--- title: "Tesla’s New Price Cuts May Sink Used Values Later and Owners Aren’t Happy" description: "After Tesla slashed prices on all of its new models, used car prices have fallen dramatically, upsetting customers and hurting brand value." date: "2023-01-18" modified: "2023-01-18" authors: - name: "Nico DeMattia" job_title: "Contributing Writer" link: "https://www.thedrive.com/authors/nico-demattia" url: "https://www.thedrive.com/news/teslas-new-price-cuts-may-sink-used-values-later-and-owners-arent-happy" categories: - "News" - "News by Brand" - "Tesla News" --- # Tesla’s New Price Cuts May Sink Used Values Later and Owners Aren’t Happy ![]() *Photo | Tesla* Tesla recently [slashed its new car prices ]()across the board, with some cars' pricing—such as the Model Y—dropping by as much as 20%. However, that's come with potentially unexpected consequences, as it's angered many of its recent customers by completely [sinking used Tesla values](). Why did [Tesla]() slash its prices? According to *[Automotive News]()*, Elon Musk said during a recent call that price cuts were made to increase sales volume. It's also likely that Musk wanted to get many of his cars' prices low enough to allow some customers to qualify for a $7,500 federal incentive under the new Inflation Reduction Act requirements. And while that did work, it came at the expense of customers who bought their Teslas just before the price cuts were made, causing *those* customers to miss out on huge savings. Admittedly, customers miss out on savings all the time from all automakers. Tesla slashed its prices without warning, and there's no sign of them going back up. Furthermore, Tesla owners are also upset because their cars' values have dropped significantly after the massive price cuts, which will hurt them when it comes time to sell. They're losing money right before their eyes. The significant drop in new car prices not only reduces the incentive to buy used cars but it floods the market with them. As more and more customers buy new Teslas, more and more Teslas are added to the used car market, thus further reducing their values. However, Kelley Blue Book Executive Editor Brian Moody told *The Drive* that it's too early to tell if new car prices have affected used car values. "There isn't enough data yet," Moody said, but agreed that values could drop after a significant price cut. Who would pay for a used car when only a little more money gets you a new one with a warranty? ![]() **Photo | Tesla** According to [*Reuters*](), almost a third of used Tesla sales last year were 2022 models. Over the past year or so, rising fuel costs due to the war in Ukraine raised used Tesla values as customers searched for second-hand EVs. That led to customers of 2022 Teslas to flip their cars and buy new ones. However, many of those flippers have either already seen their newer car plummet in value, or they just missed out on huge discounts. It isn't just values that are dropping, it's reputation as well. [Tesla had a great year in 2022](), outselling other premium brands like BMW, Mercedes, and Audi in the U.S. by huge margins. However, premium brands don't make lineup-wide price slashes, especially of that magnitude. Instead, that's often seen as something budget brands do. Jessica Caldwell, executive director of insights at Edmunds recently told *[The Verge]()*, “Like the mainstream automakers, Tesla will need to contend with what these price cuts will mean for its residual values and brand image." However, according to Moody, Tesla's—and by extension Elon Musk's—price slashing behavior can be seen as maverick-like to its fans, shielding it from criticism. "The mystique of the company, that they don't follow rules," he said. It's hard to blame customers for wanting to jump on Tesla's newly discounted models, especially while they're still eligible for federal tax credits. However, that influx in new customers, and its subsequent flooding of the market with used cars and damaging its reputation as a premium brand, could end up doing more harm than good in the long run. *Got tips? Send 'em to tips@thedrive.com* ## Author Nico is a writer and reviewer from New Jersey who probably thinks he’s a lot funnier than he actually is. His love of cars began when he was just a kid playing Gran Turismo 3, grinding out enough race wins with a Mazda Miata to save up for an in-game RUF 911. That passion for small, lightweight sports cars drove his desire to learn more about the industry, get his hands on as many cars as he could, and bring those experiences to life on the page. He cut his teeth writing about BMWs, Volkswagens, and Audis, mostly, and has owned far too many of each. He’s on his fourth 3 Series sedan, but all of his old, cheap German cars have forced him to learn more about car maintenance than his mechanical capability can handle. Too many late nights have been spent scrambling to get a car running by morning so he could get to work. For some reason, he never seems to learn that old Bimmers probably aren’t the best daily drivers. But he loves more than just old German cars. He’ll gladly drive and discuss anything with four (or even three) wheels. Cars aren’t his only passions, though. Nico is also a big nerd and loves movies, video games, comic books, and cares far too much about the New York Giants. So don’t be surprised if you see football references or dumb, obscure movie quotes in any of his car reviews. ### Author social links [Instagram]() [LinkedIn]()