Why are used car prices soaring? Tesla’s example

If you’re looking for a Tesla, you’ve probably noticed quite long lead times and a significant price increase in the last few weeks. So why not move on to a second-hand model you will tell us? Simply because they too are taken by storm and have seen their prices soar.

In 2021, Tesla once again had a record year for almost the entire world. Tesla practically doubled its number of registrations in 2021 from 2020, with 936,172 vehicles sold. In Europe, the same story, Tesla sold 167,549 cars and ranked first in the electric car ranking, ahead of Volkswagen (166,357 units sold) and Renault (97,129 units).

France is no exception to the rule, as it was a Tesla that managed to take the Renault Zoé from the first place among electric cars sold in France. The Model 3 found 24,911 buyers, compared to 23,573 for its runner-up, the Zoé. Far behind is the Peugeot e-208 which completes the podium with 17,858 units.

New prices that continued to rise

It must be said that the Tesla Model 3 was particularly advantageous financially last year in France. The basic models, whose autonomy is already more than enough for most drivers, were traded around 36,800 euros after deducting the bonus. And today, if the bonus has not changed thanks to the extension of the aid, the prices of the Model 3 have exploded, thus taking it out of the limit to trigger the maximum bonus of 6,000 euros.

At the time of writing, in France, the Tesla Model 3 is trading from 53,490 euros, a figure that has stabilized after several consecutive increases. Thus, the basic Model 3 is no longer subject to the maximum bonus, but 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 saw its prices rise by 14,690 euros!

In the space of a few months, in France, the purchase price of a Tesla Model 3 has increased by almost 15,000 euros!

Why such an increase in the price of new, but also second-hand?

To make matters worse, Tesla is, like many other manufacturers, affected by component shortages due to the various current geopolitical conflicts. So, at the time of writing, a basic Tesla Model 3 is available in France between January and March 2023, i.e. more than 6 months. The same goes for the Long Autonomy version. Only the Performance variant can be delivered early, as Tesla announces delivery in late 2022.

And the Model 3 isn’t the only one spared, as the Model Y, which is now produced in Berlin, Germany, isn’t available before the end of the year at best. The Gigafactory is still in something of a “break-in” before it reaches its maximum production capacity.

Regarding the Model S and Model X, Tesla seems to be in the most complete imprecision, since it is no longer possible to order these two models in Europe, but simply pre-order them. The brand’s website indicates that “Prices and options will be finalized closer to the first deliveries. You will be asked to finalize your order once the final price and options are communicated. In the meantime, your order is considered a pre-order that can be canceled and refunded in full.”

Demand rises, prices rise

Therefore, since the beginning of the year, we have witnessed a rather new phenomenon. Well, not exactly for Tesla, as used models were often taken by storm, but model prices logically remained below new ones. Some second-hand models are already reasonably priced, or even more expensive than new ones, and this phenomenon has become even more pronounced in recent weeks.

We could succinctly summarize this situation by the famous ready-made phrase of “the law of supply and demand”and this is indeed the case itself, although it is a little more complicated than the case of the Californian company which, since its arrival in the automotive market, has done nothing like the others.

With extended delivery times and new prices that have increased significantly, some customers are turning to the second-hand market. Except it’s obviously taken by storm, and sellers are taking advantage of exponential demand to drive prices higher. Just take a look at specialized ad sites to see this. Even on Tesla’s official website, in the used tab, some models are shown at almost the same price as new ones, but with 20,000 or even 30,000 km more for some.

In the screenshot saved above the used part of the Tesla website, we can see a Tesla Model 3 Performance displayed at €69,590 with 8,874 km while being exchanged for €66,490 new. It is true that the second-hand model taken as an example is equipped with the “Improved Autopilot” option (3,800 euros) raising its new price to 70,290 euros, but the truth is that the second-hand price is very close to price nine, and we are far from “25% of the price lost once the new car leaves the dealership”.

Another example, visible in the screenshot below, is a Tesla Model Y showing 19,725 km on the odometer which is displayed at 71,990 euros, which is exactly the same price as the new model.

This is a phenomenon that can be seen in cars sold in limited editions, such as Porsche or Ferrari, for example, but in no case from a general manufacturer. This trend is not specific to France, as our American colleagues atelectrek give several examples, such as a Model Y showing 24,000 km selling for $1,000 more than a new model.

It should also be noted that, in France, there is another particular phenomenon in the second-hand Tesla market. Some companies specializing in the import and export of automobiles have taken advantage of the bonus system to resell, from six months onwards, a Model 3 to other countries that do not have aid and, therefore, a new much higher price. This allowed these companies to make good capital gains, with many cars leaving mainly for Holland or Norway, where a Model 3 was traded in for a new one that was much more expensive at the time compared to France. But with the rise 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 component shortages, the Covid crisis and the war in Ukraine, but also with the legislator pushing for an electric model, the new car market is halfway there, and it’s not just Tesla who suffers For example, on the side of the Volkswagen group, it is necessary to wait for some plug-in hybrid models for more than a year and a half! The same goes for Mercedes, where some models, like the EQS in particular, will be delivered a year after ordering.

A recent study by iSeeCars.com reveals that Teslas are far from the worst with this phenomenon of used cars being more expensive than new. For example, for an imposing Mercedes G-Class, some recent used models trade for 21.5% more than new ones in the US! And some more “conventional” models are not spared either, as a simple Toyota RAV4 hybrid, a Corolla hybrid or even a Ford Mustang Mach-E are also at stake.

And a return to normal is not expected until 2023, or even 2024, according to some manufacturers, including Volkswagen. After that date, it would be another “problem” that will take over, as some players in the automotive industry are already announcing possible battery shortages until 2026, such as Carlos Tavares, the head of Stellantis. Something tells us used car prices may not drop anytime soon, and not just Teslas.

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