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Tesla bursts used-car price bubble, weighs on demand for new cars

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By Hyunjoo Jin and Nivedita Balu

SAN FRANCISCO (RockedBuzz via Reuters) – Tesla buyers who have waited months for their new car have had an unusual choice for much of the past two years: keep the new EV or sell it at a profit to someone with less patience.

But the days of Tesla’s flip are numbered: a potential threat to new car prices that have already been slashed.

Prices for used Teslas are falling faster than those of other automakers and clean energy status symbols languish longer on dealer lots, industry data showed to RockedBuzz via Reuters.

The median price for a used Tesla in November was $55,754, down 17% from July’s peak of $67,297. The overall used-car market saw a 4 percent decline during that period, according to data from Edmunds. Used Teslas stayed in dealer inventory for an average of 50 days in November, compared to 38 days for all used cars.

Rising gasoline prices, an effect of the war in Ukraine, have increased demand for Tesla, one of the few long-range electric vehicles on the market. Tesla Inc itself has raised prices faster than the prices of other cars, building up its profit margins. And buyers of some new Teslas have taken advantage of the booming market to sell their relatively new cars for a profit, then order new ones, spurring demand for Tesla’s new cars.

Now fuel prices are falling, interest rates are rising, Tesla production is increasing, and competition from EVs is growing, causing used Tesla prices to fall faster than the market and creating a ripple effect on prices of the new Teslas.

Tesla last week doubled down on a cut in the price of new cars in the United States to $7,500 for Model Y and Model 3 delivered this year, adding to investor nervousness over weakening demand.

Nearly a third of used Teslas on sale in August were 2022 models on sale, a sign the original buyers aimed to flip, analysts said. That compares with about 5 percent of other brands on the second-hand market, research firm Edmunds said.

Tesla shares fell 7.3% to a more than two-year low of $114.12 in early trading on Tuesday. They’re down over 65% this year.

GRAPH – Tesla used car prices are falling faster than the prices of other used cars

https://www.reuters.com/graphics/TESLA-PRICES/gdpzqqemkvw/chart.png

GRAPH – Tesla cars stay longer on used car lots

https://www.reuters.com/graphics/TESLA-PRICES/mopakkzqjpa/chart.png

GRAPH – Newer Teslas being sold in the used car market

https://www.reuters.com/graphics/TESLA-PRICES/akpeqqrojpr/chart.png

“You can’t sell your current Tesla for more money than you paid for it, which has been true for much of the past couple of years,” said Karl Brauer, executive analyst at auto sales website iSeeCars.com. “This would reduce the demand for new Teslas.”

Musk said on Thursday that “radical changes in interest rates” have raised the prices of all cars, new and used, and that Tesla could potentially lower prices to support volume growth, which would translate into lower profits. .

Tesla, which has dissolved its media relations department, did not respond to RockedBuzz via Reuters emailed questions.

Indeed, Tesla is hardly alone: ​​The US used-car market has thrived as global vehicle production has hit snags, but it is now facing a “used-vehicle recession,” an analyst said, after that used-car seller CarMax last week reported an 86% decline in its third quarter of profit.

But Tesla is leading the retreat: The factors driving up the prices of its vehicles have been exaggerated compared to other brands because Teslas were “basically for a long time really the only viable product when it came to EVs.” used,” said Ivan Drury, director of Insights at Edmunds.com.

Electric vehicles like the Ford F-150 Lightning and Hyundai Ioniq 5 are hitting the market with a lot of hype, said Liz Najman, content marketing manager at electric vehicle researcher Recurrent.

Software engineer Greg Profitt bought a new Model Y last year for $49,000 and sold it three months later for $12,000 more. He ordered a new one, but just bought a used Tesla at a discount.

“The economy scares me to buy anything new,” he said, adding that the new $7,500 rebate would be too little to sustain demand.

(Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru, additional reporting by Akash Sriram; Editing by Peter Henderson, Anna Driver and Matthew Lewis)