2022 was a strange year for Tesla. Global chip shortages and supply chain disruptions compounded into a shortage in vehicles for the aforementioned brand. The war in Ukraine roiled oil and gas markets making driving a conventional vehicle expensive leading to people rushing for electric cars. And, the foibles of their CEO—acquiring Twitter, losing the most money in history to date—were constant media fodder.
All this seemed like an inflection point for Tesla with demand, brand value and stock price only set to go up.
Edmunds sales data shows that a third of used Teslas for sale in August were 2022 models up for resale--a sign that original buyers were most likely aiming to flip their cars for profit.
How things have changed.
Tesla recently announced a 20% drop in price for most models in order to stimulate global demand sending used car values falling.
So why are used car prices for Tesla and EVs falling?
The Economy, Interest Rates and Inflation.
There isn’t much more to be said here that everyone else isn’t reading in their news feeds. Prices are high and interest rates are only set to go higher making buying anything a lot more expensive.
EV Production Is Finally Catching Up
Production is finally catching up to demand but the truth belies some of the truth behind the current EV market. While production is catching up to demand that demand is a lot more muted than it was in 2022.
The Used Market is Flooded with EVs
Have a white 2022 Model 3 or Y that you want to sell? Unfortunately, you’re amongst thousands of others. Tesla-flipping was a thing in 2022 but people who ordered their white model Ys with a dream of making a few bucks are now back to where we all were with used car sales values—“once you drive it off the lot, you’ve lost money.”
Speculation--in the long run--usually ends with a lot of people losing money and history is rife with examples (think Dutch Tulips, Housing, the list goes on). When it comes to the used car market it always makes sense to adhere to the rules that your car is, in most cases, a depreciating asset. It's less about making money than it is.