Used Tesla car prices stabilize as Model Y depreciates less than Lexus

The rampant drop in used Tesla car prices has now stabilized, and they are no longer in freefall. Elon Musk's new market share gain strategy led to six consecutive price cuts, while the federal tax credit for new EVs added to the downward trend that brought the Model Y price below that of the average new car in the US for the first time.

The new reality was reflected in the market for second-hand Teslas as well. After inching up for a good part of the last two years, Recurrent's used EV Price Index has now fallen and settled somewhere around the April 2021 mark. This means that now is a good time to buy a second-hand electric car without worrying it would suffer accelerated depreciation.

In fact, it seems that the bestselling Tesla cars hold their value better than those of most other automakers, including premium brands like Lexus or BMW. This is not to say that are still appreciating from their retail price like at some points in the past, yet the 2020 Model Y has lost just over 10% of its value for three years, ahead of the Lexus RS, and ditto for the Model 3.

Furthermore, there aren't as many Teslas on the second-hand car market as there used to be, which slows down their depreciation rate further. Tesla's locked leases and new entrants in the electric vehicle market have diminished the share of Tesla cars in the used EV pool from 67% in September to just 33% now, a rather whopping shift. Also, those who bought Teslas with the intention of flipping them for profit keep driving them since their retail prices have fallen drastically.

Now that the used EV prices have stabilized, there are plenty of vehicles below the government's US$25,000 threshold for tax credit eligibility, too. In fact, the share of cheap used electric cars doubled ever since the passing of the Inflation Reduction Act and its green transportation subsidies. Those include US$4,000 for the purchase of used electric vehicles under US$25,000, and more and more second-hand EVs now qualify for this tax credit.

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