Fact Check: Tesla Owners Are Dumping Vehicles On Used Car Market, Desperately Lowering Prices 25%

Fact Check: Tesla Owners Are Dumping Vehicles On Used Car Market, Desperately Lowering Prices 25%

used Tesla

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The price of used Teslas is falling by at least three times the rate of other used electric vehicles and outpacing the overall auto market, due in part to competition, significant price cuts for new Teslas, and the possibility that CEO Elon Musk’s brand was overvalued.

The average price of a used Tesla fell from $67,915 in July 2022 to $49,967 –an $18,000 (or 26 percent) drop, according to a new survey by CarGurus.

Car experts and commentators say they are shocked by the 26-percent price decline.

While used electric cars have seen a 1.5 percent price decline so far this year, Teslas dropped 4.8 percent, AutoWeek reported.

“With new Teslas getting significant price cuts (and having wait times of only a few weeks) it’s no surprise that used cars are rapidly dropping in value. That said, the sheer amount pre-owned Teslas have fallen by is still shocking,” Ben O’Hare wrote for electric vehicle news platform Inside EVs.

Karl Brauer, an executive analyst for iSeeCars, said it’s possible Teslas were overvalued until recently, “But it’s more accurate to say they represented where the market valued them at that time, and now the market is re-evaluating them.”

Meanwhile, Tesla stock almost doubled in the first six weeks of 2023, starting the year at $123.18 and trading at $215.39 as of this writing.

“Between the ever-expanding field of non-Tesla EV options, the recent reductions in new Tesla prices, plus the overall falling values in used vehicle pricing, these drops in Tesla prices were inevitable,” Brauer said in an Autoweek report. “Though the rate of these drops, outpacing the overall market and even other EV drops, confirms the Tesla market was overdue for a correction.”

Paul Krugman wrote in the New York Times, “Tesla is a brand whose customer base largely consists of wealthy cultural liberals who were attracted in part by Elon Musk’s perceived with-it persona. Musk’s public embrace of MAGA conspiracy theories is an almost inconceivably bad marketing move, practically designed to alienate his main buyers.”

Tesla owners have been writing about how they feel about owning a Tesla. However, there does not seem to be evidence that many have sold their vehicles based on his acquisition of Twitter, wrote Forbes contributor Peter Cohan, a former venture capitalist who teaches business strategy and entrepreneurship at Babson College.

Anne Marie Squeo is the CEO and founder of Proof Point Communications, a boutique marketing and communications firm.

She wrote in Fast Company that buying a Tesla was a mistake and she is embarrassed to drive it after Musk bought Twitter in late October and “all hell broke loose.”

“A brand is a living contract of sorts,” Squeo wrote. “It tells people who you are and what to expect from you. Companies, and even people, spend years and tens of millions of dollars building their brands in a consistent and reliable way that drives upside. Working inside such companies, a lot of attention is spent on protecting the brand and staying true to it. It’s worth noting that in Tesla’s case, the company’s brand grew strong without spending a dime on traditional advertising. Instead, they tapped into growing concerns about climate change, personal carbon footprints, and a desire to topple outdated power structures.”

When Musk took over Twitter, he started “pushing conspiracy theories, espousing Putin-speak, posting pictures of guns by his bedside, and literally undermining Tesla overnight, which had been one of the world’s strongest brands,” Squeo continued. “In doing so, he seemingly turned his back on Tesla’s progressive tenets and the very people who helped make it a success.”

Squeo said she dumped her Tesla stock last summer and watched it go down more than 50 percent from August to December 2022. 

Tesla owner John Blumenthal wrote in the Los Angeles Times, “Will people see me as a symbol of right-wing environmentalism, a living oxymoron?…Now that Musk has apparently swung to the far right — banning journalists from Twitter while reinstating neo-Nazis — I’m horrified to be associated with his brand whenever I drive anywhere.”

Forbes contributor Cohan predicts that if Elon Musk steps down as CEO of Twitter, as he has promised, Tesla stock could be worth less than $50 per share.

Musk is turning off Tesla customers with his version of Twitter, Cohan wrote, and that won’t change as long as he owns the social network. He’s also angering buyers who paid pre-discount prices, and EV customers are going to the competition. Oh, and “Tesla stock is way overvalued,” Cohan wrote on Feb. 15.

Tesla’s market capitalization on Feb. 15 — $672 billion — was 60 percent higher than that of four much bigger rivals combined — Toyota ($228 billion), GM ($59 billion), Ford ($51 billion), and VW ($82 billion). Tesla is also more profitable and growing faster than its rivals.

Tesla’s share of the U.S. market for EVs is down from 70.5 percent in 2021 to 63.5 percent in 2022 with new, more affordable options arriving that offer equal or better technology and production build, according to S&P Global Mobility.

Carvana had 555 used Teslas listed for sale on Feb. 16.

READ MORE: Top Short Seller Jim Chanos Provides Scientific Basis Of Shorting Tesla Stock: Could Go To $60 Or $40