Tesla (Nasdaq: TSLA) continues to feel the consequences of its massive price cuts. Data from CarGurus show that the average price of a used Tesla has declined every month for the past 19 months, and is now down 50%.
The February 2024 average price fell to a record low of $33,913 on Monday, coming from a record high of $67,900 in July 2022. This coincides with continuous price cuts throughout 2023. Tesla has cut nearly 30% off the sticker price of its top-selling Model Y. Just a few days ago, they announced a limited-time price cut for the same model in the US.
Analysts have, for over a year, been warning that the price cuts would hurt not just Tesla but the used EV market as a whole. The average price of used EVs has been lower than used combustion engine cars. But this doesn’t necessarily mean that more people are going to buy them, or that they will be more affordable to run.
Energy prices and insurance premiums are higher, and incentives continue to be rolled back, slowing down adoption rates, especially for battery electric vehicles (BEVs).
According to Tim Albertsen, CEO of global lease firm Ayvens, it’s also how Tesla does it that makes it worse for its used car prices. Tesla’s practice of announcing its price cuts — meant to encourage demand — “immediately flow through to residual values” (used car prices), and the same can’t be said for other carmakers who offer these price cuts during individual sales conversations, thus making the impact on used cars more manageable.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
The Grocery Grift: Why Toronto and New York Are About to Light Taxpayer Money on Fire