Price for used Tesla drops at a faster rate compared to other car models

The price for used Teslas has been dropping drastically and at a much faster rate compared to other car models. The drop comes after a period of high demand where people could flip Teslas to other buyers who did not have the patience to wait for their new cars at a profit.

Used Tesla car prices plunge

According to a report by Reuters, the price of Teslas was dropping, and these cars took longer at the dealer lots. In November, the average price for a used Tesla was $55,754. This represented a 17% drop from the July peak of $67,297.

According to data published by Edmunds, the used car market also reported a 4% decline during the period. In November, used Teslas remained in the dealer lot for 50 days on average, which was a longer time than the average 38 days for all the used cars.

The demand for Tesla cars increased as gasoline prices increased because of the Russian invasion of Ukraine. However, Tesla also increased its car prices at a higher rate, which raised the company’s profit margins. Some buyers started taking advantage of the rising demand to sell their cars to other buyers at a profit and then place an order for new cars. This further raised the demand for new Tesla cars.

However, the factors that caused the meteoric rise in Tesla prices are no longer in play. Fuel prices are easing, and interest rates have risen as the Federal Reserve seeks to take the rising inflation. Tesla’s output has also increased as the competition in the EV industry grows.

These factors have collectively led to the prices of used Tesla cars falling at a higher rate than the rest of the market. The price of new Teslas has also declined significantly. Last week, the EV maker set the new car price cut at $7,500 for the Model Ys and Model 3s delivered in 2022, creating anxiety about the dropping demand.

Around a third of the used Tesla vehicles for sale in August were 2022 models being resold, indicating that the original buyers wanted to flip and make profits. This was a higher number compared to the 5% of the other car brands in the used car market.

Used car market in the US faces a recession

Tesla’s CEO, Elon Musk, said that the rapid changes in interest rates had caused a rise in the price of all new and used cars. Therefore, Tesla was considering lowering prices to sustain the volumes. However, this action would result in a drop in profits.

However, Tesla is not alone in the crisis. The used car market in the US is currently facing a recession. CarMax, a used car seller, reported an 86% decline in its third-quarter profits.