In mid-January, Tesla slashed prices by up to 20% across its lineup, but new-car shoppers aren’t the only ones who might encounter falling price tags on the brand’s all-electric SUVs and sedans: Cars.com data shows that used Tesla prices have also been trending down since their summer peak, and the dip has accelerated in recent months. Read on for details regarding average used Tesla prices, recent inventory levels, and how the new federal electric-vehicle tax credit rules will impact your new or used EV purchase.
By Jane UlitskayaJanuary 30, 2023
All used Tesla models (i.e., the Model 3, Model Y, Model S and Model X) saw a steady drop in average prices among Cars.com dealer inventory over the last six months after prices peaked in July. For example, average prices for all model years of the popular Model Y SUV saw month-over-month price drops between 2% and 5% since hitting a peak of $73,882 in July.
As of Jan. 22, the average price for a used Model Y among Cars.com dealers was down 23% since July and 5% since December. The average price of a used Model 3 sedan followed a similar trend, down 21% since July and 7% since December.
The larger Model S sedan and Model X SUV each saw comparable average month-over-month price drops of 4% and 5%, respectively, since July. The average price of a Model S was down 31% from the July peak of $73,961 and a 5% drop from December. The Model X’s average price was down 25% from the July peak of $97,898 and 6% from December.
Did Tesla’s New-Car Price Cuts Play a Role?
It’s likely that the recent discounts on the Model 3 and Model Y as well as the more substantial price reductions on all new Teslas are contributing to the drop in used prices; all used Tesla models except the Model S saw the largest price drop since July between December and January. But the above trends show that used prices started falling well before the price cuts took place. A week-over-week comparison of used prices before and after Jan. 13 (the day following the price cuts) shows a 3% average price drop for the Model 3; less than a 1% decline for the Model X; and a 2% drop for both the Model Y and Model S.
Tesla’s price cut, which lowered the base prices of its new cars by up to $19,000, has the biggest impact on newer pre-owned models. Tesla owners who recently purchased a new car before the price changes took effect will likely find the value of their vehicle has plummeted essentially overnight. This has implications for the vehicle’s auto loan (if financed) and its trade-in value.
What About Other Used EVs?
Used Teslas aren’t the only EVs seeing price tags shrink in recent months, but they are falling faster than those of other brands. For the electric compact SUV class — which includes the Audi E-Tron, Ford Mustang Mach-E, Hyundai Ioniq 5, Kia EV6 and Volkswagen ID.4, among others — the average used price across all comparable models in January was $46,955, down 16% from the July peak of $56,179. That’s a notably smaller drop compared to the Model Y, which fell 23% in the same timeframe. In recent months, however, the average prices among these comparable vehicles are trending closer to the Model Y, falling 4% from November to December and another 4% from December to January.
Used Vs. New Teslas
As both new and used Teslas become more affordable, it’s a good idea to consider how each option will fit your budget. Based on new Tesla pricing (including destination charges) seen on the automaker’s website as of Jan. 27, a new Model 3 starts at $45,380 ($55,380 for the Performance variant); the Model Y at $54,880 ($58,380 for the Performance); the Model S at $96,380 ($116,380 for the Plaid); and the Model X at $111,380 ($121,380 for the Plaid).
The average used prices for the Model 3, S and X are notably lower at $41,789, $56,391 and $73,255, respectively. However, the Model Y’s average price lands above the starting price for new variants at $57,001.
Shoppers deciding between a new or used EV should also factor the updated federal EV tax credit guidelines into the affordability equation. The new laws reinstate Tesla’s eligibility for the $7,500 credit and likely motivated the automaker’s new-car price cuts. Along with income caps, the new guidelines stipulate purchase price caps of $55,000 for cars and $80,000 for SUVs, which limits eligibility to the Model 3 and Model Y.
Although a tax credit of up to $4,000 has been extended to used EVs, the purchase price cap is much lower at $25,000. Based on the average used prices outlined above, Tesla shoppers will have a hard time finding a pre-owned vehicle that falls below the price cap. All-electrics like the Nissan Leaf (average price as of January: $23,031) and Hyundai Ioniq EV ($24,636) are more likely to meet eligibility requirements. Used EV shoppers who are open to other options can reference the IRS’ full list of vehicles that qualify.
Used Tesla Inventory Trending Down
Shoppers looking for a used Tesla should note that inventory has been declining alongside average prices in recent months, but it’s still well above the levels seen in the summer of 2022. Average inventory among Cars.com dealers for all used Teslas has dropped every month since October, when it peaked at approximately 17,500 units. For January, the average inventory was approximately 15,000 units — still well above the 8,300 seen in July. The Model 3 is currently the most available used Tesla with an average of approximately 7,500 units, while Model Y inventory averaged 2,500 units after falling 12% since December.
It remains to be seen if used Tesla inventory will continue to fall as demand ticks up in response to the lower prices. Tesla’s price cuts have already spurred demand on new models, according to Automotive News. The report notes that demand for the Model Y increased so fast that Tesla has once again raised the starting price of the SUV by $500.
More From Cars.com:
- What to Know Before Buying a Used Electric Car
- What to Know Before Purchasing an Electric Vehicle: A Buying Guide
- 2021 Tesla Model Y Review: Have Your Cake and Eat It, Too
- What’s New With Electric Vehicles for 2023?
- Tesla SUV Buying Guide
Is a Used Tesla a Good Buy?
Before deciding to go with a used Tesla, shoppers should consider all the aforementioned variables, including the average price trends seen in recent months, tax credit eligibility for its new-model counterparts and availability among falling inventory. Buying a used EV comes with some additional considerations: Although new Tesla models are among the EVs with the longest range, batteries lose capacity over time and used EVs will offer a decreased range compared to a new model. This is especially important for shoppers considering an older model-year Tesla.
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