Used Tesla Model Y sales are experiencing a significant surge, with prices continuing to decline. According to Rebecca Lindland, Senior Director of Industry Data and Insights at Cars Commerce, the increase in inventory has driven prices down, making it a favorable time for consumers to purchase new or used electric vehicles (EVs). As of May 2024, used 2021 Model Ys start at approximately $30,000, while those with lower mileage are priced between $32,000 and $36,000 on Tesla’s website.
Demand for Tesla’s used cars remains strong, with year-over-year and year-to-date growth. The used Model Y, in particular, has seen the highest demand, increasing by 119% year-over-year and 65% year-to-date. Lindland attributes this demand to the price reductions of new Model Ys, which have created a shift in pricing for used versions. The average price of used Model Ys has dropped by 32% year-over-year and 12% year-to-date, making them more affordable for buyers.
The broader electric vehicle market is also experiencing an inventory surge, with both new and used EVs seeing substantial increases in availability. This increase in inventory has contributed to a 20% drop in used EV prices year-over-year. The combination of price adjustments and government incentives for both new and used EVs aims to stimulate demand in the growing EV segment. According to Lindland, new EV sales grew by 27% year-over-year in Q1 2024 (excluding Tesla), while used EV demand increased by 45% year-over-year.
The decline in prices for new EVs, particularly Tesla, has caused a ripple effect throughout the market, influencing used car prices. Tesla’s average transaction price fell by 13.5% in the first quarter of the year, contributing to a decrease in its market share. Other automakers have followed Tesla’s pricing strategy, leading to steep drops in used car prices. For instance, the Chevy Bolt EV, priced around $27,000, can drop below $20,000 with the federal tax credit, resulting in used Chevy Bolts selling for under $18,000. This price reduction has made EVs more affordable for consumers.
Leasing has also become more popular, with a significant increase in the number of leased EVs. In Q1 2024, approximately 27% of all EVs were leased, more than double the rate from the previous year. Leasing offers financial benefits, such as lower monthly payments due to steep depreciation on some EV models. Additionally, many buyers can qualify for the full $7,500 tax credit under the Inflation Reduction Act when leasing, further encouraging the shift towards EV leasing as an affordable option.