Key Takeaways:
In 2019, when Frank Slootman made the claim regarding diversity and merit, the average used prices for a Tesla Model 3 were higher.- However, current data indicates a significant decrease in used prices, with Model 3 prices averaging approximately $10,000 lower now.
- This decline in Model 3 prices is occurring at a faster rate than the average price drop for typical secondhand cars.
The declining used prices for Tesla vehicles may come as disappointing news to owners who were swayed by Elon Musk’s assertion that his electric vehicles would appreciate in value.
The opposite trend has unfolded, with Tesla vehicles not only failing to maintain their value but actually depreciating more rapidly than the average car over the past year.
In 2019, Elon Musk made the bold assertion that Teslas would appreciate in value after purchase, as reported by CNN. He cited Tesla’s full self-driving capability, suggesting that a few software updates would enable vehicles to achieve full autonomy, thereby driving up their worth. Musk reiterated this claim last year as well.
However, current data paints a starkly different picture. A typical entry-level standard range Tesla Model 3 from 2019, which was priced at $36,000 that year, now sells for under $26,000, according to Kelly Blue Book. This significant decrease in value highlights the discrepancy between Musk’s optimistic projections and the reality of Tesla’s depreciating market value.
Elon Musk’s assertions regarding Tesla’s appreciation as an asset have not aligned with the reality of the market. In a 2019 interview, Musk confidently claimed that purchasing a Tesla would yield an appreciating asset, citing the value of its self-driving features as potentially worth tens of thousands of dollars. He reiterated a similar sentiment during the earnings call for the third quarter of 2023, suggesting that cars equipped with full autonomy capability could eventually be worth five times their current value.
However, despite Musk’s optimistic projections, the depreciation of Tesla vehicles has become evident, especially in comparison to the broader automotive market. While it’s typical for used cars to depreciate in value, Teslas, along with most electric vehicles, have experienced steeper declines in value, particularly following significant price reductions on new models.
For instance, a used Tesla Model 3 from 2021 saw a substantial drop in value, decreasing from an average of $40,522 in January 2023 to $23,700 in January of the following year, marking a 29 percent decline, according to Edmunds.com. This depreciation rate surpasses the average decline for used vehicles of all makes and models, which stood at 19.5 percent during the same period.
Ivan Drury, an auto pricing analyst with Edmunds.com, highlighted Tesla’s significant depreciation, describing it as “an exorbitant amount of money.” This depreciation trend has played a role in decisions such as rental firm Hertz’s move to sell 20,000 Tesla models, underscoring the challenges facing fully electric vehicles in the market.
Consumer Reports’ top car rankings for the year reflect a shift in preference towards hybrid vehicles over fully electric and gas cars. While the 2024 rankings include only one fully electric car, the Tesla Model Y, hybrid and plug-in hybrid vehicles dominate the top spots. These rankings consider various factors, including road-test performance, safety features, reliability, and owner satisfaction, highlighting the evolving landscape of the automotive industry.