New Tesla Model 3 Price Falls Below Used Model 3s

By Cee Lippens April 18, 2023
Used Model 3 prices are down 21.5% since Sept. 2022, making it the used car that has taken the steepest pricing nosedive in the past six months. The Tesla was also in the top five vehicles for year-over-year price declines, with asking prices down 19%. Used Model 3 prices are down 21.5% since Sept. 2022, making it the used car that has taken the steepest pricing nosedive in the past six months. The Tesla was also in the top five vehicles for year-over-year price declines, with asking prices down 19%.

Tesla slashed new model prices for the sixth time this year in its largest market, the U.S. The price cuts, announced on April 18, reduced prices between 2% and 6%. The company reduced prices on both standard versions, on its base model the rear-wheel drive Model 3 by $2,000, and on its best-selling Model Y crossover by $3,000. $5,000 was trimmed from its more expensive Model S and Model X on April 7. The company has cited tougher U.S. EV standards that take effect in late April that will reduce the $7,500 tax credit available for the Model 3 and Model Y. In Tesla's earnings release for 2022 in Jan., it notes that the average sale price for its vehicles has "generally been on a downward trajectory for many years."

Tesla sold 240,266 Model 3s in 2022, with 63,001 Model 3s out the door in Q1 of 2023. Model 3 sales still lag behind the automakers best seller, the Model Y, but if Tesla CEO Elon Musk's plan, for global EV domination, is successful, not for long.  The Model Y has been enjoying success globally. There were 759,000 Model Ys sold last year, just 28,000 units behind the 3rd place global best seller, the Ford F-150 ( best-selling truck for the last 46 years).  Toyota claimed the top two spots, with the RAV4 at 870,000 and the Corolla with 1.12 million global sales. 

Tesla sold 536,069 cars overall in the U.S market in 2022 taking 3.92% of overall market share. This brings Tesla's total deliveries in 2022 to 1.31 million cars, which is a record high for the brand and 40% growth year-over-year, but also just short of its own goal of 1.4 million deliveries. The company has bumped up its U.S market share to 4.75% in Q1 of 2023, bolstered by price cuts and tax incentives. 

Last August, Tesla, revealed its audacious plan to sell 20 million electric vehicles per year by 2030. Elon Musk has set this goal as the center of the company's growth promise for shareholders. If achieved, it would make Tesla twice the size of any automaker in history, accounting for roughly 20% of the global vehicle market share. Considering the amount of batteries and minerals Tesla would have to acquire to power that chuck of the global EV auto market, it’s a big, big ‘if’. The governments of the two largest auto markets, the U.S and China have turned their attention onto the issue, and potentially cornering the markets, Tesla could easily find itself squeezed out of those numbers.  Unless the EV automaker, a self professed ‘disruptor’ in the auto market, pulls off what could be a huge auto game changing shift, selling a popular bread and butter model,  parked in 2 out of 5 American driveways, that just happens to be an affordable EV. The 'Model T' of electric vehicles. 

That game changing EV is still in the wind, but the Model 3 is in the running along with some eye poppingly inexpensive Chinese built EVs that are bound for export over the next few years. BYD, China's largest electric automaker showed up at this years Shanghai Auto Show with a compact EV in tow, sticker price, $11,000. The stage may be set for a breakout Chinese electric-vehicle maker to copy the success of Toyota's Corona, or Honda's Civic which opened the American auto market, in the 1970s during an energy crunch, to Japanese cars that were fuel-efficient and met US pollution standards. 

The Model 3 has already been a huge success for Tesla. It’s built a reputation on the combination of affordable sticker prices and being an EV that works well in the real world. The long range model has a range of 372 miles, well out of the ‘range anxiety’ inducing models. Americans want models that have at least a 300 mile range to consider a shift.  Cumulative price cuts for the Model 3 since the beginning of the year, have reached 11% according to Reuters calculations. The base model 3 is $39,990 on Tesla’s website, apply the federal EV tax credit of $7,500 boldly cited on the model 3 purchase page and the cars sticker price hovers around $32,000.  

Tesla claims on its purchase page the basic model price after ALL potential saving comes in at a whooping $29,440 ( Depending on where you are. That price includes an extra $2,000 Cali tax credit and $4,200 estimate on gas savings). A car built to compete in the $40-47,000 range is selling for a potential $30-34,000, up to $15,000 under the average new car price in March.

Tesla Model 3 Ad via Edmunds.

As of April 18, the full tax credit will be divided into two parts. To qualify for the first $3,750, 50 % or more of a vehicle’s battery components must be produced or assembled in North America the second $3,750, at least 40 percent of critical minerals used in the battery must be extracted or processed in the U.S. This brings the Model 3s tax credit down to $3,500, still around $11,000 under the average new car price.   

Price cuts have been upsetting some Tesla owners who bought pre price cuts. The flip side to the success of new Teslas sales are pre-owned Tesla sales slumping. Used Model 3 values have dropped rapidly. The average price of a used Model 3 is down from about $53,000 in September 2022 to just $41,337 in February of this year, making many used Model 3s more expensive than a new model today.  The Model 3 has had the fastest decline in used car prices in America, with an average used price drop of 21.5%  according to ISeeCars data. That equates to an $11,302 reduction in price. The national average has seen a fall of 4.7%. 


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Last modified on Sunday, 18 June 2023 17:46