For much of the last two years, Tesla customers who patiently waited for their new vehicle have had an odd option: keep the new electric car or sell it at a gain to someone who has less patience.
However, the times of the Tesla flip are coming to an end, which could endanger the already declining prices of new cars.
According to industry data, used Tesla prices are dropping more quickly than those of other automakers, and the clean-energy symbolic meanings are remaining on dealer lots for a longer period of time.
The typical cost of a second-hand Tesla in November was $55,754, which is a 17% decrease from the peak price of $67,297 in July.
Edmunds’ data showed the used automobile industry as a whole had a 4% decline over that time. In November, used Teslas stayed in dealer inventory for an average of 50 days as opposed to 38 days for all used automobiles.
As a result of the conflict in Ukraine, gas costs have increased, which has increased interest in Teslas, among the few long-range rechargeable vehicles on the market. Tesla Inc. (TSLA.O) increased its own pricing more quickly than those for competing vehicles, increasing its profit margins.
Additionally, some new Tesla owners profited from the rising market by reselling their relatively new vehicles for a profit before placing orders for new ones, which increased demand for Tesla’s newest models.
Now that fuel prices are declining, interest rates are growing, Tesla production is rising, and EV competition is expanding, used Tesla prices are falling faster than the market, which has a trickle-down impact on the cost of new Teslas.
In response to investor concerns about waning demand, Tesla last week boosted a U.S. new-car price drop to $7,500 for Model Ys and Model 3s supplied this year.
Analysts noted that about a third of older Teslas for sale in August was 2022 models that were intended for resale, indicating that the initial purchasers intended to flip the vehicles. Research company Edmunds claimed that contrasts with around 5% of other manufacturers on the used market.
In early Tuesday trade, Tesla shares dropped 7.3% to a higher-than-two-year low of $114.12. This year, they have decreased by over 65%.
Karl Brauer, an executive analyst at the auto sales website iSeeCars.com, said people can’t sell their existing Tesla for more cash than they bought it for, which was true for a large portion of the previous two years. As a result, fewer new Teslas would be purchased.
Musk claimed on Thursday that the drastic swings in loan rates have driven up the cost of all cars, both new and used, and that Tesla may have to decrease prices in order to maintain sales volume, which would lower profits.
Tesla, which has dissolved its media relations division, did not reply to inquiries sent by email.
In fact, Tesla is not alone in this situation: after used car vendor CarMax last week disclosed an 86% reduction in third-quarter profit, one analyst claimed that the U.S. used car market is currently experiencing a used vehicle recession.
Ivan Drury, the director of insights at Edmunds.com, noted that Tesla is leading the retreat since the causes driving up the pricing of its cars were magnified when compared to those of other brands because Teslas were for a long time truly the only viable item when it came to used EVs.
According to Liz Najman, a content marketing manager at EV researcher Recurrent, EVs are entering the market with a lot of buzzes, including the Ford F-150 Lightning and the Hyundai Ioniq 5.
Greg Profitt, a software developer, paid $49,000 for a brand-new Model Y last year, then sold it for $12,000 more three months later. He had a new one ordered, but he recently purchased an older Tesla at a bargain.
He continued, saying that the economy kind of frightens him to buy new, and the new $7,500 reduction would be too small to sustain demand.