It doesn’t feel like it was very long ago when finding used cars for sale was almost impossible, but things are changing. Used cars are sitting on dealer lots for longer, and prices are dropping. Tesla, like other manufacturers, is seeing a drop in their used car prices, but the drop in their used car sales is more dramatic than others. Take a look at some reasons why.
New Tesla Models Will Qualify for EV Tax Credit in 2023
The 2023 EV tax credit is a significant factor in the decline of used Tesla sales. For the first time since 2019, brand-new Teslas will again be eligible for a $7,500 tax credit. When car buyers do the math, they could end up paying over $50,000 for a used Tesla when they could get a new one for less with the tax credit.
In a bold move that added to this issue, Tesla cut prices on several new models for the end of 2022. This move was most likely a way for the automaker to help their year-end sales, but it most likely added to the drop in used Tesla sales.
Lower Fuel Prices
When gas prices were high, demand for Teslas was high. As one of the longest-range electric vehicles on the market, drivers were willing to pay more for a used Tesla in order to save at the pump. Now that gas prices are easing, buyers are not flocking to EV models with as much urgency.
Rising Interest Rates
Interest rates for auto loans have risen significantly since 2021, and rates for used cars are higher than rates for new cars. With so much economic uncertainty and talks of a recession, many car buyers are hanging onto their money instead of running out to find used cars for sale.
More Competition
For a long time, Teslas were the only viable long-range EV used cars for sale. With more mainstream manufacturers coming out with EVs in every market segment, buyers have more options at more affordable prices.
New EVs from other automakers are creating a lot of buzz. With more choices, buyers don’t have to look at used Teslas to get into an EV with a range they feel comfortable with and with the latest features and technology.
Tesla Flippers
Tesla flipping was a profitable business for some Tesla buyers. For the past few years, if you were patient enough to buy a new Tesla and then wait for it to come in, you could quickly flip it and sell it for a profit to another buyer who was not as patient. As demand for Teslas drops, flippers are having a harder time finding buyers, resulting in a dramatic drop in used car sales.
So, the bottom line: why are Tesla prices dropping faster than other used cars? It really just comes down to supply and demand. Supply chain issues are not as much of a problem, so Tesla increased output, but easing fuel prices, more EV competition, and rising interest rates are reducing demand. This results in Tesla having more used cars for sale without buyers to snatch them up.
