Tesla resale value

Do Teslas hold their value?

When you think about electric vehicles (EVs), is Tesla one of the first names that comes to mind? If so, you’re certainly not alone. Tesla was one of the first EV brands to gain notoriety in the U.S. and they currently sell the most popular EVs.  However, compared to some other EVs available on the market today, Teslas come with a premium price tag, making it important to consider if they’re worth the cost. In this article, we’ll help you understand if Teslas hold their value over time.

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Key takeaways

  • Depreciation is the decrease in value of an asset following its initial purchase and is commonly associated with new cars. 
  • Teslas depreciate at a slower rate than regular gas powered vehicles.
  • Teslas continue to improve their existing products, increasing their value and resale prices.
  • The Inflation Reduction Act could help increase the resale value of pre-owned Teslas.
  • If you’re looking to lower your Tesla charging costs, the best way to do so is by going solar! Compare solar quotes through the EnergySage Marketplace to find a system that fits your needs at the right price.

What is depreciation?

You may have heard that as soon as you leave the car dealership with your new car, it loses value – this is true and refers to the concept of depreciation, the decrease in value of an asset following its initial purchase. This concept is most commonly associated with new cars; while used cars depreciate as well, they do so at a far lower rate. Teslas, for example, depreciate rapidly in the first three years and then slow in the rate of depreciation. 

Do Teslas hold their value?

Simply put, yes. Despite initial depreciation, Teslas prove to be a good investment compared to many other cars. 

Teslas depreciate slower than gas-powered vehicles

Compared to regular gas-powered vehicles, Teslas depreciate at a slower rate. One of the main reasons why Teslas retain their value even several years after initial purchase is their mileage range. Most Teslas will last over 500,000 miles, while the average person drives only 13,500 miles per year. So, their depreciation is not typically evaluated based on mileage like traditional vehicles – rather, it’s evaluated through their remaining battery capacity. 

On the other hand, some gas-powered cars depreciate up to 60 percent in the first five years while other cars just remain as scrap value. Internal combustion engine vehicles (aka gas-powered cars) contain over 2,000 moving parts, compared to just 20 in EVs. Therefore, the cost of repair and maintenance is far higher for gas-powered cars, which contributes to their faster depreciation. Overall, when determining how quickly your car will depreciate in value, it’s important to consider factors like warranty, anticipated maintenance, the model and any add-ons you purchase, the condition of the car, the EV’s range, and the mileage on the odometer (or the remaining battery life for EVs), which will all impact its eventual resale value. 

Teslas continue to improve

As the government passes new climate legislation, like the recent Inflation Reduction Act, and as gas prices continue to rise, it’s becoming increasingly clear that EVs are the vehicles of the future. And many EVs, including Teslas, continue to improve as technology advances, increasing their long term value. First, the cost of batteries is continuing to drop every year – lithium ion batteries (the batteries that power EVs) cost $1,000 per kilowatt-hour (kWh) in 2010, but in 2017 cost just $200 per kWh. These lower costs make batteries easier to replace in your EV, boosting its resale value and extending its life. 

Another important thing to note is that Tesla will likely implement Full Self Driving (FSD) capability into many of their existing EVs in the future, which will increase their resale value. Teslas purchased after 2019 will be eligible for the software updates that will enable FSD, slowing the rate of depreciation for these vehicles. You do have to add the FSD capability when you purchase a Tesla, though, or at any point through the Tesla app or website. Tesla did announce that as of September 5, 2022, FSD capabilities will cost $15,000 (prior to that date, it’s available to add to the Tesla you purchase for $12,000).

There is also the option to have enhanced autopilot capabilities as an added feature for $6,000. Enhanced autopilot offers the ability to navigate on autopilot, auto lane changing, autopark, summon, and smart summon features.

Teslas are in demand

If you’ve ever tried to purchase a Tesla before, you know they’re in high demand. Most people hoping to buy a Tesla have to wait about a year before they can start driving their new EV.  Interestingly, even when the supply chain is slow, the demand for Teslas remains high. This can result in used Teslas being very close in price to new Teslas so that owners can start driving their vehicle sooner. In fact, in some cases, buying a used Tesla can even cost more than a new Tesla! 

