Two Huge Threats to Tesla Sales No One Is Talking About

Sign up for CleanTechnica’s Weekly Substack for Zach and Scott’s in-depth analyses and high level summaries, sign up for our daily newsletter, and/or follow us on Google News!

As part of the discussion under our latest Europe EV sales report, one of the readers made a comment that really made me think about something. While we frequently discuss how Elon Musk’s political activities seem to be hurting Tesla sales and how Tesla’s limited and quite old lineup is making it less and less competitive, but the commenter brought up an issue that may be as big as both of those.

Tesla, like other legacy automakers, depends on customer loyalty and selling new vehicles to existing owners. Previous buyers are often likely to buy again from the brand, and many people who buy new cars like to get new ones every 3–5 years. However, depreciation and trade-in values matter a lot for that to happen. Here’s the comment before I go further:

There was an interesting article in Dagens Nyheter here, providing some more context besides the focus on Elon.

1. 1. Tesla Sweden has had 0% financing and kept lowering prices, which has attracted private customers. That market is now saturated for Tesla.
   2. The 2nd hand value of tesla has decreased sharply, leading to customers having to keep their cars longer instead of getting a new Tesla.
   3. The lead Tesla had is gone. Competitors have several new models on the market, whereas Tesla doesn’t. The lack of a cheaper M2 was one example.
   4. There is an abundance of great deals for 2nd hand company cars that private buyers can get their hands on.
   5. Competitors has better service and lower costs for i.e insurance and wheels. (No clue why weels were one of the examples.)

It was also stated that TM Sweden has to much focus on pushing new cars and neglected the after markets and 2nd hand market.

Here is a link to DN.se — in Swedish, but Google Translate will do the trick. Not sure if this is an open article though.

It was #2 that caught my attention. If people still owe money on a car and the trade-in value of the car is lower than the amount still owed, it’s hard to feel comfortable trading in for a new model. Even if you don’t owe money on the car any longer but the car took a huge hit in terms of depreciation and trade-in value, it’s hard to justify buying a new version of the same model or another car from that brand.

Even among Tesla faithful who plan to upgrade form an existing Tesla to a newer one when they get a new car, I have the sneaking suspicion a lot are holding onto their cars longer than Tesla would like because of how much they have depreciated.

On a related note, there’s another thing that is probably making it harder and harder for Tesla to sell as many cars as it would like. The used Tesla market is huge, and you can find a lot of wicked good deals on not-very-old Teslas. People who 5 years ago might have stretched to buy a new Tesla, or just bought a new Tesla because there wasn’t a great used Tesla market, can now go on any used car marketplace and find a wealth of options. Tesla is now competing with the used car market in a way it wasn’t just a few years ago.

Another comment on that same thread highlighted that in some European markets, the used Tesla market is even being hit due to high depreciation and the political stink on the brand: “I don’t think a refreshed Model Y will do wonders for Tesla. The brand has been damaged too much, which can be seen by the fall in demand in the second hand market. Some dealers are hesitant to take a Tesla as a trade-in because of the fast depreciation they recently have experienced, with stores filling up with unattractive cars. And with falling second hand prices the important company car market will be more hesitant, resulting in more appeal for the traditional European brands like for example Volkswagen.”

All good points. There’s a domino effect going on, it seems, and even two rows of dominos rolling down.

To close, there was yet another interesting comment from a reader on this matter. A reader, Nick Rericha, sent in a review of the Volkswagen ID. Buzz after a recent road trip. In the article, he explained how he and his wife justified getting the ID. Buzz despite it being a bit out of their budget. “We fell in love with the vehicle and started working the gears and levers to see how we could make a purchase happen. The trade-in value of the Pacifica that was offered was less than what we owed on the vehicle. I really did not want to have another car payment because we had just paid off the Model 3,” he noted. “After a few weeks from that initial visit, we saw the writing on the wall regarding resale values of used Teslas, so we decided to visit again to see what they would offer for my Model 3. The trade-in offer was good and I only saw it going down, so we decided to trade in the Model 3 for a leased ID. Buzz First Edition that we call Buzzy. We took Buzzy home on February 8, 2024,” he then explained. Good foresight. Tesla resale values have reportedly taken a serious hit since then. And way to go out there and justify buying the super cool new ID. Buzz!

I guess it’s wrong to say “no one is talking about” these problems in the Tesla market. However, overall, amongst all the discussion about Tesla sales dropping in 2024 and even more so in 2025, you don’t really see big headlines or discussions around Tesla depreciation killing demand among would-be second-time (or third-time, fourth-time, etc.) buyers. You also don’t ever see headlines or big discussions explaining how the huge and growing used Tesla market — with better and better deals (the other side of deep depreciation) — could be eating into demand for new Teslas.

All in all, Tesla seems to be facing some serious growing pains. Add these to the list.