Tesla's now seeing Yugo-style depreciation

2019 Model 3 with Full Self Driving

Cost new: $47,190

Tesla’s Trade-in quote: $20,000.

Good news is that a $20,000 used Tesla qualifies for the $4,000 tax credit if you earn less than $75,000/yr.



The stock has seen some Yugo scale depreciation too, down some $40 from where I sold the last lot at $257.


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China is a major buyer of EVs. Their economy has failed to recover as well as hoped after the end of the Covid lock down. All related stocks including Tesla and lithium companies have seen recent declines as a result.

And Tesla continues to cut prices in China to move those Teslas.

I bought a tiny bit of Tesla for the first time on Friday. We shall see how it goes. If it drops a lot more, I’ll probably buy more. But this is more for fun than for meaningful investment.

Tesla’s trade-in quote has little to do with actual resale value, as many commenters to that article have pointed out. So, no, it isn’t measuring depreciation as it claims.

Plus, if you pay attention, you’ll see that the trade-in quote is for the car with the Full Self Driving option removed (Tesla is running a promotion this quarter that lets you transfer FSD to a new car by removing it from an old one). The original purchase price ($47,190) would have been $6,000 less if the FSD option had not been purchased.

The author of that article is usually pretty good, so I’m not sure why this particular piece is so blatantly stupid.



It actually has a lot to do with it. A great many people (half? more? less?) trade in their old car when getting a new one. That they could possibly get more by selling it themselves is irrelevant. That trade in value is the real world depreciation those buyers experience.

Is this particular experience an outlier? Maybe. I don’t know. But dismissing trade in value simply because it’s less than a private party sale is just plain silly.



I recall a previous discussion that pointed out the FSD option seemed to be generally considered worthless at trade in.

Much as fans of Tesla want to see their favorite car as really different - and it many ways it is - when it comes time to sell it to people with cold, calculating numbers as the only consideration, they seem to be pretty much the same as any other car.


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In this particular case, it’s not that silly. That’s because the used EV tax credit can only be taken if you purchase the used car from a dealer, it cannot be taken if you purchase from a private party. In reality, private party sales are usually lower than dealer sales, mainly because the dealer has to charge more to cover their large overhead (they also cover it by paying less for their used cars, hence why trade-in values are lower than private party values).

Tesla is a little different. That’s because the founder, and so far the management and board has gone along with it, really does want to lower costs and prices as much as possible to ensure the highest number of sales. They’ve stated many times that the goal is to fill the world with EVs to “save the world” from unclean energy. So the company itself is constantly lowering costs and periodically lowering prices. That directly means that their used vehicles will go down in value. If that cost cutting/price lowering goes on forever, then the value will continue declining. So you should expect used Tesla models to depreciate faster than most other vehicles. If other manufacturers catch up and also find ways to cut costs/lower prices, then the same will occur to them. And since vehicles are somewhat fungible, price declines might spread across similar models (for example, if used model Ys suddenly drop by $10,000, then you might see similar declines in prices for used Mach Es).

2021 was an outlier. During that year, due to a confluence of a few things (mostly supply chain issues, and other covid stuff), demand for immediate cars went up so high that used Teslas were selling for as much as new ones, or even higher in some cases. That was because you could get a used one tomorrow if you were willing to pay the price, but you have to wait a few months for a new one. Also, due to the very high demand that year, Tesla raised prices to allow supply to meet (almost meet) the high demand, only to lower them the next year (2022) and the year after that (2023).

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You Tesla longs can thank my snark for the 12 point rally today!