Everyone from business partners, market analysts and their own customer's fear Tesla is tanking the market for EVs.
Tesla's constant ratcheting of prices down to keep sales numbers up is having a sweeping effect on the EV industry. Owners are unhappy about rapid, market-leading depreciation. Business partners like Hertz felt they had to dump their Tesla fleet due to unfavorable resale values hurting their balance sheet. Competitors have had to lower prices, across the board, to keep up. This is exactly the opposite of Musk's statement from late 2023: "You can think of every car we sell or produce that has full autonomy capability as something that in the future may be worth five times what it is today."
"I understand vehicles drop in value and are not investments," he said in a text message. "But losing well over 50% of a $50,000 purchase in 18 months is a huge kick in the ass."
The rapid drop in value of used Teslas was a big part of the reason that, in January Hertz announced it was selling 20,000 electric vehicles, the large majority of them Teslas. Rental car companies count on being able to sell cars on the used market after a certain time, which makes resale values critical to the business. Tesla's cratering resale value hurt Herz's bottom line.
"[T]he deployment of Teslas has become a more expensive proposition because when the [manufacturer's suggested retail price] came down, the residual came down and the depreciation went up," Hertz chief executive Stephen Scherr said during an earnings call last month.
The downward pressure on Tesla's own car values has caused price competition throughout the market for used EVs.
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For instance, the average price of a used 2021 Ford Mustang Mach-E fell almost 37% over the past year. In terms of its size, price and specifications, the Mach-E is a very close competitor to the Tesla Model Y, which dropped 31% over that same period. Meanwhile, the average price of all other used model year 2021 EVs has dropped about 34%, although that figure can vary greatly, Drury said.
CNN
