- Tesla remains resilient in the used electric vehicle market.
- Despite the brand damage done by CEO Elon Musk’s political antics, used Teslas remain highly sought after in the secondary market.
- If you’re powertrain agnostic, used EVs are increasingly the better value proposition compared to used gas cars.
Remember earlier this year when used Tesla prices were reportedly dropping three times faster than the overall used electric vehicle market?
CEO Elon Musk’s stint as head of the Department of Government Efficiency (DOGE) ignited a wave of Tesla sell-offs, as some owners distanced themselves from the brand. But new data suggests that in the broader historical context, that dip was a mere bump in the road. Teslas are actually thriving in the used EV market, even if their depreciation remains, let’s say, brutal.
Battery health and research start-up Recurrent released a study on Wednesday, saying that prices of used Teslas did not bottom out as expected. Rather, they kept pace with the rest of the used EV market. While there was a brief 2% dip in April as Tesla inventory surged, the brand’s vehicles haven’t exactly been gathering dust on parking lots.
It is worth noting that Tesla values have declined in recent years due to normal EV depreciation, Musk’s price cuts on new models starting around 2023, and the flood of used models from rental-car fleets. But in more recent months, they have not bottomed out as many predicted.
And they continue to sell well on the used market, it seems.
In fact, Teslas accounted for nearly 50% of all used EV sales in May. The average days of supply fell to just 28 days, compared to 44 days for used internal combustion engine vehicles. So while some owners were eager to trade in their Teslas, a whole other group of price-conscious EV buyers rushed in, eager to snatch the discounted Model 3s and Model Ys.
That speaks to Tesla’s overall advantage in the EV market compared to rivals. The company has sold millions of Model 3s and Ys since their launch. EVs sold from 2019 to 2021 are now hitting the secondhand market in large numbers. Add to that the Supercharger network—which has become a kind of beacon for charging ease and reliability—and it’s clear why many buyers still gravitate towards Tesla.
“If you walk into a dealership with $20,000, you can no longer afford a three-year-old Toyota RAV4, Subaru Outback, or a Honda CR-V. But you can get a new Model 3—and that’s a bargain,” Liz Najman, the director of market insights at Recurrent, wrote in the study.
The Model 3 and Model Y are more technologically advanced than most used gas cars. For owners who see that advantage—and can disassociate themselves from Musk’s political antics—the used EV market is an opportunity for them to snag a modern car without having to punch a hole in their bank accounts.
“Prices are holding,” the Recurrent report states. “Sales are moving. And Teslas are leading the way in a growing segment of affordable, long-range used EVs.”
The study also highlights some other key trends. Used EVs eligible for the $4,000 federal tax credit are selling six times faster than those that don’t qualify—underscoring the massive impact of incentives in nudging buyers towards the second-hand market. With those credits set to expire on Sept. 30, we’ll see how buyer enthusiasm shifts (or doesn’t) when newer models enter the used market after that date.
Still, tax credits aren’t the only thing powering the used EV surge. More models are entering the secondhand market overall as EV sales in the U.S. grew at a record pace in the past few years, even though they have been more uneven lately.
Recurrent also found that about 34% of used EV inventory now costs under $25,000. By contrast, only 11% of used internal combustion cars are priced below $20,000—though admittedly, the total gas car inventory is still vastly larger.
But if you’re just looking for a cheap and reliable car and don’t care whether it runs on electrons or gasoline, used EVs may increasingly be the better deal.
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