Photo: Tesla
If you need another sign that Tesla is in deep trouble, you just have to look at the used car market. Used Teslas are now cheaper than ever, which means demand for new cars will also tank soon, and people who expected to make a profit by flipping their Tesla are now stuck with it.
The demand for new Tesla vehicles was so high this year that used-car prices climbed well above the MSRP. It wasn’t just for Tesla or electric cars, as many in-demand models were sold over the MSRP on the used-car market. Dealers also made things worse, with tens of thousands of dollar markups for the hottest models. But Teslas usually were a special case, thanks to insanely-high prices, which peaked at just under $70,000 in August.
This has created a new business for many people who would buy Teslas one after another and then sell them for a sizeable profit. Again, this was a trend we saw for other car makes and models, with the GMC Hummer EV and Ford Bronco as the main culprits, but none of them got to the level of Tesla’s most popular models. The phenomenon even got Elon Musk’s ire, resulting in flippers being banned from ever buying a Tesla ever again.
Nevertheless, the times are changing, and probably Elon Musk would love to have those guys buying Teslas in droves again. This trend may be over now because the used Tesla prices are in free fall and have been declining for the past four months. According to the CarGurus used-car index, used Tesla median prices were the highest at the end of July, at $67,915. They have been deep diving ever since, reaching $54,200 on Christmas day. That’s a whopping 20% drop in value for the average used Tesla in a used car market that only declined 7% over the same period.
This is only one side of the story because Tesla cars are also spending more time on dealer lots, despite their lower prices. Edmunds data cited by Reuters show that Teslas usually take 50 days to sell, compared to the 38-day average for all used cars. We can say that Tesla prices were in a bubble, and that bubble burst, leaving many people with hard-to-sell EVs and possibly, even more on the way. After all, those cars in Tesla’s inventory didn’t appear out of the blue; there must’ve been people canceling their orders.
With this, another effect comes into play and hammers another nail in the coffin for Tesla. With prices so low on the used car market and many new orders canceled, it’s no wonder why Tesla took measures to trim production at Giga Shanghai. Depending on how this situation evolves throughout 2023, Tesla might be in for a brutal awakening. Since the end of the year is usually a time to make wild predictions, here’s ours: Tesla’s new prices will also fall significantly in 2023. After all, Tesla bragged about insanely-high margins in 2022, and there’s no reason to keep those margins if nobody buys the cars.
Tesla has already started discounting its cars in several markets, with China in the pole position. Not more than a year ago, Musk said it has enough on his plate, dismissing the idea that Tesla needed a cheaper product. The current market trends show that good leaders plan in advance, not blinded by momentary success. If Tesla still wants to grow next year, it desperately needs another product. And that is beyond the Cybertruck, which will have to be a resounding success to keep Tesla’s dream going.
This has created a new business for many people who would buy Teslas one after another and then sell them for a sizeable profit. Again, this was a trend we saw for other car makes and models, with the GMC Hummer EV and Ford Bronco as the main culprits, but none of them got to the level of Tesla’s most popular models. The phenomenon even got Elon Musk’s ire, resulting in flippers being banned from ever buying a Tesla ever again.
Nevertheless, the times are changing, and probably Elon Musk would love to have those guys buying Teslas in droves again. This trend may be over now because the used Tesla prices are in free fall and have been declining for the past four months. According to the CarGurus used-car index, used Tesla median prices were the highest at the end of July, at $67,915. They have been deep diving ever since, reaching $54,200 on Christmas day. That’s a whopping 20% drop in value for the average used Tesla in a used car market that only declined 7% over the same period.
This is only one side of the story because Tesla cars are also spending more time on dealer lots, despite their lower prices. Edmunds data cited by Reuters show that Teslas usually take 50 days to sell, compared to the 38-day average for all used cars. We can say that Tesla prices were in a bubble, and that bubble burst, leaving many people with hard-to-sell EVs and possibly, even more on the way. After all, those cars in Tesla’s inventory didn’t appear out of the blue; there must’ve been people canceling their orders.
With this, another effect comes into play and hammers another nail in the coffin for Tesla. With prices so low on the used car market and many new orders canceled, it’s no wonder why Tesla took measures to trim production at Giga Shanghai. Depending on how this situation evolves throughout 2023, Tesla might be in for a brutal awakening. Since the end of the year is usually a time to make wild predictions, here’s ours: Tesla’s new prices will also fall significantly in 2023. After all, Tesla bragged about insanely-high margins in 2022, and there’s no reason to keep those margins if nobody buys the cars.
Tesla has already started discounting its cars in several markets, with China in the pole position. Not more than a year ago, Musk said it has enough on his plate, dismissing the idea that Tesla needed a cheaper product. The current market trends show that good leaders plan in advance, not blinded by momentary success. If Tesla still wants to grow next year, it desperately needs another product. And that is beyond the Cybertruck, which will have to be a resounding success to keep Tesla’s dream going.
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