According to the latest data from Cox Automotive, Tesla's price cuts it has contributed to a surge in sales of used electric vehicles (EVs) in the United States.
Used EV sales increased by 32% in the first quarter of 2023, as average retail listing prices fell to $43,400, a 4% decrease from the same quarter last year and significantly lower than the average new EV price of around $59,000.
According to data firm Cox Automotive, EV market leader Tesla's aggressive price cuts for new vehicles have dropped used EV prices.
Increase in EV Wholesale Values
Cox Automotive also reported that used EV wholesale values increased by 3.7% yearly, compared to a 2.4% overall decline.
This indicates that demand for used EVs is increasing, owing to the affordability of used EVs and growing environmental awareness.
Meanwhile, Reuters tells us that Congress's introduction of a $4,000 used EV tax credit in August 2022 is also expected to boost the used EV market.
To qualify, buyers must purchase a used EV from a dealer for $25,000 or less, with the maximum credit set at 30% of the sale price up to $4,000.
More About Tesla Price Cuts
According to Bloomberg, Tesla recently marked down each version of its higher-volume Model 3 and Y EVs by at least $1,000 and versions of its more expensive Model S and X EVs by $5,000.
This is Tesla's second large-scale price cut this year, following cuts across the board in January.
Despite a second round of discounts in early March, Tesla delivered just 10,695 Model S and X vehicles in the first quarter of 2023, the lowest number since the third quarter of 2021.
Elon Musk, Tesla's CEO, has stated that he is willing to sacrifice the company's profitability to continue growing in the face of rising interest rates and a possible recession.
Unlike incumbents such as Ford and newer entrants such as Rivian and Lucid Group, Tesla has large profit margins.
Despite mixed sales figures in the first quarter of 2023 for Tesla, the company is expected to maintain its dominant position in the EV market. Cox Automotive forecasts that it will account for a significant portion of the anticipated surge in new EV sales in the United States this year.
GM Surpasses Ford in US EV Market
In other news, General Motors is gradually reaching the top of the EV market. Its most recent achievement was to surpass its long-time rival, Ford Motor Company, to take second place in the US electric vehicle market.
According to CNBC, Ford's most recent number of EVs sold was 11,000 in the first quarter of 2023, while General Motors outsold them by nearly twice as many.
In the first three months of 2023, GM sold up to 21,000 electric vehicles, outpacing its decades-old rival, Ford.
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