By Venessa Wong
The EV maker, which is laying off workers, has been slashing prices. 'There's a great opportunity for used-car buyers.'
Tesla shareholders have had a tough run lately: The company is planning to lay off 10% of its workforce, and Tesla's stock is down more than 35% so far this year.
Prospective car buyers who have mulled buying a Tesla (TSLA), on the other hand, are likely to catch a break this year - a big break.
Not only has the electric-vehicle maker been slashing thousands of dollars off new-car prices to deal with the glut of vehicles it produced, but the average price of used Teslas is also down 36% from the same time a year ago, to $31,800, according to CoPilot, a car-shopping platform that analyzes listings data on dealers' websites daily.
"We're in a unique time in the auto industry, where technology is advancing quite rapidly and demand for EVs is constantly shifting. Those price changes are reflecting that," said Keith Barry, a senior autos reporter at Consumer Reports. "It's a great opportunity for used-car buyers."
These price trends could open up the EV market to more buyers, as cost has been the primary deterrent for consumers, according to a AAA survey. It's now cheaper than ever to buy a Tesla, said CoPilot CEO Pat Ryan. He expects more discounts this car-buying season, which runs from March through September.
"I would wait for Elon Musk to have his earnings call and tell people what he's going to do," said Ryan. "We're going to know a lot more after his April 23 earnings call. He's got to signal to the market what's his plan - he's either got to cut production or lower prices."
Still, consumers do have other hesitations besides upfront costs, including EV maintenance costs; lack of charging stations; and range anxiety, which refers to consumers' worries about how far they can drive before having to charge the vehicle, according to AAA.
EV batteries typically last 10 to 20 years, and the cost to replace the battery on a Tesla, including labor, ranges from $10,000 to $20,000, according to J.D. Power. And while there are more than 180,000 EV charging ports in the U.S. - including about 2,100 Tesla Superchargers, which can fully charge a battery in about an hour - that number is still far from the 500,000 public chargers the federal government aims to have by 2030.
Tesla did not respond to a request for comment.
But for car shoppers who are Tesla-curious, lower prices may help sweeten the deal. As car prices have finally started to decline after surging during the onset of the pandemic, the electric-vehicle market has seen particularly deep price cuts. The average used-EV price in the U.S. in February was down by 31.8% year over year, according to data from the car-search site iSeeCars.com.
The average price of a used Tesla Model 3 is down 48.2% from two years ago, to $26,785; the price of a used Model S is down by 55.7%, to $32,582; the price of a used Model X is down by 48.9%, to $45,414; and the price of a used Model Y is down by 48.8%, to $34,969, CoPilot data provided to MarketWatch show.
A record 1.2 million EVs were sold in 2023, bringing electric vehicles' share of the total U.S. vehicle market to 7.6% - an all-time high, according to estimates from Kelley Blue Book. Tesla held a solid majority (55.1%) of the EV market, with 654,888 vehicles sold last year. Ford (F) was a distant second, with 6.1% of EV sales.
Still, sales of new EVs have been slowing, and "Tesla is under pressure because, like other manufacturers, they were producing more cars than they could sell," Ryan said.
Here are four tips to consider if you're thinking about buying a Tesla, or any other EV.
Consider a three-year-old used EV
"The best bang for the buck for consumers in the market today, bar none, is the used electric vehicle," said Yossi Levi, the founder of Car Dealership Guy, a podcast, newsletter and website with insights about the car industry. And the best-value purchase is likely a three-year-old EV, he said.
He considers that a sweet spot because the car will still be under the four-year warranty for used Teslas and probably doesn't have too many miles on it yet, but will be much cheaper than even a two-year-old vehicle. Used vehicles also still qualify for the $4,000 EV tax credit. You can see the full requirements on the Internal Revenue Service website.
From the archives (August 2022): Used EVs: How to navigate the tight market for pre-owned electric vehicles like the Nissan Leaf and Chevy Volt
If you're buying used, first compare prices on car-shopping sites
It's important to know what the market in your area looks like. Dealers may negotiate with you if you find a better deal somewhere close, within a roughly 100-mile radius. "You take the price of the lower one and show it to the dealer," Ryan said, adding that his company does not make money from dealers or from the sale of vehicles. "It's like comps in real estate, and that's where the power is."
Wait and watch a bit longer
Tesla will report earnings April 23. "I would wait another few weeks, maybe into the timeframe around early May, because there's a reasonable chance Tesla's going to have to lower prices further if their sales fortunes don't turn around," Ryan said. "That can be a really nice opportunity for people to get in."
Try to mitigate your losses by leasing
Car owners trading in their vehicles this year have taken bigger losses than usual due to falling prices, and Teslas in particular have lost more value than other brands.
"One way to avoid the headache of ending up with an EV with a low resale value is to lease instead of buy," Barry said. "At the end of the lease, you turn the car in and it's the automaker's problem to figure out how to sell it."
Generally speaking, the higher a vehicle's price, the further it has to fall, he added. "We've seen some huge drops on the Model X, but the prices of the Model Y and Model 3 have fluctuated up and down," he said.
See also: 'Why did I do this to myself?' says TikToker with $1,600 truck payment and $1,400 SUV payment
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-Venessa Wong
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04-16-24 1138ET
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