In the United States, the value of used electric cars has taken a significant hit, with Tesla at the forefront of this downward trend. The Model 3, in particular, has experienced a staggering 30% drop in value over the past year.
After a remarkable surge in 2022, which saw some used electric vehicles selling for higher prices than brand new cars, the market has finally started to see a decline in used car values over the last six months.
According to iSeeCars, while used car prices have dropped by less than 4% year-over-year for the third consecutive month, the prices of used electric vehicles are falling even more rapidly. In June alone, used EV prices plummeted by 29.5% compared to the same period last year. This follows a 28.9% drop in May, a 24% drop in April, and a 16.8% drop in March. The data comes from an analysis of over 1.8 million 1- to 5-year-old used cars conducted by iSeeCars.
Karl Brauer, the Executive Analyst at iSeeCars, notes that Tesla’s dominant presence in the market has contributed significantly to the decline in used EV prices. As vehicle prices continue to decline, dropping 15.7% since January, Tesla’s decision to reduce prices on new models has had a profound impact on the value of used EVs. Since Tesla makes up a large portion of the used EV market, the drastic decrease in Tesla’s values has had a ripple effect across the entire category.
It’s worth noting that despite the 30% decrease, the average selling price for a used Model 3 still hovers around $37,000, which is close to the base price of a brand-new Model 3.
One factor contributing to the decline in used car values is the high interest rates, which are affecting both new and used car buyers. The impact is particularly notable in used car transactions, creating a peculiar situation. On one hand, used car inventory is at a record low due to people refraining from upgrading their vehicles. On the other hand, prices continue to fall because there is insufficient demand, stemming from buyers’ challenges in securing financing.
While the current circumstances present a challenging environment for the used EV market, there is hope that things will improve in the future. The market will need to wait a little longer for a robust and thriving used EV market to materialize, taking into account factors such as interest rates, demand, and overall economic conditions.
In conclusion, the value of used electric cars in the US, including Tesla’s Model 3, has experienced a significant decline. With Tesla’s prominent position in the market, its price reductions have had a pronounced impact on the used EV category as a whole. However, it’s important to note that despite the substantial drop, used Model 3s still command a price close to the cost of a new one. The current market conditions, including high interest rates and financing challenges, have contributed to the decline. While the used EV market faces temporary difficulties, it is expected to rebound in due course, once market conditions stabilize.