Are Used Tesla Prices Killing New Tesla Sales?

Used Tesla (NASDAQ: TSLA) Model 3s are available for $20,000 to $27,000, depending on the year they were built. A new long-range Tesla 3 sells for $37,500 without the federal tax incentive. The question is whether a three—to five-year-old version of the same model that has been driven 40,000 miles is a vehicle people would buy to save money. Used Tesla sales compete with new ones, which must erode some new Tesla 3 sales.

Buyers can purchase used Tesla 3s at Carvana. They have been through a 150-item inspection, meaning they have a low chance of mechanical problems.

The car media has compared new Tesla 3s with used ones, and their conclusion is, in general, that the used versions are a good deal. Car review site Inside EVs compared a new Tesla long-range Model 3, which had upgraded paint and cost $51,000. A 2018 Model 3 with fairly similar features costs in the low $20,000s. The review said the differences were fairly small. It wrote of the used version, “While the 2018 model may not be quite as refined and luxurious, the overall driving experience is essentially the same.” Despite these comparisons, Tesla stock is still rising.

Most other car companies have similar challenges. Used versions of cars and light trucks compete with new ones. In Tesla’s case, its stock price is based, to some extent, on rapidly growing vehicle sales, which used models have almost certainly undermined. Another factor in the stock’s price is that Tesla may launch what could be an advanced self-driving vehicle using road data it has collected and AI. In the meantime, its sales per quarter face the challenge that the number of used Tesla 3s for sales is large.

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