Tesla’s vaunted ability to hold its value is evaporating, and the steepest falls are turning the once-premium Model 3 into a bargain lot special that threatens the broader used-EV market.
At a Glance
- Edmunds says a 2024 Model 3 Long Range resold for just $31,000—nearly half its sticker price.
- Cox Automotive data shows Tesla resale values down 10.1 % year-over-year, more than triple the industry EV average.
- Tesla carries 31 % more used inventory than a year ago, pressuring prices further.
- CarEdge projects a 59 % five-year depreciation for the Model 3, versus 39 % for a BMW 3 Series.
- Analysts blame deep new-car price cuts and a “Musk premium” backlash for the slide.
Why Values Are Cratering
VehicleSuggest reports that 12-month depreciation for privately owned Model 3s has “accelerated to muscle-car speed,” citing Edmunds’ fire-sale resale of its long-term test car for around 50 % of the original $60,630 purchase price—an unprecedented collapse for a mass-market EV, according to VehicleSuggest. Market-wide data reinforce the trend: Cox Automotive tallies a 10.1 % annual drop in Tesla resale values, dwarfing the 2.8 % slide for all used EVs and highlighting how earlier factory price cuts continue to ripple through the second-hand aisle EVXL.
Watch a report: What’s Going On With the Resale Value of Used Teslas?
InsideEVs notes that depreciation is fastest on fresh metal: its own 2024 Model 3, barely a year old and still under warranty, fetched “a hair over thirty grand” at auction, shaving nearly $30,000 in 12 months, reports InsideEVs. Analysts say Tesla’s repeated sticker-price cuts on new cars—up to $9,000 on some trims since 2023—force resale math downward each time. Coupled with rising inventory (Tesla ended May with 31 % more used vehicles than a year prior), wholesale buyers are discount-ing Model 3s simply to keep lots moving.
The Musk Factor and Market Fallout
Brand fatigue is amplifying the numbers. Business Insider interviewed Tesla owners who off-loaded their cars after Elon Musk’s political battles, citing harassment and vandalism fears; one seller called the badge “a magnet for grief,” according to Business Insider. Morgan Stanley warns that image risk can shave nine additional points off Tesla resale by 2026 if sentiment doesn’t improve.
CarEdge’s depreciation model now pegs a five-year Model 3 residual at $21,542—59 % under MSRP—versus 39 % for a comparable BMW 3 Series, according to CarEdge. Such gaps threaten loan-to-value ratios: Kelley Blue Book shows many 2023 Model 3 owners owe more than their cars are worth after just 24 months, raising default risk across captive-finance portfolios.
Winners, Losers and What’s Next
For shoppers, the collapse offers unprecedented deals: large franchise dealers are advertising 2024 Model 3 Long Range cars with under 15,000 miles for $29,900, less than a new Honda Accord Hybrid after fees. Yet tax credits complicate the calculus; a new Model 3 still qualifies for a $3,750 federal incentive, narrowing the discount and pressuring used prices further if Congress renews the credit cap.
Industry watchers predict Tesla may throttle production or bundle extended warranties to shore up confidence. Meanwhile, rival brands such as Hyundai and Polestar are touting “stable resale” in marketing blasts aimed squarely at disillusioned Tesla shoppers.
If depreciation continues at today’s pace, the Model 3 could become the first major EV to mimic the rapid value drop once reserved for luxury sedans. For bargain hunters, that’s welcome news. For lenders—and Tesla’s carefully crafted premium halo—it is a flashing red warning light on the dashboard of an industry still learning how to price the future.
