So, as it turns out, Teslas aren’t the best investment. We can hear some of you saying, “yeah, duh.” Even so, the fall-off in trending prices for electric cars like the Tesla Model Y has been remarkable. CarEdge has the Tesla Model X losing 36% of its value in the first year, and 63% by year three. After five years, our own price tracking tool sees the X holding less than a third of its initial value.
According to iSeeCars, EVs depreciate around 13% more over a five-year stretch than other cars, with the average no doubt dragged down by Tesla. Used Tesla prices in particular were actually down by 5.3% last year, while the rest of the used market experienced a year-over-year 3.7% rebound, its first in five years. Here’s what’s going down, and why it was easy to see coming.
Teslas Lose Value Quicker Than Other EVs
2021 – 2025 Tesla Model X exteriorTesla
Looking at depreciation rates on CarEdge and comparing residual values for the Tesla Model S, for example, to non-Tesla EVs, the depreciation rate looks something like this…
1 Year Residual Value
3 Years Residual Value
5 Years Residual Value
Tesla Model S
69%
34%
31%
Hyundai Ioniq 5
55%
47%
40%
Ford Mustang Mach-E
62%
49%
43%
Compared to the Ioniq 5 and the Mustang Mach-E, the Model S actually holds its value pretty well in the first year, but it sees an immediate drop-off from there, plummeting to about a third of its original MSRP after just three years, and slowing to a steady downwards trickle from there.
Checking out Tesla’s flagship models, here’s what the depreciation rates look like over a five-year stretch.
1 Year Residual Value
3 Years Residual Value
5 Years Residual Value
Tesla Model Y
69%
42%
39%
Tesla Model X
64%
37%
33%
Tesla Cybertruck
79%
64%
54%
Tesla Model 3
70%
42%
40%
Impressive first-year value retention seems to be the norm for Teslas, before a steep drop-off sometime around the second or third year after purchase.
Checking in with our price-tracking tool, we find five-year-old Model 3s trending at less than half their initial MSRP.
Looking at the marketplace for some examples, we can find the following Model 3s for sale.
- A 69,585-mile 2019 Standard Range is selling for $14,999 in Florida.
- A 113,244-mile 2019 Standard Range is selling for $15,381 in Oklahoma.
- A 71,582-mile 2018 Long Range is selling for $15,300 in California.
- A 31,348-mile 2018 Mid Range is selling for $16,996 in California.
- An 81,897-mile 2021 Standard Range is selling for $19,995 in Ohio.
- The priciest model we can find is a 35,869-mile 2019 Standard Range selling for $35,999 in Maryland.
There are hundreds of listings for used Model 3s selling for well under $20,000, with the average on our own marketplace being skewed upwards by a few dozen listings in the $30,000+ range. We have around 700 listings at the moment, and the vast majority are selling for below $25,000.
Based on these numbers, we wouldn’t advise spending a dollar over $22,000 on a used model from 2021 or earlier. If one dealer doesn’t want to let a 2021 Standard Range go for that price, a hundred other sellers will be eager to make the sale.
The Cybertruck Has Proven An Exception To The Rule
2024 Tesla Cybetruck Exterior donut in the sandTesla
The Tesla Cybertruck, for all of its recalls and build-quality and performance issues, has actually impressed us in a number of areas. It’s a Top Safety Pick+ award winner, it holds an 85/100 Quality & Reliability rating with JD Power, and it depreciates more slowly than you’d expect of a Tesla, likely owing to its status as more of a niche product, commanding the loyalty of a small, but devoted demographic.
One of the more controversial vehicles in any segment today, the Cybertruck certainly has its share of haters. But, begrudgingly or not, sometimes you have to give credit where it’s due.
Tesla’s High MSRPs Followed By Dramatic Price Cuts Have Contributed To The Fall-Off
2021 – 2025 Tesla Model X exteriorTesla
You don’t need a degree in economics to understand a couple of basic principles of the used car market.
