Tesla used car price bubble bursts, weighing on demand for new vehicles

For much of the past two years, Tesla customers who waited months for their new car have had an odd option: keep the new electric car or sell it at a profit to someone who has less patience.

The days of the Tesla flip are coming to an end, which could endanger the already declining prices of new cars.

According to industry statistics provided to Reuters, used Tesla prices are dropping more quickly than those of other automakers, and the clean-energy status symbols are remaining on dealer lots for a longer period of time.

The typical cost of a used Tesla in November was $55,754, which is a 17% decrease from the peak price of $67,297 in July. 

According to Edmunds data, the used automobile industry as a whole had a 4% decline over that time. 

In November, used Teslas stayed in dealer inventory for an average of 50 days as opposed to 38 days for all used automobiles.

The Ukraine war’s impact on rising gas costs increased demand for Teslas, one of the market’s few long-range electric vehicles. 

Tesla Inc. (NASDAQ: TSLA) increased its own pricing more quickly than those for competing vehicles, increasing its profit margins. 

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Additionally, some new Tesla owners profited from the rising market by selling their relatively new vehicles for a profit before placing new orders, which increased demand for Tesla’s new vehicles.

Now that fuel prices are declining, interest rates are rising, Tesla production is rising, and EV competition is expanding, used Tesla prices are falling faster than the market, which has a trickle-down impact on the cost of new Teslas.

In response to investor concerns about waning demand, Tesla last week doubled a U.S. new-car price drop to $7,500 for Model Ys and Model 3s delivered this year.

Analysts noted that the fact that about a third of used Teslas for sale in August were 2022 models up for resale indicated that the original purchasers intended to flip the cars. 

According to research company Edmunds, that contrasts with around 5% of other brands on the used market.