Enhanced Autopilot or $12,000 Full Self-Driving Capability options. As you would imagine, older Model 3s are trading hands for less than $29,000, with many 2018 and 2019 models hovering around the $25,000 mark with upwards of 60,000 or 70,000 miles (~96,000 km – ~112,000 km) on the clock.
Read: Used EVs Values Tumble As Tesla Lowers Prices For New Vehicles
Depreciation like this is common across the industry and moving forward, the value of used Teslas could be hit even harder. Data from Edmunds reveals that over the past year, the price of a used 2021 Model 3 has fallen by an average of 29%, down from $40,522 in January 2023 to just $28,700 in January this year. That’s a larger drop than the average 2021 used vehicle that lost 19.5% of its value over the same period.
Tesla’s aggressive price cuts are partly to blame for the falling values of its used models. As the EV maker cuts prices of its new models, consumers also expect to pay less for used alternatives, creating a domino effect and pushing all prices down, CNN reports. The situation worsened after Hertz decided to sell off 20,000 EVs, primarily Teslas, from its rental fleet at the beginning of the year.
Elon Musk doubled down on his assertion that new Tesla vehicles could be appreciating assets during the brand’s third quarter 2023 earnings call. “You can think of every car we sell or produce that has full autonomy capability as something that in the future may be worth five times what it is today,” he claimed.
Even if Tesla eventually achieves vehicles with fully autonomous driving capabilities, it’s safe to assume that its vehicles will continue to depreciate, much like almost every other car in the industry that isn’t a high-priced, limited-run supercar or an ultra-rare classic.
