Used Tesla car prices fall most on record as Hertz CEO ousted over drastic Model 3 depreciation

The price war that has been sweeping the EV industry for over a year now has led to such a drastic value destruction that second-hand Teslas are now the dubious champions in price depreciation.

Used Tesla cars lost nearly 30% of their value since last February, as Elon Musk kept cutting prices of new vehicles in order to stay competitive.

Tesla cars depreciate the most

Tesla prices fell even faster than those of perennial depreciation champions like Alfa Romeo and Maserati, whose vehicles only fell 13% and 9%, respectively.

Rental companies like Hertz and Sixt, however, suffered the most. They bought tens of thousands of Tesla vehicles at their peak, when supply chain issues and insatiable demand sometimes made Tesla car prices appreciate even after purchase. At the time, even Elon Musk admitted that Tesla car prices are "frankly at embarrassing levels."

Fast-forward to 2024, and the CEO of Hertz announced that he is stepping down. His push to buy 100,000 Teslas while betting on a shift in consumer sentiment went awry as the average used Tesla's price went from $51,323 to $36,515 since last February.

Between the typical rental car depreciation and the EV price war, Hertz lost an exorbitant amount. It recently put 20,000 of its Model 3 vehicles up at fire sale prices starting from $16,000 with the federal used EV tax credit.

Used Model Y prices are a bright spot for Tesla

There is a story behind the unprecedented 28.9% slump in used Tesla car prices, however. When breaking down the brand depreciation rate by models, it's Tesla's most and least expensive vehicles that saw the largest price drops. The price of a used Model X, for instance, fell by nearly $20,000 since last February, while the Model S lost $15,000 of its value, and a second-hand Model 3 is now $10,000 cheaper than it was a year ago.

The majority of vehicles that Tesla sells now, however, are of the Model Y crossover variety. So much so, that the Model Y became the world's top-selling vehicle last year. Those who bought the Model Y witnessed it keep its value best compared to other Tesla vehicles or other EVs.

It remains to be seen if electric car prices will continue to fall at the same rate in the year ahead, now that Chinese EV makers like BYD initiated their own price war.

The Model Y, however, will probably remain the bright spot in Tesla's roster, considering that its price can now be lower than that of the Model 3 Highland even, when tax credits are applied. 

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