FYI: Tesla Model 3 Sees Biggest Drop in Value Among Used Cars
The used car market is undergoing a rapid transformation, shedding the inflated prices seen during the pandemic. According to recent data from iSeeCars, used cars are becoming more affordable, marking a significant shift from the trend of used cars surpassing new car prices during COVID-19. Among the vehicles experiencing the steepest declines in value, the Tesla Model 3 stands out.
### Tesla Model 3 Leads the Depreciation Race
The Tesla Model 3 has experienced the largest drop in value of any used vehicle on the market. From 2023 to 2024, its average price plummeted by 22.6%, from $37,548 to $29,045. This is a significant drop, regardless of propulsion type. The next biggest loser was the Jeep Grand Cherokee, which saw a 9.2% reduction in average price, falling from $34,107 in 2023 to $30,956 in 2024.
### Increased Availability of Affordable Used Cars
iSeeCars has noted a dramatic increase in the number of affordable used vehicles priced under $20,000. In addition, these cars are less used than in previous years, with the average mileage of a used car down by 2.8%. This means that buyers are paying less money for less worn-out cars.
### Mixed Implications for Tesla Owners and Buyers
For current Tesla Model 3 owners, especially those who purchased their vehicles at the peak of COVID pricing, this decrease in value may come as unwelcome news. These owners are likely to face lower trade-in or private-party sale prices.
However, for used car buyers, this represents a golden opportunity. The influx of used Model 3s, partly due to fleet dumping by companies like Hertz, has added to the supply, making it easier to find a well-equipped, relatively new electric vehicle at an affordable price. As a result, driving a used EV for the same price as a used compact internal combustion engine (ICE) car is now a more affordable option.
### Market Correction Post-COVID
The average price of a 1 to 5-year-old car had risen more than 40% since 2019 due to the pandemic’s impact on supply and demand. Limited supply and high demand drove used car prices to unprecedented levels during the pandemic, a trend noted by iSeeCars’ Executive Analyst Karl Brauer. However, the market appears to be correcting itself with an increase in available units, which has, in turn, driven down prices.
### A Step Towards EV Affordability
This downward trend in used car prices, particularly for EVs like the Tesla Model 3, is likely to bring more people behind the wheel of electric vehicles. The average price of a used Model 3 is now around $29,000, which includes various well-equipped models. This broader availability could encourage more drivers to consider EVs, achieving price parity with used ICE cars.
### Conclusion
As the used car market continues to rebalance, the drop in prices, especially for models like the Tesla Model 3, offers both challenges and opportunities. While current owners might face lower resale values, used car buyers have more affordable and potentially better options than ever before.
For more insights and updates, reach out to us at tips@automotive.fyi, or on Twitter @automotivefyi.
William Kouch, Editor of Automotive.fyi
