When Tesla raises its prices, people are upset, which is to be expected. When Tesla lowers its prices – which is rare, especially in the US – while many people are obviously excited, others aren't happy. The unhappy folks are typically those who already own a Tesla model that they paid more for. Not only are they likely jealous that someone got a much better deal on a Tesla than they did, but their resale/trade-in value instantly plummets.
Tesla has said over the years that it has the most transparent prices in the industry, it doesn't offer deals or discounts, and it doesn't have markups. Sure, it depends on how you define deals and markups, but regardless of the official definitions, Tesla showed us over and over in 2022 that it can and will raise its prices. Then, toward the end of the year and into 2023, the US EV maker dropped prices. The most recent price cuts were significant.
With all of that said, when Tesla adjusts its prices so often and by such notable margins, it impacts the entire automotive industry. Used values drop, people's cars are no longer worth what they paid for them, and it arguably creates a bit of a mess. Our friend Andy Slye put together the video at the top of the page to discuss this topic, and it's certainly worth checking out.
Tesla owners have every right to be upset if the automaker reduces the prices of its models. However, unfortunately, this is just how it works. It should come as no surprise to see Tesla raise and lower prices, since it has done so in the past. CEO Elon Musk said not long ago that if the economy improved, Tesla may be able to lower prices. Musk went so far as to admit that prices were becoming ridiculously high and that delivery wait times were getting unacceptable.
Slye owns Tesla vehicles and has seen his trade-in values drop shockingly low, but that doesn't mean he loves his cars any less. Moreover, unless he aims to sell right now, it doesn't really matter. In fact, there's a really good chance Tesla will raise prices yet again, and the story will change. Slye shares:
"But when you buy something from someone else the terms are simple: the seller offers an item at a price, and if you as a buyer agree to that price, then that is solely a decision made by you, the buyer."
His 2022 Tesla Model Y cost $55,000 new, and Tesla will only give him $39,000 for it now. Meanwhile, Slye has a 2018 Model 3 with Full Self-Driving that cost him $58,000. According to Tesla, it's currently a $19,000 trade-in.
Slye points out that if you did any research before buying a Tesla, you'd know that the prices had gone up many times over the past few years. He suggests that people who are considering buying a Tesla should only buy it if they absolutely need it, they can afford it at the current price, and they plan on keeping it for a long time.
If you can afford your car payment, you're happy with your car, and you plan of keeping it for the long haul, the resale value doesn't really matter. Slye aims to keep both of his Tesla vehicles for at least 10 years, so while he may be frustrated by the price cuts, they aren't impacting him. Instead, they're making EVs more affordable for the masses, meaning even more people can now buy a Tesla.
Isn't this something we should be applauding about? Don't we want prices to come down and for EVs to move more quickly into the mainstream?
Aside from the Tesla situation, a car is a depreciating asset, and while some people may have sold their used Teslas for a profit over the past few years – and Elon Musk says Teslas are appreciating assets – this is not common. When you buy a car, it's assumed that as soon as you drive it off the lot it will lose about 20% of its value. Slye says some cars may depreciate by a whopping 30% in the first year alone.
What's your take on Tesla's price cuts? Do you agree with Slye's reasoning, or do you see things differently? Let us know in the comment section below.
Source: Andy Slye (YouTube)