3 Unique Reasons Tesla Cars Depreciate
Written by
J. Arky
Edited by
Amber Barkley
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Owning a Tesla comes with a lot to deal with. On the one hand, you are probably enjoying one of the most original automotives of the 21st century, and on the other hand, they’re not always easy to fit into the budget — and you are running into depreciation issues that are unlike any other vehicle you’ve driven prior. That’s because, as amazing as the technology is under the hood, it’s one-of-a-kind to a car brand that’s just barely hit the road.
“Teslas depreciate quickly due to rapid advancements in EV technology, frequent price cuts and concerns about battery longevity. However, they stand out with cutting-edge software, over-the-air updates and a strong network,” said Shawn Miller, the founder of Modified Rides.
GOBankingRates broke down three unique reasons Tesla cars depreciate. Also, if you’re looking for a car that will depreciate more slowly, check out new cars that will hold their value in 2025.
Warranty Expiration
Melanie Musson, an auto industry expert with CarInsurance.org, said that, because Teslas are electric vehicles (EVs), the cars run on electricity stored in batteries, which means that batteries are essential to the overall functionality of the drive… until they run out of juice.
“The problem is that batteries don’t run forever,” Musson explained. “Once an EV battery wears out, it’s often not worth buying a new battery. As long as the warranty [covers] the battery, EV owners don’t have to worry about the battery life, because if there are problems, the warranty should cover them.”
When the warranty expires, the risk is transferred over to the owner with no safety net.
“So, a Tesla nearing or past its warranty will be worth a lot less, because consumers don’t want to risk losing battery function,” Musson said.
Advancements in Technology
Tesla has always been on the cutting edge of what comes next in the automotive industry, which actually makes its vehicles depreciate faster. That’s because as the technology advances in new models, the older ones tend to go out of date quickly.
“Things like processor upgrades, camera hardware for Autopilot and battery improvements can make older models seem less advanced,” Miller said. “Older Teslas might not support new Full Self-Driving features, because they lack the latest chips or sensors. This can impact depreciation, since buyers often want the latest tech, and older models may lose value faster.”
Price Changes
“The value of a new car impacts the value of a used car,” Musson explained. “If you buy a Tesla for $60,000 and a year later, it’s worth $45,000, but a Tesla changes the starting price of a new model to $50,000, your used Tesla will instantly be worth less. If the price is close, any savvy customer would rather have a new model than a used one.”
This means that when price drops on new Tesla models, the value drops for used ones, as well, causing a domino effect.
“Luxury vehicles lose value,” Musson said. “They historically depreciate faster than more basic models. Teslas are luxury vehicles, so it makes sense that they would depreciate more than other EVs. People who can afford luxury vehicles tend to want new cars. People who can’t afford new cars are in the used car market and don’t want to pay extra for fancy features that don’t impact functionality.”
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