Tesla’s used car price bubble pops, weighs on demand for new cars

SAN FRANCISCO, Dec 27 (Reuters) – Tesla buyers who have waited months for their new car have faced an unusual choice for much of the past two years: keep the new electric vehicle, or sell it at a profit to someone with less patience.

But the days of the Tesla flip are numbered ̵[ads1]1; a potential threat to new car prices that are already being slashed.

Prices of used Teslas are falling faster than other automakers, and the status symbols of clean energy are disappearing in the dealership much longer, industry data provided to Reuters showed.

The average price of a used Tesla in November was $55,754, down 17% from the July peak of $67,297. The overall used car market was down 4% during that period, according to Edmunds data. The used Teslas were in the dealer’s warehouse for an average of 50 days in November, compared to 38 days for all used cars.

Rising gasoline prices, an effect of the Ukraine war, increased demand for Teslas, one of the few long-range electric vehicles on the market. Tesla Inc ( TSLA.O ) itself raised prices faster than those of other cars, building up profit margins. And buyers of some new Teslas took advantage of the booming market to sell their relatively new cars at a profit, then order new ones, boosting demand for Tesla’s new cars.

Now, fuel prices are falling, interest rates are rising, Tesla production is increasing and electric car competition is increasing, which is causing the prices of used Teslas to fall faster than the market, creating a ripple effect on the prices of new Teslas.

Tesla last week doubled a US new-car price cut to $7,500 for Model Ys and Model 3s delivered this year, adding to investor jitters about curbing demand.

Nearly a third of used Teslas for sale in August were 2022 models that were up for resale, a sign that original buyers were aiming to flip, analysts said. That compares with about 5% of other brands on the used market, research firm Edmunds said.

Tesla shares fell 7.3% to a more than two-year low of $114.12 in early trading on Tuesday. They are down over 65% this year.

“You can’t sell your current Tesla for more money than you paid for it, which was true for much of the last two years,” said Karl Brauer, an analyst at auto sales website iSeeCars.com. “It will reduce the demand for new Teslas.”

On Thursday, Musk said that the “radical changes in interest rates” have increased the prices of all cars, new and used, and that Tesla could potentially lower prices to maintain volume growth, which would result in lower profits.

Tesla, which has disbanded its media department, did not respond to Reuters’ emailed questions.

Indeed, Tesla is hardly alone: ​​The US used-car market boomed when global auto production hit trouble, but it now faces a “used-car recession,” one analyst said, after used-car seller CarMax last week reported an 86% decline in third-place sales. – quarterly result.

But Tesla is leading the retreat: the factors pushing up the prices of its vehicles were exaggerated compared to other brands because Teslas “basically for a long time were really the only viable product when it came to used electric cars,” said Ivan Drury, director of Insights at Edmunds .com.

Electric cars like the Ford F-150 Lightning and Hyundai Ioniq 5 are hitting the market with a lot of buzz, said Liz Najman, content marketing manager at EV researcher Recurrent.

Software engineer Greg Profitt bought a new Model Y last year for $49,000 and sold it three months later for $12,000 more. He ordered a new one – but has just bought a used Tesla at a discount.

“The economy kind of scares me into buying new,” he said, adding that the new $7,500 rebate would be too little to sustain demand.

Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru, additional reporting by Akash Sriram; Editing by Peter Henderson, Anna Driver and Matthew Lewis

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