New figures show that the value of a used Tesla fell by more than $1,000 on average in the first half of January.
According to used car platform CarGurus, the average list price of a Tesla fell from $36,410 to $35,370 between Jan. 1 and Jan. 18.
During the same period, the company's share price also fell by more than 15 percent.
Adding fuel to the fire, Hertz announced in a corporate filing last week that it would sell tens of thousands of its electric cars in a “fire sale.”
Analysts say the increase in supply of heavily discounted Teslas is likely to impact the already difficult and relatively small used market.
The value of a used Tesla continued to plummet in January, dropping an average of more than $1,000 in just 18 days
Last week it also emerged that Tesla had been dumped by another rental giant, Sixt – which will buy 250,000 Jeeps, Chryslers and Dodges instead. It is unclear whether Sixt will also sell the old Teslas.
Rental companies blame the low demand for electric vehicles on customers who don't want to find charging stations on road trips and are also concerned about range.
While the value of used electric vehicles from all manufacturers is falling, Tesla's is being hit the hardest.
According to CarGurus, the typical list price of a used Tesla fell below the cost of an average electric vehicle for the first time in September.
Used electric vehicles fell 22 percent between October 2022 and October 2023, while the used car market overall only fell 3 percent.
“Electric vehicle prices overall have fallen quite significantly over the last year and a half,” said Kevin Roberts, director of industry analytics at CarGurus.
He explained the significant impact on Teslas, pointing to the company's aggressive price cuts on new cars.
As competition increased in the electric vehicle market, Tesla decided to cut its relatively large profit margin to gain market share, Roberts said.
Those price cuts also meant Tesla would be able to sell cars for less than the threshold for buyers to claim federal tax credits — a key incentive for Americans to choose electric vehicles.
In fact, Hertz CEO Stephen Scherr mentioned the declining value of its electric vehicle inventory during the company's third-quarter earnings call in October.
“The EV MSRP declines throughout 2023, driven primarily by Tesla, have reduced the fair market value of our EVs compared to the previous year, so a salvage will result in a greater loss and therefore a greater burden,” said he said.
Almost all of the more than 500 used electric vehicles the company had for sale Wednesday were Teslas, with some Model 3s listed for as little as $21,000.
That's half the price of a new car and up to $10,000 less than cars with similar mileage from other sellers.
Because of their high mileage and visible body damage, Hertz may have chosen to sell many of its electric vehicles at significant discounts
Analysts believe Hertz may have chosen to sell many of its electric vehicles at significant discounts due to their high mileage and visible body damage.
“After renting several Model 3s from Hertz over the last six months, I've noticed that some of them are pretty rough cosmetically,” Scott Case, CEO of electric vehicle research firm Recurrent Auto, told Portal.
Starting this week, a large number of Chevrolet Bolt electric vehicles also appear on the Hertz Used Cars for Sale website. They started at $20,000.
Sales of the vehicles began last month and additional models will be released later this year, the company said.
However, according to Roberts, it may not be all bad for Tesla and electric vehicles in general.
“Last year saw more than a million new electric vehicles sold for the first time, so demand for electric vehicles continues to grow,” he said.
And if the price continues to fall, we may eventually reach a point where more consumers are much more interested.”