First off, as a rule, used cars have to sell for less than new cars if they want to sell at all. There are exceptions to that rule, like when Toyota Tacoma buyers started paying more for older models so that they could get their hands on the V6 engine the brand pulled for the relaunch. But, by and large, used car buyers are buying used cars because they’re cheaper.
So, when new car prices are slashed, that means that used car prices need to come down at roughly the same pace. That is, if it costs the same to be a Tesla’s first or second owner, wouldn’t you rather be the first?
Related
Used Tesla Cars Depreciated Faster Than Any Other Brand Last Year
Cars like the Model 3 lost around a quarter of their value in 2024.
Tesla has a history of introducing cars at steep MSRPs, with pricing comparable to a mid-range BMW or Mercedes-Benz. Then, a year or two go by, and the brand cuts the price by $1,000 or $3,000 or $20,000, leaving used Tesla dealers to cut their own prices in order to stay competitive.
2023 Marked The Start Of A Trend Toward Major Price Cuts
2023-2024 Tesla Model Y Gray Rear Angle Parked on Grassy Field w/ Mountain BackdropTesla
2022 saw the prices for every model trickling upwards, only for the brand to start 2023 with a whole slew of major discounts, ranging from $3,000 to $21,000, depending on model and trim. To pick out some key models included in these price cuts…
Original Price
New Price
Discount
2023 Tesla Model 3
$46,990
$43,990
$3,000
2023 Tesla Model 3 Performance
$62,990
$53,990
$9,000
2023 Tesla Model Y
$65,990
$52,990
$13,000
2023 Tesla Model S Plaid
$135,990
$114,990
$21,000
2023 Tesla Model X
$120,990
$109,990
$11,000
In some instances – like the Tesla Model 3 Performance and the Tesla Model Y – these discounts were able to get the pricing under the cut-off for the EV federal tax credit, which we lost last year. Whatever Tesla’s intentions in dropping the prices, the ripple effect would be felt in the used market.
Related
What 10-Year-Old Used EVs Sell For In 2025
Buying a new EV can be a strain on your bank account, so this is how much a ten-year-old used example will cost on the secondhand market.
Tesla would make a habit of dramatic price cuts and discounts, and the occasional price bump, as well. In 2024, we reported on the brand knocking $2,000 off the Model S, Y, and X. The automaker has also offered incentives like 0% APR on the Model 3, and free full-self-driving upgrade transfers.
In addition to these major discounts that seem to take place once or twice a year, users in the subreddit r/TeslaLounge have pointed out that Tesla has a history of daily price drops for used models.
“What typically happens, from what I saw, is that they lower the price over a couple of months, then ‘reset’ the vehicle’s price and start the process all over again.” – u/Nakatomi2010, r/TeslaLounge
The longer a car sits on a lot, the lower the potential sale price. Most dealers keep those prices secret, allowing room for negotiation. Used Teslas seem to inch toward transparent pricing before resetting back to the price the dealer would like to claim, if possible.
What’s A Savvy EV Buyer To Do?
2023-2024 Tesla Model Y Front Parked in Garage at Night w/ Door Open and Snow OutsideTesla
Note, these observations are just that, observations – there’s no study and results, here. However, despite this, we’ve got two pieces of advice for anyone looking to buy a Tesla.
- Don’t think of a Tesla as an investment. It’s almost guaranteed to lose money faster than any other vehicle on the market.
- Buy cheap.
As Nakatomi2010 puts it, “There’s a science to tracking the Tesla used car prices” from the inventory page, advising potential buyers to track the offers from day to day until the car you want gets down to a price you like.
And don’t stress about missing out on “the perfect deal”. As we’ve seen, the tendency is for Tesla prices to keep coming down by leaps and bounds in the long run, whether you’re buying directly from Tesla, or from third-party dealers.
Sources: Tesla, r/TeslaLounge, iSeeCars, CarEdge.
