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The popularity and technological advances continue within Tesla, and the changes can be seen in the resale market for these vehicles in how they retain value.

Teslas generally do retain value extremely well when compared to others in the EV market. If you compare a Tesla to a traditional vehicle, the results will not be the same though. This is because there are more changing factors and industry tax incentives that make EV-used cars less desirable.

There are multiple Teslas you can consider if you want to find the model that retains value the best. We consider both the Tesla Model X and Tesla Model 3 to be the two top choices, with recent estimates stating that Model 3 will be the best performer. This guide includes everything you need to know about whether Teslas retain value.

The used car market is rapidly changing, but this is especially true for electric vehicles. Our experts had the opportunity to work closely with some key figures that helped provide the research needed to gather all data in this guide. Keep reading to find out if Teslas retain value.

Table of Contents

Do Teslas Retain Value?

Tesla vehicles are not like the other electric vehicles that are available on the market. Tesla vehicles retain their value well but they are more expensive than other electric vehicles.

Teslas don't always retain value as well as other cars, but they do retain more of that value than other electric cars. Overall, you can expect these premium vehicles to hold their own in the resale market.

Tesla vehicles have a prestigious quality to them that makes them valuable in a way that is different from most passenger cars. This prestige quality also keeps Tesla prices competitive with less expensive options for electric cars.

For this reason, Tesla remains one of the top-selling electric car brands in the world even though it has been outsold by several different companies in some markets recently.

If you are new to Tesla, you will notice the recent growth they have experienced that only helps when these vehicles are being resold. They will hold their value extremely well for an electric vehicle, and it only continues to improve each year.

Why Do Teslas Depreciate?

Teslas depreciate quickly because they're made with premium materials and use advanced technology. The electric vehicle market, in general, tends to depreciate much faster than any other type of vehicle.

There are a few key reasons why Teslas depreciate to keep in mind. This will help you determine whether this is the best vehicle purchase for you.

Battery Technology

Tesla, like other car manufacturers, has to make the transition from older models to newer ones. To maintain the brand's appeal, they have to continuously upgrade their cars.

However, the cost of these upgrades often causes the older cars to become less attractive and in turn depreciate. One of the key upgrades is the battery and the amount of usage your current one has.

Teslas will depreciate because of new upgrades in battery technology and make the older ones less attractive. This is why it is important to invest in Tesla vehicles now before they become outdated.

New Release Upgrades

From a consumer perspective, when a new vehicle is released it can look more appealing than an older model but that changes when these new models start depreciating. This includes interior and exterior features.

As Tesla innovates, the new launches will make the older vehicles less desirable. This is the main reason that hurts the resale market and could impact the value of a Tesla to drop.

This reason is a good example of why the Tesla Model X and Model 3 hold their value very well. It also shows you why Tesla leads the market overall too because the designs tend to remain similar with a key focus on performance upgrades.

Decreased Retail Prices

The resale market will take a hit when Tesla drops the prices of their vehicles. The resale market has been steadily increasing and as of now, it’s struggling with this drop in value, and buyers that would normally invest for the future are hesitant to buy.

This drop in price impacts the resale market because when cars are bought at a reduced rate and there is an increase in value, the owner is more inclined to sell. However, this also means fewer people are buying new cars from Tesla because they can get older models at a lower price point.

Incentivized Buying

The tax incentives offered to buy electric cars make it less attractive for used car buyers. This has been a concern for the auto industry and depreciation in the value of used cars.

These incentives are designed so that people will purchase new cars, which is good for the environment, but not so good for used car prices. A lot of people have been selling their old cars after they get a new one, which has led to a sharp spike in demand.

The government incentive is there to help people switch to electric cars and it is great at doing that - but it might not be so great at managing other consequences like depreciation of used cars.

What Causes Electric Vehicles To Lose Their Value More?

The value of electric vehicles is becoming less with time. It is due to the increase in the number of models that has led to saturation, new tax incentives that encourage buyers to get a new car, and the changing technology in the industry.

Electric vehicles are a great option for people who want to reduce their carbon footprint and be environmentally conscious, but they can easily become worth much less due to a shift in market trends.

Luckily, Teslas will hold and retain value better than nearly all over EV you can find. This makes them a much safer choice and a sound investment now as the shift continues.

Which Tesla Model Retains Value Best?

Tesla’s most impressive model is the Model 3. It has the best features and performance in its class. The Tesla Model 3 is the best Tesla to retain its value and can be resold at the highest price.

However, this continuously changes based on the year and the 2021 estimates expect that the Tesla Model X will instead rank at the top for the Tesla that retains its value the best for this year with lots of cool features too.

But on average, you can expect your Tesla Model 3 to retain 90% of its value over the first three years that you own it. This number is incredibly high and would rank this Tesla among the best for all cars and not just the EV market.  

Do Teslas Retain Value?

About The Author

Charles Redding

Charles Redding

I've spent many years selling cars, working with auto detailers, mechanics, dealership service teams, quoting and researching car insurance, modding my own cars, and much more.

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