Used Tesla Prices Drop Below $20,000
It is hard to say exactly what has killed the EV market in the US. It has, however, caused a retreat by every large car company in the world that tried to take a piece of what they thought would be a huge success. EVs have become so unattractive that used Teslas are available for sale for under $20,000, according to the used-car site Carvana. That is for a Model 3. The price of a new 2026 Model 3 is about $45,000, depending on features.
The exodus by manufacturers has been bloody. The FT recently covered the story in a piece titled “Global carmakers retreat en masse from electric vehicle plans.” Each of these large companies relied on several factors. People would move away from gas-powered cars for environmental reasons. According to the EPA, “transportation accounted for the largest portion (28%) of total U.S. GHG emissions in 2022.”
There was also an assumption, although hard to prove, that gas prices would increase over time. The current Iran war and its impact on gas prices suggest this may be true.
Government incentives were important. In the US, these reached $7,500 per EV. The Trump Administration killed this. The Biden Administration was pushing to have 50% of all new car sales be EVs by 2030.
Within a few days of the end of the EV credit, Ford took a $19.5 billion write-off for its failed EV business. GM, Honda, Stellantis, and VW also took a billion write-downs. And then, Tesla, the EV leader in America, said its 2025 global sales dropped compared to 2024.
As EV demand declined, used EV prices fell along with it. The problem worsened as EVs delivered to buyers on three-year leases reached the end of their leases, dumping even more inventory into a period of soft demand.
What is not clear this year is whether used EV prices will rebound as gas prices rise. Many Americans still will not buy EVs. They do not like the long charging times, low range, and rapid tire wear.
If gas moves above $5 for a long time, EV sales might rebound. Used EV prices may rise with them. In the meantime, used EV prices will languish, and used Teslas may be available at $20,000
