Even with all of the efforts mainstream auto manufacturers are putting into developing new electric vehicles, Tesla is still the supreme EV maker in the U.S. Many Tesla models, like the Model 3, Y, S, and X, are commonplace names, alongside cars like the Ford F-150 and Honda Civic.

Thanks to supply-line delays and semiconductor shortages during the peak of the COVID-19 pandemic, the demand for vehicles skyrocketed, bringing auto prices with it. The supply of available vehicles couldn’t meet the demand, which meant everyone had to pay more to get a new car, and people flocked to used car dealership locations to find an updated ride.

Making a Profit by Tesla Flipping

Prudent drivers saw an opportunity to make some money, and Tesla flipping became a regular activity. The idea was that you could either buy a Tesla and sell it for a profit or just take advantage of the higher prices to sell your current Tesla model. Since new cars were hard to come by, shoppers were willing to pay well over value to get their hands on a used Tesla from a used car dealership. In some cases, they would pay more than the car would cost brand new.

A Sharp Price Drop

According to Reuters, the average price of a Tesla hit its peak price in July 2022 at $67,297. Of course, what goes up must come down. As of November 2022, the average price of a Tesla dropped 17% to $55,754. The reasons used Tesla prices are dropping are varied. For starters, the Inflation Reduction Act brought back an EV tax credit. The credit kicked off for new and used EVs bought after January 1, 2023. That means shoppers are willing to wait to get a new Tesla instead of paying more for a used model.

Another reason used Tesla EVS are coming down in price is due to a flood in the market. Unlike other auto manufacturers, Tesla does not offer an extended warranty on all of its models, specifically the Model 3 and Model Y. The lack of warranty coverage for models pre-2018 leads owners to get rid of their “older” cars to exchange them for something new. Used car dealership locations are saturated with Tesla models from this era.

Finally, the current state of the economy isn’t helping. As the Fed raises interest rates, fewer shoppers have the extra money to make big purchases. Many drivers are putting their money into maintaining their current vehicles instead of trying to buy new or updated used ones. The fear of an upcoming recession also forces people to hold on to their money, even if the delays for new cars have shortened tremendously. Grabbing a Model 3 used to require waiting for a year; now, that wait time is only a month or two.

So Will a Tesla Hold Its Value? Yes. And No.

The changes in used Tesla prices don’t necessarily mean that this EV manufacturer is losing steam. It’s more the reality of a changing market and economy. Used Tesla vehicles may not be valued as high as they were at the height of the new and used vehicle shortage, but that tends to be true for everything in this post-COVID market.