Tesla’s warranties help protect your investment

While EVs come with fewer moving parts to fix, there are some pricier components such as the main battery and drive unit (your Tesla’s electric motor, inverter, and gear box). And while these have come down in price as mentioned previously, they are still costly to replace. The good news is that Tesla’s warranty does a nice job of covering you in this area, helping to further protect your investment and add value if you do sell yours. Tesla offers a minimum 8 year or 100,000 mile warranty on your battery and drive unit, whichever comes first, with minimum 70% retention of Battery capacity over the warranty period. Some models like the Model S and Model X offer even longer mileage limits, going up to 150,000 miles. 

Additionally, Teslas have a Basic Vehicle Limited Warranty that covers your vehicle for 4 years or 50,000 miles, whichever comes first, as well as a Supplemental Restraint System Limited Warranty that covers your vehicle for 5 years or 60,000 miles, whichever comes first.

How will the Inflation Reduction Act increase Tesla resale value?

The Inflation Reduction Act was signed into law last week, and a huge part of the plan is to cut America’s carbon footprint by investing in the electric vehicle sector. The plan focuses on mid to lower income households to include a large subset of the American vehicle owner. The new law makes buyers eligible to receive up to $7,500 on qualifying new EVs and up to $4,000 on used EVs but the buyer must make no more than $150,000 annually. Previously, such incentives were only available for new EVs but now they are applicable for second-hand cars, enabling more people to afford and purchase EVs. 

This incentive is only applicable to cars assembled in North America (which includes Tesla), eliminating several popular EV manufacturers and Tesla’s main competition. The used tax credit will likely drive more EV shoppers to choose a used vehicle, which could in turn increase Tesla resale value. However, some of Tesla’s higher end models will not be eligible for the tax credit since vehicles because of the guidelines surrounding vehicle cost — only cars less than $55,000 and vans, SUVs, and pickup trucks less than $80,000 earn the credit. Learn more about the Inflation Reduction Act’s impact on EVs.

What Teslas are currently available?

Today, there are four commercially available Tesla models that you can purchase: the Tesla Model S, the Tesla Model X, the Tesla Model 3, and the Tesla Model Y, with the $47,690 and $129,990. These models share common features such as advanced automation and driving assistance, over the air updates, and advanced security features, as well as the ability to remotely monitor the car. 

Here are some of the key things you should know about each of the Tesla models:

  • The Tesla Model S is a luxury sports vehicle that launched in 2012 and has the longest range of all the models. The base price is $106,190.
  • The Tesla Model X, launched in 2015, is an electric SUV and is the fastest SUV in the automobile industry.
  • The Tesla Model 3 is the most affordable model and is targeted towards the mass market. It accommodates a wide range of shoppers at its competitive price and has a range of 267 to 334 miles. 
  • The Tesla Model Y is a mid size SUV with a range of over 300 miles and can fit up to seven passengers.

To learn more about the various Tesla models, explore EnergySage’s Guide to EVs.

What does the future hold for EVs?

Electric vehicles are an important part of the future of the automobile industry. With gas prices rising and new climate legislation signed into law, EVs are becoming an increasingly attractive and affordable alternative to traditional gas-powered vehicles. As charging infrastructure continues to expand, EVs are slated to become the vehicles of the future.

Power your Tesla with solar

If you’re looking to lower your Tesla charging costs, the best way to do so is by going solar! To learn more about the benefits of charging your EV with solar, be sure to check out this article. On the EnergySage Marketplace, you can compare up to seven quotes from our network of pre-screened installers, allowing you to find a system that fits your needs at the right price. If you’re planning to charge an EV at your home, be sure to make a note in your account so installers can size your system accordingly – that way, you’ll be able to power your car with renewable energy generated right at your home!

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Categories: Electric Vehicles

About Ananyaa Mehra

Ananyaa Mehra is a rising junior at Tufts University pursuing a bachelors of science in Environmental Studies as well as a minor in entrepreneurship. On campus, she is involved with the Energy club, sustainability council, and helps plan the annual Tufts Energy Conference. She is passionate about and has expertise in electrification, renewable energy, and green technology, with a focus on policy and equity. In her free time, she loves spending time in the ocean, trying new coffee shops, and traveling.

One thought on “Do Teslas hold their value?

  1. Tim

    You wrote, “If you’re looking to lower your Tesla charging costs, the best way to do so is by going solar!” I’m not against solar, but that statement seems misleading for many, or perhaps most people. The most obvious way to lower charging costs is to charge at night at off-peak rates.


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