Here's Why Tesla Car Values Have Dropped So Fast

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Tesla used car values have dropped incredibly fast -- and today I'm going to explain why. Doug DeMuro will cover why Tesla values have fallen so quickly, and what's to blame for rapidly slowing Tesla pricing.

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[DougDeMuro]

Note that I filmed this video on Monday, before Tesla's announcement this week that they're significantly cutting prices on all their new models -- a move that will only further serve to significantly reduce the value of used Teslas.

[puffpio]

I think there's also a fifth point: Increase used car supply due to 3 year lease returns. The Model 3 came out as a 2018 model year, but in the beginning production rates were really low so not a lot were made/sold. We are at the point where a decent supply of leases are expiring.

[HightLink]

You know what's a huge deal breaker for me? the freaking enormous repairing prices on any random thing like a door handle compared with a "normal" car. Not to mention the fact that as a car guy, I would like to change some of the broken parts myself like a tail light for example, not be forced to go to their service. Fast acceleration and some gimmicks can't replace what some of us really want from a car.

[spireprintingpackaging]

Another factor you forgot to mention is the long list of service issue, delays and price gouging on repairs, replacement parts and bricking some used cars. This has a big effect on people looking for moderate ownership costs. Many other luxury cars drop like rocks from some of these issues.

[winningdesigns]

In Australia they dropped about 10% in the past 3 months as I've been following the prices closely. I also happened to test drive a model 3 in early Dec and I've asked for their prices of pre-owned 2021 and up, and the guy said the cheapest one they have is $67k aud. To which I said 'no thanks because online they are $10k cheaper'. He almost fell off his chair and immediately went to check for himself lol. But since then the same cars I saw 6 weeks ago are still for sale and they are dropping even more.

[zach_drives_]

Love when Doug’s inner economist shows - more analysis like this in the future please.

[ynie]

Definitely keeping an eye out! I wanted a model Y almost a year ago, and a used one was 70K OTD. If I could score one under 40K, that would be a phenomenal daily commuter!

[daltonknox]

I had a Model Y on order. I let it drop for a number of reasons:
self driving doesn't work well enough and got worse after radar was removed.
the Fremont Y has a bent frame so body panels and doors don't fit and rattles and
squeaks cannot be fixed and there is no sign that Austin Ys will be available.
the value of the cars drops to zero after the 8 year drive train warranty runs out
because of the potential cost of replacement of battery, drive units etc.

[amcluesent]

Here in Britain, electricity prices have skyrocketed (about 42 US cents per kWh) making EVs less attractive compared to gas, plus in the 22/23 winter there was a lot of press coverage of long queues at the small number of Supercharger sites as Tesla range fell in the cold weather.
The charging infrastructure in Britain just isn't ready for mass EV ownership, despite our utterly corrupt politicians banning sales of gas cars from 2030

[TheHulker]

The one thing that also has a big impact that you did not mention is the federal $7, 500 tax credit and price cuts which makes all model 3 and most model Ys much cheaper. Examples: Dual Motor 5 seat model Y was 65, 990 now 45, 490. Model 3 Rear Wheel Drive was 46, 990 now 36, 490. Model 3 performance was 62, 990 now 46, 490. With these changes used car prices will continue to go down unless wait times for new models gets much longer again.

[jonathanorta]

Increased competition is definitely one of the reasons. I used to want a Tesla cus it was electric and thr technology seemed great, but now these other brands offer more in my opinion. The design is just more attractive in the other brands than Tesla's. Especially when you talk about teslas build quality.

[solneshkallc]

You forgot to mention how former Tesla customers left the brand because of the HORRIBLE customer service & car repair service. We were a 2-Tesla vehicle household who just had enough of their uppity attitude in dealing with customers and how they handle servicing those cars!

[worldrallynut]

With the recent price cut, a new model 3 performance now can qualify for the $7500 federal tax credit + $4000 tax credit in NJ if you configure for less than $55k. That means a new model 3 performance with barely any wait list can be bought for $45k after fees including credits.

Edit: The NJ rebate is $2k for vehicle prices between $45k-55k and $4k for below $45k. It is offered point of sale.

[sittingduck]

I will add another factor: my 4 year old model 3 still costs $2000 for annual insurance. As new buyers become more informed, fewer and fewer people are willing to pay that kind of insurance - it effectively cancels out a big chunk of gas savings, if not all of it.

[timcole]

Well put on all fronts and spoken in a clear concise way. I hope they keep tanking....I want a salvage 3 performance project in my life.

[ali_elsemary]

which video is for the car in the cars and bids section, looks like a mitsubishi galant 7 but i cant find the video, please someome reply with a link if there is a video.

[costafilh]

This is nice! 2-3 car reviews per week + More Doug 1-2 videos per week.

PS: I miss car spotting with Doug! 😅

[michaelbrady]

You make a good point that when used model 3’s start hitting the $20k mark, that’s almost too good to pass up. It’s a lot of car for the money and that will have the effect of devaluing used Leaf’s, Bolt’s and other cheaper ev’s. I just got done with a 2021 Leaf SV with Pro-Pilot and it is no comparison to a model 3 in any way…these are listed in the high $20’s on dealer lots as comparison.

[ivar]

I got my Model Y in Iceland December 22. Teslas were not depreciating at that time and holding value very well. Delivery time was 1-3 months.
From what I know cars where not often "available now" ie. someone decided not to take delivery. When I came in to Tesla Iceland I could choose from 2 cars. A few hours later I was offered yet another car (which bought). Thinking back this is very suspicious especially since the car was about to increase about $4000 in price in the new year because of tax changes. So now I'm thinking - who knew about this? Did Tesla Iceland tell friends to not to take delivery and they then passed the cars on to suckers (me)?
This feels like a sort of insider trading thing. I can not see any difference in selling company stock you know for a fact is going to decrease in value and selling a car that you know is going to (abnormally) depreciate in value. Legally it seems to be different but ethically I can not see a difference. I suspect why this is legal and insider trading is not is that insider trading affects people that have money and power. A new car is for most people the second most expensive thing they will buy.
Besides the money I feel I got robbed of the joy of getting and owning a new car. I like the car but I also hate it.
Anyway my blood will stop boiling at some point but I find it very unlikely that I'll buy another Tesla.

[rpmrevolution]

Locally, the demand for EVs in general, has really fallen in my area after hurricane Ian. For several weeks people were not able to charge their cars without power while gas stations continued to operate with generators running the pumps. Tesla certainly has the advantage with its charging infrastructure, something I didn’t realize until living with my Mach-E for 8 months before selling due to the unreliable charging infrastructure anytime I traveled. But, without electricity neither has the advantage. Just something to consider before buying an EV if you live in a disaster prone area.