Last year, I wrote a series of articles about the uncertainty around the decision of buying vs leasing a Tesla model Y. In particular, I cautioned in one of the posts that Tesla cars’ depreciation rates may be better than other brands, but there are still uncertainties and we should not assume it is a single number, simple because “we do not know the future”.

Now we are in late 2023. Well, so much has happened. The depreciation rates of Tesla have indeed increased.

That was because Tesla decided to cut prices aggressively. A 2020 Model Y was sold for $65K in January 2022. The same car was sold for $50K in March 2023 (see this telling graph from recurrentauto.com), an almost 25% price cut.

What will a 25% price cut of a new Model Y do to used ones?

Well, if you had bought a Model Y before 2022, then this is bad news if you will sell it now, because its market value should decrease by somewhat around 25% (of course, subject to the usual demand and supply balance), compared to a year ago. That means Tesla cars’ annual depreciation rate has increased.

Of course, I expect used Tesla cars still hold greater value compared to other EVs. Nevertheless, to some people who bought a new Tesla last year hoping to flip it today or a couple of years from now, they will be disappointed. To at least some of them, they should have taken the leasing approach.