Tesla Cars Do Not Increase in Value Despite Elon Musk’s Prediction — Here’s Why
Written by
David Nadelle
Edited by
Maria Concepcion
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Frustrating for media outlets, Tesla doesn’t generally respond to press inquiries. That doesn’t mean its co-founder and CEO won’t air opinions and predictions on a broad range of topics, including his sometimes controversial, industry-leading EV brand.
As CNN notes, four years ago, Elon Musk boldly claimed that Teslas would increase in value after purchase as software updates would eventually enable his models to become more autonomous and self-driven. More recently, Musk reiterated the claims at a 2023 third-quarter earnings call.
“You can think of every car we sell or produce that has full autonomy capability as something that in the future may be worth five times what it is today,” Musk said.
Tesla’s driver assistance suite software — Full Self-Driving (FSD) — is still pending regulatory approval and will require human oversight to operate any vehicle equipped with the technology. Without FSD, which Musk said could be worth $100,000 alone and is “the most important source of profitability for Tesla,” any chance of a Tesla increasing in value is doubtful.
Four years after Musk’s prediction, pre-owned Teslas are trading at lower sticker prices as the company fights to regain its dominance in the suddenly crowded EV market. The average used Tesla Model 3 sells for around $29,000, per CNN, while a new base Model 3 costs around $38,000-$40,000, depending on if one of the company’s frequent price slashes is in effect.
To meet delivery goals amid increasingly stiff competition from the likes of Ford and BYD, the largest EV manufacturer in the world cuts prices on its models on a regular basis. The cuts affect Tesla’s used resale values and the bottom lines of other EV brands.
The average price of a used Tesla has been declining consistently since August 2022, according to CarGurus data. According to Edmunds data, the price of a used 2021 Tesla Model 3 sedan tanked about 29% year-over-year, from $40,522 in January of 2023 to $28,700 in January 2024, per CNN.
Driven by the lasting economic effects of supply chain restrictions, high inflation, and low inventory, American drivers are keeping their cars longer now, and used cars are worth more than they once were.
However, unless you’re buying a rare or collectible car as an investment, vehicles start depreciating when you’re handed the keys, to 20% in the first year of ownership and 15% each year after.
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