Why are used car prices skyrocketing? The example of Tesla

If you’re in the market for a Tesla, you’ve probably noticed that delivery times have been quite long and that prices have risen considerably in recent weeks. So why not go for a second-hand model? Simply because they too are being snapped up and their prices have exploded.
In 2021, Tesla has once again had a record-breaking year almost everywhere in the world. Tesla almost doubled its number of registrations in 2021 compared to 2020, with 936,172 vehicles sold. In Europe, it’s the same story, with Tesla selling 167,549 cars and topping the electric car charts, ahead of Volkswagen (166,357 units sold) and Renault (97,129 units).
France is no exception to the rule, since it is a Tesla that has managed to dislodge the Renault Zoe from the top spot of electric cars sold in France. The Model 3 found 24,911 takers, against 23,573 for its runner-up, the Zoé. Far behind, it is the Peugeot e-208 that completes the podium with 17,858 units.

NEW PRICES THAT HAVE CONTINUED TO RISE

It must be said that the Tesla Model 3 was particularly attractive financially last year in France. The basic models, whose range is already more than enough for most drivers, were trading at around 36,800 euros once the bonus was deducted. And today, while the bonus has not moved thanks to the aid extensions, the Model 3’s prices have exploded, taking it out of the 6,000 euro maximum bonus trigger.
At the time of writing, in France, the Tesla Model 3 starts at 53,490 euros, an amount that has stabilized after several consecutive increases. Thus, the basic Model 3 is no longer subject to the maximum bonus, but to an intermediate bonus of 2000 euros, so its base price is now 51 490 euros. So if you do the math, in less than a year, the Model 3 has seen its price increase by 14,690 euros!
In the space of a few months, in France, the purchase price of a Tesla Model 3 has risen by almost 15,000 euros!

WHY SUCH A RISE IN PRICES FOR NEW CARS, BUT ALSO FOR USED CARS?

To make matters worse, Tesla is, like many other manufacturers, affected by component shortages due to the various current geopolitical conflicts. At the time of writing, a basic Tesla Model 3 is available in France between January and March 2023, which is more than 6 months later. The same goes for the Long Range version. Only the Performance variant can be delivered earlier, since Tesla announces a delivery at the end of 2022.
And the Model 3 is not the only one spared, since the Model Y, which is now produced in Berlin, Germany, is not deliverable before the end of the year, in the best case. The Gigafactory is still “running in” so to speak before reaching its maximum production capacity.
Concerning the Model S and Model X, Tesla seems to be in total limbo, since it is no longer possible to order these two models in Europe, but simply to pre-order them. The brand’s website states that “prices and options will be finalized as the first deliveries approach. You will be invited to finalize your order once the final prices and options are communicated. In the meantime, your order is considered a pre-order that can be cancelled and refunded in full.

DEMAND INCREASES, PRICES SOAR

So, since the beginning of the year, we’ve seen a fairly new phenomenon. Well, not quite for Tesla, as used models were often snapped up, but the prices of the models logically remained below those of the new ones. Some used models are now almost or even more expensive than new, and this phenomenon has become even more pronounced in recent weeks.
We could succinctly summarize this situation with the famous phrase “the law of supply and demand”, and this is indeed the case, even if it is a little more complicated than that for the Californian firm which, as since its arrival on the automotive market, does nothing like the others.
With extended delays and new prices that have increased significantly, some customers are turning to the used car market. Except that it is obviously taken by storm, and sellers are taking advantage of the exponential demand to increase prices. Just take a look at the specialized ad sites and you’ll see that. Even on the official Tesla website, under the used car tab, some models are listed at almost the same price as new, but with 20,000 or even 30,000 km more for some.
On the screenshot taken above from the used car section of Tesla’s website, we can see a Tesla Model 3 Performance displayed at 69,590 euros with 8,874 km, while it can be traded in for 66,490 euros when new. Of course, the second-hand model taken as an example is equipped with the “Enhanced Autopilot” option (3,800 euros) bringing its new price to 70,290 euros, but still, the used price is very close to the new one, and we are far from the “25% of the price lost as soon as the new car leaves the dealership”.
Another example, visible on the screenshot below, is a Tesla Model Y with 19,725 km on the odometer that is listed at 71,990 euros, exactly the same price as the new model.
This is a phenomenon that can be seen on cars sold in limited editions, like Porsche or Ferrari for example, but in no case with a general manufacturer. This trend is not unique to France, as our American colleagues at Electrek give several examples, such as a Model Y with 24,000 km sold for $1,000 more than a new model.
It should also be noted that in France, there is another peculiar phenomenon on the Tesla used car market. Some companies specialized in importing and exporting cars took advantage of the bonus system to resell, after six months, a Model 3 to other countries that do not have aid and therefore a much higher new price. This allowed these companies to make a nice profit, with many cars going to the Netherlands or Norway, where a Model 3 was trading at a much higher new price than in France at the time. But with the increase in prices in France, this phenomenon disappeared as quickly as it appeared.

TESLA IS NOT THE ONLY BRAND AFFECTED

With extended delivery times due to the shortage of components, the Covid crisis and the war in Ukraine, but also with the legislator pushing for the purchase of an electric model, the new car market is caught in a pincer movement, and it’s not only Tesla that is suffering. For example, at Volkswagen, some plug-in hybrids have to wait more than a year and a half! The same goes for Mercedes, where some models, such as the EQS, will be delivered a year after the order is taken.
A recent study by iSeeCars.com reveals that Tesla is far from being the worst with this phenomenon of used cars being more expensive than new ones. For example, for an imposing Mercedes G-Class, some late-model used cars are trading for 21.5% more than new in the U.S.! And some more “conventional” models are not spared either, since a simple Toyota RAV4 hybrid, a Corolla hybrid or a Ford Mustang Mach-E are also concerned.
And a return to normal is not expected before 2023, or even 2024 according to some manufacturers, including Volkswagen. After that date, it would be another “problem” that would take over, as some players in the automotive industry are already announcing possible battery shortages by 2026, as Carlos Tavares, the boss of Stellantis, recently stated. Something tells us that used car prices may not be coming down just yet, and not just Tesla prices.

Digital Marketing Arround The World

Leave a Comment