Electric vehicle (EV) prices in the used market have seen a significant drop, largely driven by Tesla Inc. TSLA implementing aggressive discounts on new models. This has created a challenging scenario for both EV owners and dealers.
What Happened: The value of used EVs has plummeted due to Tesla’s price cuts on new models. This has resulted in a surplus of unsold EVs on dealer lots, reversing the trend from two years ago when supply-chain issues had driven used EV prices to levels comparable to new ones, The Wall Street Journal reported on Monday.
In September, the average price of a three-year-old EV was around $28,400, marking a 25% drop from early 2023, according to Edmunds. This decline stands in contrast to the stable prices in the broader used-car market. While lower prices may attract budget-conscious buyers, many current owners face loans that exceed their vehicle’s worth.
Additionally, Hertz’s decision to release a large portion of its Tesla fleet into the used market has further depressed values. The surge in leasing, now the preferred method for acquiring new EVs, has also contributed to the drop in used EV prices, with leasing accounting for nearly 80% of electric vehicle sales at dealerships today.
Why It Matters: The decline in used EV prices is part of a broader trend in the EV market. In July, rental car companies, including Hertz, began to distance themselves from EVs due to their rapid depreciation. Tesla’s price reductions on new models have been a significant factor in this depreciation.
Despite Tesla’s projected decline in sales, the overall EV market is expected to grow. According to Cox Automotive, EV sales in the third quarter are anticipated to increase by 8% year-on-year, with a 69% jump in used EV sales. Meanwhile, Rivian Automotive RIVN has also entered the used vehicle market, offering lower-priced options on its online shop.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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