Why Are Used Teslas Costing More Than Brand New Teslas With Rebate?

It usually isn’t but occasionally it might be. This article aims to explore the reasons behind this seemingly unusual phenomenon, and how certain market factors contribute to it.

Why Are Used Teslas More Expensive?

There are primarily three reasons for this discrepancy:

Price Drop of New Teslas: The price of new Teslas has been dropping rapidly. At the times when new Teslas are temporarily below the asking price of used Teslas, buyers may opt for a used model instead. Short Wait Times for New Teslas: In some instances, the wait time to receive a new Tesla has been exceptionally long. Patience limits mean buyers are more inclined towards purchasing used models, especially if they’re already aware of the value reduction in new Teslas. Resale Embargo on Cybertrucks: Tesla implemented an embargo on the resale of Cybertrucks due to high demand. The restriction has led to very high prices for those ignoring the embargo, driving up the cost of used Teslas as well.

While these factors can lead to higher used Tesla prices, it's important to understand the overall market dynamics and the long-term outlook.

The Decrease in Used Car Prices

Recent significant Tesla price cuts have affected the used car market. Used Tesla prices have dropped suddenly in line with the reduction in new model prices. Between a 17% and 25% reduction, used Tesla models like the Model 3 and Model Y have seen a steep drop in value.

Though this may be unwelcome for current Tesla owners planning to sell their cars, it’s not necessarily a significant impact in the long term. As residual values over several years will remain relatively stable, the decline in prices should be a one-time adjustment. The eventual values of the cars should stabilize at lower but less steep levels.

The Evolution of Used Car Purchasing

A few years ago, manufacturers, including Tesla, were struggling to meet the demand for cars. Waiting times for new cars were long, and buyers opted to purchase used Teslas with the intent of flipping them for a profit. This situation has changed significantly. The market has softened, and demand has dropped. As a result, the premiums dealers were demanding have evaporated.

Today, you can purchase a new EV off the lot at MSRP or even less. The same applies to used Teslas, which have plummeted from stratospheric prices to as low as 25K for a Model 3 or Model Y.

Supply and Demand Are at Play

The core issue is supply and demand. The demand for Tesla cars exceeds the manufacturer’s current supply. Some buyers are willing to pay above Recommended Replacement Price (RRP) to have a new Tesla immediately, rather than waiting for a new car to be available.

Conclusion

The phenomenon of used Teslas costing more than new Teslas with a rebate is a result of recent market dynamics and supply chain issues. While the current pricing gaps may appear unusual, they reflect a broader market trend and a temporary adjustment period in the aftermath of substantial price cuts.