The days of paying a premium for a used Tesla are seemingly in the rearview mirror as demand for the pioneering electric vehicle plummets.
The price of a used Tesla has fallen 17% in the past five months, from a peak of $67,297 in July to $55,754 in November, according to a Reuters report. During the same period, the overall price of used cars fell only 4%.
That’s a far cry from Tesla’s accelerated sales during the pandemic, when demand led buyers to pay more for a used electric vehicle rather than wait months on the waiting list for a new one.
Nearly a third of used Teslas for sale in August were 2022 models slated for resale, a sign that original buyers were aiming to turn around, analysts said. That compares to around 5% of other brands on the used market, according to research firm Edmunds.
“You can’t sell your current Tesla for more money than you paid for it, which was true for much of the past two years,” said Karl Brauer, executive analyst at the car sales website. iSeeCars.com. “That would reduce the demand for new Teslas.”
Used Teslas sit on the lot longer than other used cars — 50 days compared to the 38-day average for most other brands — before being sold, Edmunds.com said.
With falling fuel prices, rising interest rates and increasing competition from electric vehicles, Tesla prices are falling faster than the market and creating a cascading effect on the prices of new Teslas.
Tesla last week doubled a new-car price discount to $7,500 for Model Ys and Model 3s delivered this year, adding to investor jitters about easing demand.
Tesla shares fell 7.3% to a more than two-year low of $114.12 in early trading on Tuesday. They are down more than 65% this year.
Tesla, which no longer has a media relations department, could not be reached for comment.
The massive drop in Tesla shares comes as Musk seems increasingly distracted by his acquisition of Twitter. In recent days, analysts from Oppenheimer, Daiwa Capital Markets and Evercore ISI have all cut their Tesla price targets.
Musk has sold nearly $40 billion of Tesla stock this year, in part to pay for his $44 billion takeover of the social media site.
“I needed to sell stocks to make sure, like, there was dry powder…to account for the worst-case scenario,” Musk said in a Twitter chat. Musk assured listeners he would not sell any more shares, but investors are aware he has made similar promises before and has not followed through.
Musk has also had to suspend operations at Tesla’s factory in Shanghai as COVID cases rise. He also hinted that the company would not meet its production targets for the year.
On Thursday, Musk said “drastic interest rate changes” had raised the prices of all cars, new and used, and that Tesla could potentially lower prices to support volume growth, which would lead to a decline in profits.
Yet Tesla dominates the electric vehicle space with a market capitalization of over $350 billion, remaining the largest automaker in the world. Toyota’s market cap is $222 billion, General Motors’ is $47 billion, and Ford’s is $44 billion.
However, other companies like Ford and Hyundai are launching electric vehicles that could further undermine Tesla’s dominance.