Rapid car depreciation benefits second-hand electric vehicle purchasers significantly.
In the ever-evolving world of automobiles, the used car market has taken centre stage, with the used car market now three times larger than the new car market. This shift is particularly noticeable in the used Tesla market, where prices have seen significant depreciation throughout 2025.
According to recent reports, Tesla models such as the Model S, Model X, and Model Y have witnessed a decline of over 15%, 14%, and 4.8% respectively year-over-year, outpacing the broader electric vehicle (EV) category[1][2]. Three-year-old Tesla Model 3s can now be purchased for less than new Honda or Toyota sedans, reflecting the market's shift from lofty resale values to a much more accessible price point[1].
Several factors are driving this rapid decline in used Tesla values, setting them apart from both luxury and mainstream competitors. These include Tesla's repeated price cuts for new vehicles, a large wave of off-lease Model 3s and other Tesla vehicles entering the used market, government incentives and tax credits, technology obsolescence, changes in battery chemistry, increased competition, brand perception and demand, and broader used car market dynamics[1][2].
While mainstream and luxury internal combustion engine (ICE) and hybrid vehicles benefit from constrained new car supply and strong residual values, Teslas face a unique combination of rapid technological turnover, aggressive pricing strategies, and a ballooning used inventory[2][3]. This has made Tesla’s depreciation curve notably steeper than both luxury and mainstream rivals.
For now, the used Tesla market is a buyer's market, with plenty of supply, falling prices, and attractive deals—especially for those able to capitalize on expiring tax credits[1][2]. However, the long-term outlook is less certain, as depreciation rates may stabilise if demand rebounds or supply constraints resurface, but the era of Tesla vehicles as appreciating assets is clearly over[1][2].
References: [1] CarsDirect [2] Carscoops [3] iSeeCars [4] USNews [5] Yahoo!Finance
- The used Tesla Model 3 is now available for less than the price of new Honda or Toyota sedans, showing the transition of the market towards a more affordable price point.
- Despite the steep depreciation curve, the used Tesla market presents many attractive deals for buyers, thanks to factors such as government incentives, changes in battery technology, and a large inventory of cars entering the market.
- As electric vehicles continue to advance and competition intensifies, it's predicted that the era of Tesla vehicles as appreciating assets has ended, but for now, the used Tesla market remains a buyer's market with falling prices and generous deals.
