Aggressive Tesla price cuts pummel the used EV market

(iSeeCars) –

• The average used car price is down 3.6 percent, but used EV prices have fallen 31.8 percent since last year

• Used vehicle prices have been consistently 2 to 7 percent lower than they were last year, suggesting inflation isn’t impacting used car pricing

• Used EV prices have been plummeting, falling between 17 and 39 percent year-over-year during the last 12 months

• Used Tesla prices have fallen 28.9 percent, reflecting the brand’s aggressive new model price cuts while driving values down across the used EV market

• Seven electric models lead the used car market in price drops: Chevrolet Bolt, Nissan Leaf, Kia Niro, Hyundai Kona, Tesla Model X, Tesla Model 3, Tesla Model S

Used car prices have been slowly dropping over the past 12 months, with the average used car now priced at $31,153, a 3.6 percent decline, or $1,161 drop, since last year. While used hybrid vehicles are down about twice that rate, at 6.5 percent or $2,135, electric vehicles have experienced a far more dramatic drop, losing 31.8 percent of their value, which equates to $14,418.

iSeeCars analyzed over 1.8 million 1- to 5-year-old used cars sold in February 2023 and 2024. By comparing the average prices of cars by segment, brand and model, the analysis shows a general softening of used car prices overall, but a dramatic drop in used electric vehicle prices.

Used car prices remain stable, used electric car prices spiral

“Used car shoppers are seeing a bit of a break in vehicle costs, but we’re still well above the pre-pandemic average used car price point of roughly $20,000, with no indication we’re going back to those levels any time soon,” said Karl Brauer, iSeeCars Executive Analyst. “A dramatic drop in used electric vehicle values, largely driven by Elon Musk’s aggressive price cuts on new Teslas, reflects how much influence Tesla continues to have on the EV market.”

The average used car price actually dropped below $30,000 in December, but it quickly bounced back above $31,000 in January and February. As the spring buying season ramps up, driven by tax returns and improving weather, used car prices will likely remain flat into next fall.

Looking at used vehicle values across the three primary powertrains, all three have average prices very close to the overall $31,000 price point. This parity in prices is the consequence of a large 31.8 percent drop in used EV values, compared to a 6.5 percent and 3.1 percent drop in used hybrids and gasoline models values. “Shoppers deciding between a traditional car, a hybrid, or an EV, can now make that decision based on factors beyond price, such as range and convenience,” said Brauer.

EV Values plummet

Used electric vehicle values have somewhat stabilized in recent months, but have been at a 30-plus percent decline compared to a year ago. Used car shoppers considering an electric vehicle can find much better deals today, and with EV prices continuing to drop there could be even better deals in the months ahead.

“Elon Musk’s initial price reductions on new Teslas were already impacting EV values a year ago,” said Brauer. “But his repeated price cuts kept pushing used Tesla prices down, which spread to all electric vehicles, creating weakness across the used EV market.”

Pricing by brand: Tesla values tumble

“Used Teslas lost more value than any other brand, and with a 28.9 percent decline they lost more than twice as much value as second-place Alfa Romeo,” said Brauer. “Elon’s desire to maintain new Tesla sales through price cuts had a very destructive impact on the brand’s residual values.”

Electric cars lead the way in used vehicle price drops

While the overall average price for used cars dropped 3.6 percent, the average price for used EVs dropped 31.8 percent. The weakness in the EV market is obvious when looking at the models that have lost the most value. Three Tesla models are ranked in the top 10 cars for biggest price drops, including the Model X with a 24.6 percent decrease, the Model 3 with a 24.1 percent decrease and the Model S with a 20.5 percent drop.

“EVs make up seven of the top 10 models that lost the most value this year,” said Brauer. “Older EVs like the Chevrolet Bolt and Nissan LEAF lost the most value, but three of Tesla’s four models are also among the top 10 cars that lost value.”

In addition to EVs there were three luxury models among the top 10 used cars that dropped in price. But even these models only lost about half as much value as the Chevrolet Bolt EV.

Premium and performance cars hold their value

The Porsche 718 Cayman is the top-ranked car for biggest price increases, with a 29.4 percent ($25,110) hike since last year. Eight premium models make up the top 10 cars for retained value, including three BMWs, two Porsches, a Volvo, a Genesis, and a Mercedes-Benz. Performance cars are also prominent, with two 2-door coupes and two convertibles showing strong demand among used car shoppers.

“These models all appeal to relatively affluent buyers, suggesting this segment of consumers remain willing and able to pay higher market values to get the used vehicles they want,” said Brauer.

“Stable used car values have combined with falling hybrid and electric vehicles values to create flat pricing across all three,” said Brauer. “Used cars shoppers with a $31,000 budget have access to the majority of models today, regardless of drivetrain. But they’re paying approximately 50 percent more for the average used car than they did before the pandemic.”

More from iSeeCars:

• 10 Most and Least EV-Friendly Places to Live in America

• Best Used Cars for the Money

• Best Cars for 2024

Methodology

iSeeCars analyzed over 1.8 million 1- to 5-year-old used cars sold in February 2023 and 2024. The average listing prices of each car model were compared between the two time periods, and the differences were expressed as both a percentage difference from the 2023 price as well as a dollar difference. Heavy-duty vehicles, low-volume vehicles, vehicles discontinued as of the 2023 model year, and vehicles with fewer than four of the last five model years for each period were excluded from further analysis.

About iSeeCars.com

iSeeCars.com is a data-driven car search and research company that helps shoppers find the best car deals by providing key insights and valuable resources, including the iSeeCars VIN Check report and Best Cars Rankings. iSeeCars has saved users over $412 million so far by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of new cars and used cars.

This article, Aggressive Tesla Price Cuts Pummel the Used EV Market, originally appeared on iSeeCars.com.  

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