Tesla market share has fluctuated over 2023, but it is still the undeniable volume leader in the new and used EV market. And Tesla has had an ongoing series of price cuts, totaling about 25%, to its new lineup in 2023, which have triggered a drop in the prices of used Teslas. We have followed the changes to used Tesla prices closely in our Tesla newsletter, tracking the  downward trajectory in used Tesla prices. 

We were curious to see how the Tesla price cuts have affected the overall EV market over the same time period. We paired with BlackBook, auto industry data and valuation leader, to help us visualize wholesale price variability over the course of 2023. We looked at popular 2022 models (plus the 2023 Cadillac Lyric and 2023 Nissan Ariya) to see how prices changed since January. While new Teslas have seen prices fall about 25% over 2023, the overall EV market has matched that pace and has, on average, fallen 22%.

BlackBook retail valuations for individual cars are also included on our free reports for drivers and shoppers

In this data, the effect of Tesla prices on the rest of the EV market is clear. Their 2023 price cuts to the new lineup drove down used Tesla prices. To stay competitive, other used EV prices were forced to decrease. What this has led to is an overall increase in EV affordability as many of the 2022 models we tracked depreciated 20-40% over 2023. 

For instance, the price discrepancy between the Model 3/ Model Y and mid-tier, non-Tesla EVs in the beginning of the year looks very similar to the price discrepancy between those segments today, despite the two lines trending towards each other mid-year. After the price of 2022 Model 3/Model Y drops in Q1, there is a lag before other mid-tier model prices drop. Overall, the Model 3/Model Y price dropped around $21,000 from October 2022 to October 2023, and the average mid-tier EV price dropped around $18,000. 

The same pattern can be seen in Model S/ Model X and the high-end EV segment. The two lines get closer to each other in Q2, then the average high-end EV price drops, preserving the January distance from the Tesla price trends. The Model S/Model X price dropped $39,500 year over year, while the high-end EV price average fell $27,500. In addition to price cuts, the high-end EV market has performed well due to the highest incentives in the industry.

Below you can see the wholesale price trends broken down by model for both high-end and mid-tier EVs. With many models, you can see occasional, steep drop-offs in prices. These price drops trail behind the Tesla price drops.

On the Other Hand

Of course, the flip side of affordable used EVs is depreciation. The entire auto market is seeing depreciation soar in 2023, with industry averages up 24 percent over 2022 numbers. AAA shows that while the cost of a new gas car has risen around 5% to $35,000, they will depreciate by an average of $4,538 per (13%) year over five years of ownership.

Vehicle depreciation is typically covered as a bad thing, for the understandable reason that it makes something lose value. For electric vehicle adoption, however, depreciation may be one of the top factors putting more electric cars in American garages. The next time you meet an early EV adopter, thank them for their service. 

The interesting thing about the 2023 EV depreciation is that it is driven largely by the price cuts in new Teslas. In fact, due to the Tesla price cuts in 2023,  a 2020 Tesla Model 3 has seen nearly the same depreciation in three years that a 2022 Tesla Model 3 has seen in one year.

Of course, what this illustration misses is the wild, industry-wide price increases over 2021. The price cuts and depreciation we are seeing today are, in a lot of ways, just the recalibration of that price-inflated and supply-constrained market.

Stay tuned for an in-depth look at EV value retention by model and year!