Tesla Leads Significant Decline in Used Electric Car Value in the US, Impacting Market as a Whole

In the midst of an extraordinary surge in 2022 that witnessed some pre-owned electric vehicles (EVs) fetching higher prices than their brand-new counterparts, the value of used cars finally began to decline over the past six months. Notably, Tesla, a major player in the EV market, has been at the forefront of this downward trend, with its Model 3 experiencing a substantial 30% drop in value over the course of the last year.

Recent data from iSeeCars reveals that while the overall used car prices have only dipped by less than four percent year-over-year for the third consecutive month, the decline in used EV prices has been even more pronounced. In June alone, the prices of used EVs plummeted by 29.5% compared to the previous year, following a decrease of 28.9% in May, 24% in April, and 16.8% in March. The analysis conducted by iSeeCars encompassed over 1.8 million used cars aged between one and five years, offering insights into the latest trends in the used car market.

Karl Brauer, Executive Analyst at iSeeCars, highlights that the dominance of Tesla in the market has heavily influenced the decline in used EV prices. He asserts that vehicle prices have been on a steady downward trajectory, experiencing a 15.7% decrease since January, with the rate of decline progressively intensifying each month in 2023. Tesla’s decision to reduce prices on new models has resulted in a sharp decline in the value of its used EVs. Given Tesla’s significant market share in the used EV segment, the substantial decrease in Tesla values has had a far-reaching impact on the entire category.

Leading the pack in terms of value depreciation is the Tesla Model 3, which has witnessed an astonishing 30% drop in its worth since reaching its peak in June 2023. It is noteworthy that despite this decline, the average selling price of a used Model 3 still hovers around $37,000, a figure remarkably close to the base price of a brand-new Model 3.

Rising interest rates have begun to exert influence not only on new car buyers but also on used car transactions. This has created a peculiar situation where the inventory of used cars is at an all-time low due to a decrease in people upgrading their vehicles. Paradoxically, prices continue to decrease due to insufficient demand resulting from buyers struggling to secure financing.

While the current state of the used EV market appears challenging, it is anticipated that an improved landscape will emerge with time. Prospective buyers and sellers will need to exercise patience as market conditions stabilize and financing options become more accessible. As the market adjusts, industry stakeholders will be closely watching the developments in the used EV sector, eagerly awaiting signs of a revitalized and flourishing market.