Article – The used Tesla market is showing surprising signs of life following two years of price declines that raised concerns among owners and investors alike. According to recent data from automotive research firm CarGurus, average used Tesla prices have stabilized and begun climbing in key markets, defying broader industry trends.
After falling nearly 41% from their January 2022 peak, used Tesla values appear to have found their floor. The average sale price for pre-owned Model 3 sedans increased 4.7% over the past quarter, while Model Y crossovers saw a more modest but still significant 2.8% uptick according to the latest transaction data.
“We’re witnessing what appears to be a fundamental shift in the used Tesla marketplace,” says Kevin Roberts, director of industry analytics at CarGurus. “The extreme price compression that characterized 2022 and 2023 has largely worked its way through the system, and demand is rebuilding on more sustainable terms.”
The turnaround comes amid Tesla’s aggressive new vehicle pricing strategy that saw multiple rounds of cuts through 2023, which initially devastated resale values. CEO Elon Musk‘s price-slashing campaign reduced new Model 3 starting prices by as much as $13,000 from their 2021 highs, immediately impacting the value proposition of nearly identical used models.
What’s driving this unexpected resilience in the used market? Several factors appear to be converging. First, Tesla’s price cuts on new vehicles have largely stabilized in recent months, removing the downward pressure on used inventory. The company’s announcement that it will hold prices steady through at least Q3 2024 has given used car dealers and private sellers more confidence.
Second, overall used vehicle affordability has become increasingly attractive to budget-conscious EV shoppers. “The average three-year-old Model 3 is now selling for approximately $29,800, nearly $20,000 less than its original purchase price,” notes Jessica Caldwell, executive analyst at Edmunds. “That value proposition is drawing in buyers who previously considered Teslas out of reach.”
Data from Cox Automotive reveals that used Tesla inventory is moving faster, with average days-to-sell dropping from 52 days in December 2023 to just 38 days in April 2024. This acceleration in turnover indicates healthier demand fundamentals rather than merely price-induced sales.
The Federal Reserve’s signals about potential interest rate cuts later this year may also be contributing to increased buyer confidence. “Consumers anticipating more favorable financing conditions are more willing to make major purchases now, especially with used Teslas at historically affordable levels,” explains Cameron Barati, senior automotive analyst at Bloomberg Intelligence.
Not all Tesla models are experiencing the same resurgence, however. The Model S and Model X, Tesla’s premium offerings, continue to see more modest demand in the secondary market. Their higher price points and more specialized appeal have resulted in slower inventory turnover and continued price pressure.
Tesla’s expanding Supercharger network may be another factor bolstering used vehicle values. The company recently opened portions of its charging infrastructure to non-Tesla EVs, but Tesla owners still enjoy significant advantages in charging convenience and reliability. “The charging network remains a significant value-add for Tesla ownership that competitors still haven’t matched,” says Stephanie Brinley, principal automotive analyst at S&P Global Mobility.
Regional differences in the used Tesla market are notable. California, long a Tesla stronghold, shows the strongest price recovery with average transaction prices up 5.9% quarter-over-quarter. The Northeast and Pacific Northwest follow closely behind, while Southern states show more modest gains.
Industry analysts suggest this could mark the beginning of a more normalized used Tesla market. “We’re likely seeing the establishment of a healthier equilibrium,” says George Augustaitis, director of economic research at CarGurus. “The market overcorrected on the downside through 2023, and we’re now finding more sustainable price levels that balance affordability with actual vehicle value.”
For Tesla owners who purchased during the 2021-2022 price peak, the news provides limited comfort. Many still face significant negative equity, particularly those who financed at high loan-to-value ratios. However, the stabilization does suggest the worst of the resale value collapse may be over.
The Tesla resale value recovery also comes as the broader EV market faces challenges. Used electric vehicles from other manufacturers continue to struggle with steeper-than-average depreciation compared to internal combustion counterparts. This disparity highlights Tesla‘s unique position in the electric vehicle ecosystem.
Looking ahead, used Tesla values will likely remain sensitive to the company’s new vehicle pricing strategy and broader economic conditions. But for now, the used Tesla market appears to have found its footing, offering a rare bit of good news for current owners and potentially attractive entry points for prospective buyers.
