Tesla Cars Losing Value Faster Than Expected

Elon Musk once claimed that Tesla cars would appreciate in value over time. But a new analysis shows the opposite has happened, with Tesla cars depreciating more rapidly than predicted. When Elon Musk made bold claims in 2019 that owning a Tesla car would be like having an investment that increased in worth, many were excited by the prospect. As the leader in electric vehicles, Tesla cars seemed primed to hold their value well. But just a few years later, data is telling a different story.

Analysis of used car prices reveals that Tesla cars have actually lost value at a sharper rate than other EVs and conventional cars. On average, a two-year old Tesla car has depreciated nearly 30% of its original price. This steep decline can be attributed to increased competition in the EV market along with Tesla’s own aggressive price cuts on new models.

Why Are Tesla Cars Losing Value?

Tesla’s dominance in the nascent EV market allowed early models like the Model S and Model 3 to retain high resale prices. However, the rapid expansion of EV offerings from brands like Ford, Hyundai and Volkswagen has challenged Tesla’s leadership. To defend market share, Tesla slashed new car prices by over 20% in the last year alone. But this strategy has had unintended consequences for Tesla car owners, driving down used prices across the board. Now, a pre-owned Tesla car that would have fetched $40,000 a year ago is worth nearly 30% less on the used market.

The unexpected depreciation has been a blow to consumers and companies that invested in Tesla cars based on promises of future appreciation. Rental giant Hertz was forced to unload over 20,000 Teslas after realizing their value was falling much faster than expected. While EVs may be the future, the high-flying optimism around Tesla cars as a sure asset has crashed to earth. For now, it seems the only thing appreciating about Tesla cars is the competition facing the pioneer brand.