“I felt like I was being ripped off. As a consumer, I felt like I was being taken advantage of,” said Simmons, 32, a web designer in Naples, Florida. “The guy who just bought a car.”
That’s the reality facing owners of Tesla Motors, which has slashed prices on its vehicles by 20 percent as part of Chief Executive Elon Musk’s push to boost sales amid weak demand. For existing customers, the resale value of the cars they own will take a hit as new models drop in price.
“It’s a blow to any existing car owner,” said Ivan Drury, director of insights at research site Edmunds.com.
Drury said the price cuts on new cars would immediately affect used cars and could further reduce the value. New car buyers want the smell of new cars, so used car prices could fall even more, he said.
It’s an age-old problem in the auto industry: consumers buy a car only to see an ad a few days later for a discount that could have saved them thousands of dollars. This time is different because dealer discounts are usually limited-time sales, and Tesla’s drop is bigger than a typical rebate.
To be fair, Simmons and other Tesla fans aren’t the only car buyers who will see a drop in resale value. Used-model prices fell 15% in December, while the average price of a new model hit an all-time high of nearly $50,000, according to researcher Cox Automotive.
Among new car sellers, Tesla has cut prices the most. Its more expensive models have been hit the hardest. The base price of the Model Y is down 20%, starting at $53,000, and the performance version of the car that Simmons bought is down 19%. The Plaid version of the larger Model S sedan is down 14 percent.
Los Angeles-based TV producer Austin Flack said he listed his 2018 Model 3 with a full self-driving beta package for about $51,000 in December, but that will be more expensive as Tesla removes incentives before the end of the year. The price drops to $36,000. He said he might have to bring the price down to $30,000 again.
Jack Bradham, a cloud-services developer in Charlotte, North Carolina, said he was annoyed by the loss of value on the black Model Y Long Range he bought in December.
Bradham, 46, said in a telephone interview that he ordered the car late last year and said he was told he would have to wait until January to get it. Then he got a call from a Tesla salesperson on Dec. 10 saying he could get a car around Christmas. He said he was excited about the early delivery and agreed to buy the $69,000 electric car.
Now, he says, he should wait because he might get a discount if he picks up the car in January; the same car is now $12,000 less.
Bradham said he understands that sometimes people miss out on a sale, but what bothers him is the magnitude of the cut, and the lack of communication from the company.
“No one to contact. I called them to tweet, no response.”
Andrew Checketts of Santa Barbara, Calif., said he received a seven-passenger Model Y in early December when Tesla “chases” him with a text message, promoting a $3,750 discount. If he had waited a month, he could have bought the car for much less.
“I plan to install solar soon. Really hard to give Tesla any more money, couldn’t even see the car this morning,” Checketts said in an email. “He said he was driving a Prius today.
Tesla’s pricing has had its ups and downs over the last year. The company raised prices by 3% to 5% in March, when a semiconductor shortage cut production across the auto industry and automakers and dealers were charging top prices on all vehicles.
The company then slashed prices by $7,500 in the U.S. in December, leading analysts to believe demand for its electric vehicles was waning and exacerbating a share price slump for much of last year. Throughout 2022, Tesla’s stock price has fallen by 69%.
Tesla also cut prices in the U.S. and China late last year. In a Twitter audio chat on Dec. 22, Musk hinted again that he would lower prices further to fend off economic headwinds. “You want to increase the number of units, in which case you have to adjust the price downward,” he said.
Bradham, a developer of cloud services, said he hoped Tesla would give recent buyers some time off, such as free charging. Simmons said companies should offer full self-driving capabilities for free.
Still, Tesla owners have little recourse.
“I’m not going to buy a Tesla again. It means a lot to me. I’m a big Tesla fan. I’d go with a competitor like Lucid or Rivian,” Simmons said.
First published date: Jan 14, 2023 at 08:43 AM CST