Tesla Cars Depreciate the Most in USA — But There’s a Catch

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There’s a new analysis out there that shows that Tesla vehicles depreciate the most of any brand in the USA after 1 year of ownership (26.6%), after 3 years of ownership (44.4%), and after 5 years of ownership (54.7%).

On the flip side, the vehicle brand that depreciates the least after 1 year of ownership (11.2%), after 3 years of ownership (23.9%), after 5 years of ownership (30.7%), and after 7 years of ownership (41.6%) is Toyota.

It’s important to note, though, that Tesla sells 4 of the 14 electric vehicle models that are eligible for the $7,500 zero-emissions vehicle tax credit. That means that, effectively, $7,500 comes off of the value of those models as soon as they roll off the lot. There is no other brand that is going to be nearly as affected by this as Tesla when it comes to depreciation.

Importantly, the tax credit can be applied to every EV that is leased — the leasing company gets the credit, and can of course pass that on to customers via lower lease payments. But then there’s no depreciation being calculated for an analysis like this. (Though, you can still get great deals on EVs that have just come off lease.)

Before moving on to more of the findings, we had a very interesting comment on this topic from a regular reader a couple of weeks ago. “Des Pudels Kern” noted, “This is perhaps a repetition, but a friend sold her Tesla this week and bought another EV. In the 10 days that she dithered over the decision the trade-in value for her Tesla dropped $3500 at the same dealership. I think they might just have a bit of a demand/image/reputation problem….” That was in response to an article I wrote about Tesla offering more and more financial incentives to stimulate sales. Extreme Terrain, which conducted this new depreciation analysis, doesn’t indicate when the analysis was performed, but it was presumably very recently. But if this experience from Des Pudels Kern’s friend represents the norm, we can see that a week here or there could really affect the results.

Anyway, returning to the findings, the Tesla Model 3 is particularly hit by high depreciation in the short term. It sees the most depreciation after 1 year of ownership (35.6%). After 3 years of ownership, the Tesla Model X takes the biggest hit (50.2% depreciation), and the Nissan LEAF is second worst (48.9%). The Model X is 5th worst after 5 years of ownership (56.9%) and the Model S is 7th worst (56.5%). After 7 years of ownership, the Model S is worst (68%) and the Model X is 6th worst (66.8%).

Aside from Tesla’s models, the only other EV you see near the top of these lists from Extreme Terrain is the Nissan LEAF. Though, it appears that other electric models are not included here — except perhaps as part of broader model names (like Ford F-150 and Ford Mustang). Most pure EV models haven’t been on the market for very long, and it appears that’s why they aren’t included here. Even the Tesla Model Y isn’t included.

Is depreciation a major factor to be concerned about with EVs, and Teslas in particular? Maybe, but one also has to keep in mind that the $7,500 tax credit is going to warp the results.

Maybe we should do out own analysis over a shorter timeframe (not only using models that are at least 7 years old) and perhaps even using post-subsidy pricing as starting prices for EVs that qualify for US EV tax credits!  That would be interesting to see. Or, for that matter, we could just analyze EV models and see how they compare. We’ll have many more models to compare in a couple of years, but it could be fun and interesting to get started now.

Any other thoughts or requests in this arena? What have you noticed with regards to EV depreciation over the years?