Tesla (TSLA) prices are continuing to fall in the used market — a good sign for buyers but bad news for current owners.
Tesla used car prices dropped 10.1% in March year over year, the biggest drop among the 10 auto brands that saw falling values in 1- to 5-year-old cars, per a new report from auto research site iSeeCars. Tesla’s slide was bigger than Chrysler’s at 8.9% and Maserati’s at 8.6%, two of Stellantis’s most struggling brands.
Digging deeper into the top 20 models with the largest price drops, Tesla’s EVs featured prominently. Four Teslas ranked on the list (Model S, Model Y, Model 3, and Model X), and the Model S sedan had the biggest year-over-year price drop, losing 17.2% of its value, or nearly $10,000 from a year ago.
The Model Y SUV, Tesla’s volume seller, lost 13.1% to an average price of $30,611, while the Model 3 sedan shed 10.9% to $26,084.
Declining resale values have become a bit of a trend for the brand. “In both the new and used car markets, Tesla prices have been dropping for over two years,” said Karl Brauer, iSeeCars executive analyst. “Price cuts on new Teslas immediately impacted used Teslas, driving their prices down at a rapid rate. The new car price cuts were driven by Tesla’s desire to maintain sales growth, but that strategy stopped working last year when the automaker saw its first decline in annual sales.”
Price cuts over the years for new Tesla EVs have weighed heavily on the used car market, as buyers were getting better value by buying new. And while that boosted new car sales, it crushed existing Tesla owners who were getting far less at trade-in and put the hurt on fleet operators like rental car chains, which took massive depreciation hits to their EV inventory.
Tesla’s brand has also taken a hit due to the right-wing political activities of CEO Elon Musk, which have impacted sales both in the US and abroad. S&P Global Mobility reported registrations for Tesla vehicles in the US dipped 11% in January compared to a year ago. Though Tesla retained the top spot in terms of US EV market share at 42.5%, it represented a whopping drop of 12% compared to last year.
Falling prices and dropping sales come as Tesla is set to report first quarter results after the bell on Tuesday.
Brauer and iSeeCars see weaker results coming due to diminished demand.
“Tesla has been one of the most profitable automakers in the world in recent years, but the ongoing drop in its new and used vehicle values, along with sagging sales, will be a drag on revenue and profit,” said Brauer.
