The days of buying new Teslas and flipping them for profit might be over as new data shows that used Tesla prices in the US drop faster compared to models from other automakers.
According to industry data from Edmunds, the average used Tesla price recorded a 17% drop, falling from $67,297 in July to $55,754 in November. This is far greater than the overall 4% drop in used car prices during the same period. Used Teslas are also sitting in dealer lots for longer, averaging 50 days versus 38 days for all used cars in November.
During the past two years, Tesla raised new car prices faster than other automakers answering to the high demand for long-range EVs due to rising fuel prices. This created a “price bubble” effect for used Teslas, as their owners flipped them for profit upon delivery.
Today, easing fuel prices, rising interest rates, Tesla’s increased production output, and growing EV competition changed the balance between supply and demand leading to a drop in used Tesla prices. Consequently, the automaker adapted to the new standards by offering $7,500 new-car discounts for the Model 3 and the Model Y set to be delivered before the end of 2022, in an effort to boost year-end demand.
As described by Karl Brauer, executive analyst at iSeeCars: “You can’t sell your current Tesla for more money than you paid for it, which was true for a lot of the past two years. That would reduce demand for new Teslas”.
Elon Musk admitted that Tesla considers lowering new car prices in order to sustain volume growth, which would result in lower profit margins. Tesla’s CEO blamed the “radical interest rate changes” for the price increase in all new and used cars, even though Tesla models were hit harder due to the aforementioned price bubble. As reported by Reuters, Tesla shares fell 7.3% to a more than two-year low of $114.12 in early trading on Tuesday, recording a 65% drop in 2022.
