The Tesla used-car price bubble may be coming to an end, which could have negative consequences for new car demand. Prices for used Teslas have been falling faster than those of other automakers, and the electric vehicles have been sitting on dealer lots for longer periods of time. According to industry data, the average price for a used Tesla in November was $55,754, down 17% from a July peak of $67,297. In comparison, the overall used car market saw a 4% drop during that same period, according to Edmunds data. In addition, used Teslas were in dealer inventory for 50 days on average in November, compared to 38 days for all used cars.

One reason for the declining prices may be the increasing competition in the electric vehicle market. As more options become available, such as the Ford F-150 Lightning and the Hyundai Ioniq 5, demand for used Teslas may decrease. In addition, rising interest rates and easing gasoline prices may also contribute to the decline in used Tesla prices.

This drop in used Tesla prices could have a cascading effect on the prices of new Teslas as well. In an effort to sustain volume growth and boost demand, Tesla CEO Elon Musk recently announced a $7,500 price cut for Model Ys and Model 3s delivered in 2021. However, this discount may not be enough to offset the declining demand for new Teslas. As Karl Brauer, executive analyst at car sales website iSeeCars.com, noted, “You can’t sell your current Tesla for more money than you paid for it, which was true for a lot of the past two years. That would reduce demand for new Teslas.”

Overall, the declining prices of used Teslas and the increased competition in the electric vehicle market are contributing to a slowdown in new car demand. As the U.S. used car market faces a “used vehicle recession,” according to one analyst, it remains to be seen how the industry will adapt to these challenges.

If you need help navigating these challenges, don’t hesitate to reach out to us at CarSherpas. Our team has extensive experience in the industry and can offer practical guidance and support. We hope you’ll reach out Nick@CarSherpas.Com | CarSherpas.Com | 1.800.674.9521