It’s shaping up to be a suboptimal year to own a Tesla, unless you’re buying one now. First came accelerated depreciation, which Kevin Williams did a great job detailing. Used Teslas suddenly went cheap, possibly because the CEO is a rather divisive figure, although it might also have something to do with the stock tanking. Then a bomb dropped that could exacerbate this condition – Tesla slashed prices to the point of sneaking into federal EV tax rebate territory on a couple models. Check out Matt Hardigree’s article for more details on these price cuts. Propping up an artificially-inflated stock like Tesla’s requires perpetual growth, so massive price reductions should open up Tesla to a new audience. The downside, of course, is very unfortunate results for current owners who paid higher prices for their electric machines.
A quick glance at social media shows many Tesla owners complaining about depreciation, and we’ve rounded up some of those sentiments.
Price reduction by @Tesla is not Fair for all buyers who purchased cars in Last 8 months. We all lost around $10-$15k Plus tax credit. This is not in right spirit. We trusted @Tesla during its peak demand. @tesla should refund #elonmusk #Tesla #teslaPriceDrop #refundrequested
— Hemant Basavapattan (@HemantBasva) January 13, 2023
just lost 14% value on my tesla model3 performance. DA FUQ
— ozarej (@3vad0r) January 13, 2023
Over an hour to talk to someone at Tesla And I give up. s***** customer service. After taking $16000 Lost And less than a month. ???????? pic.twitter.com/LJPtgkHRSy
— bizwax.eth (@galarraga_yimy) January 13, 2023
I put enough down where I’m not in the hole it just sucks that my car literally lost $10K in value in one night lol
— Nick (@cerdafied_nick) January 13, 2023
@elonmusk can you do something (maybe free FSD) to the tesla buyers who bought their vehicles last December? My car is not even a month old & already lost 20% of its value. God forbid if i totaled it then i’m f$&ked! #teslaPriceDrop
— Pranav Talegaonkar (@pranavrdboy) January 13, 2023
Of course, not every Tesla owner is upset about the discounts. Some see it as a great opportunity to grow the brand, like this guy here.
These Tesla markdowns remind me of when Chevrolet announced deep MSRP discounts on 2023 Bolt EV and Bolt EUV models, although Chevrolet Bolt owners seem to have reacted to the 2023 Bolt’s lower MSRP a bit less harshly than many Tesla owners are taking these price cuts.
So why do a bunch of Bolt owners seem to be taking the 2023 discount in stride while the general sentiment of Tesla owners towards recent discounts is hostile? Well, Tesla is a bit of a unique case regarding the customers it attracts and the financial decisions those customers make.
Let’s start with the customers Tesla attracts. S&P Global crunched the numbers on Tesla conquests from October 2021 through September 2022 and here’s what the firm found. BMW owners accounted for 6.7 percent of Tesla conquests, followed by Mercedes owners at 6.2 percent and Audi owners at 4.4 percent. That’s roughly 17.3 percent of owners new to the Tesla brand that should’ve been used to rapid depreciation. Worryingly though, a large number of Tesla conquests aren’t coming out of cars with high depreciation. Toyota and Honda owners made up 28.6 percent of Tesla conquests during that period, so I wouldn’t be surprised to hear that Tesla owners coming out of mainstream ICE cars weren’t expecting such depreciation.
Such a dramatic drop in value could see some owners going from positive equity to negative equity overnight — a rather dramatic shift considering how Teslas appear to be stretch purchases for many. Marketwatch reported that Tesla owners took out the longest loans of any car brand’s owners during the first 10 months of 2021. This drop in value also comes off the back of numerous price hikes through 2021 and 2022, so like with most dips, those who got in early are likely better off than anyone who came in at the peak.
In addition to every owner, every dealer with Tesla-heavy inventory is left holding the bag. Eventually, they’ll have to take losses in order to shift units bought at the top of the market, digging into the bottom line. The whole situation is just a shit sandwich for everyone involved, and it could result in very real consequences.
So, let’s recap. On the plus side, Tesla’s discounts may bring more people into the EV fold by making new EVs with access to a reliable DC fast charging network more affordable. On the other hand, Tesla’s discounts will leave some owners underwater on their loans and kick dealers who bought high in the teeth. Perhaps overarching all else though, these Tesla discounts could be a sign that incentives are returning to the new car market. We’ll see in a few months whether this is a leading indicator or just a fluke.
(Photo credits: Tesla, Tesla Owners Worldwide, chevybolt.org)
Support our mission of championing car culture by becoming an Official Autopian Member.