Longtime Tesla investor Ross Gerber has sold about half of his stake in the electric car company, but still cannot buy his actual Tesla.
Gerber recently told BI that the used car market is so flooded with old Teslas that he has not been able to resell his old model at what he considers a fair price.
He’s right: a used Tesla is certainly not worth as much as it was a few years ago.
With demand for Tesla electric vehicles far exceeding supply from Elon Musk’s company in mid-2022, a used Model Y could trade for as much as $70,000, according to data from Recurrent, a provider that tracks used electric vehicle prices.
The same car is worth less than $40,000 on the used car market today, the company said.
Tesla is hit hardest as prices for used electric vehicles fall
Used electric vehicles are becoming more affordable as more vehicles come to market. As a pioneer in this segment, Tesla is the one most affected by these falling resale prices.
According to industry data, Teslas are the most common electric vehicles found on the used market, accounting for around 42% of the market. Hertz’s move to remove 30,000 Teslas from its fleet earlier this year accelerated the decline in used market values.
This increased supply puts pressure on resale values and forces owners who want to get rid of their vehicles to lower their list prices to attract buyers. That’s why Gerber kept his Tesla.
Musk’s price war in the new electric car market isn’t helping matters. Tesla cut prices by about $15,000 last year and has cut them further this year.
When factoring in a $7,500 federal tax credit, a prospective Tesla owner can get a brand-new rear-wheel-drive Model 3 for around $31,490. According to Recurrent, the average used price for a used 2018 Model 3 is $29,303.
Tesla’s dominance in the electric car market is waning
Tesla is maturing into a regular car manufacturer again. The increased residual values of Musk’s cars were never sustainable in the long term, especially since Tesla plans to produce millions of cars per year.
In some ways, Musk’s early commitment to the electric vehicle segment is vindicated by the company’s declining dominance as more and more competitors enter the market.
According to Cox Automotive, the falling resale values come at a time when Tesla’s share of the new electric vehicle market fell below 50% for the first time in the second quarter.
Increased competition from established automakers like Ford, Volkswagen and GM means that electric vehicle buyers have more choice and don’t have to choose a Tesla every time – another sign that Musk was right about the future viability of battery-powered cars.
