Do Tesla Vehicle Maintain Their Value? – Tesla Maison

Do Tesla Vehicle Maintain Their Value?

Tesla launched its first vehicle more than a decade earlier, which led to some wondering whether these innovative vehicles hold their value. Elon Musk oversees design, engineering, manufacturing, and other aspects of Tesla's products. Tesla was founded in 1998 by a team of engineers who believed all-electric cars were the best way to transition away from harmful fossil fuels.

How well do Teslas maintain their value over time? Overall, Teslas maintain their value exceptionally well. The value of Teslas is less than that of their competitors. They also depreciate at a slower rate over time. Teslas are held in high regard by a number of factors including the automotive market, Tesla's unique features, and buyer habits. Tesla vehicles have been rated as having low depreciation, and therefore high value.

Tesla cars, though they are an excellent investment for the environment and in comparison to other manufacturers, have a high initial price. Teslas also aren't immune to the depreciation inherent in cars, since, just like any other vehicle, a Tesla will transition from being a brand-new car to a used one once it is purchased. Tesla vehicles are still holding their value better at this stage than many of their competitors.

Teslas are in Demand

Tesla Motors' production of all-electric vehicles is what makes it unique. Tesla Motors launched its Roadster model in 2008, the first-ever highway-legal electric vehicle.

Hybrid cars that use both gasoline and battery power are the closest other automakers in the industry can come to producing these all-electric cars. Ford, General Motors etc., are traditional car makers that haven't taken on the production of fully electric vehicles due to high costs. The costs of producing electric cars would be passed onto consumers. This could result in vehicles that are very expensive and may not sell.

Teslas are even more in demand today due to the high cost of gasoline and the current supply-demand situation.

All-Electric Vehicles

A vehicle that is entirely electric runs only on electricity. These cars are fueled either by one or several electric monitors powered by rechargeable batteries. There are many advantages to all-electric cars compared to conventional gas-powered vehicles:

  • Efficiency in Energy: These electric vehicles produce a higher proportion of energy from electrical energy compared to conventional vehicles that use energy stored as gasoline
  • Environmental Friendly: Electric vehicle don't emit any pollution as individual cars. However, some power plants might emit them when producing electricity.
  • Performance Advantage: Electrical motors allow for a quieter, smoother vehicle operation as well as better acceleration and less engine upkeep over time.
  • Reduced energy dependence: because electricity is a domestic resource of energy, electric vehicles reduce the dependency on fossil fuel energy sources

There are many who would like to point out that owning a fully electric car is not as convenient as a gas-powered vehicle. Even though electric cars are improving in driving range, they still have a lower driving range (on a single charge) than many conventional vehicles. The distance that an electric car is able to travel depends on the car model and how much it costs.

A second drawback is the time needed to recharge the battery, which could take from 3-12 hours. Some models allow a fast charge up to 80%, but it usually takes longer than 30 minutes. Even though electric vehicle batteries are designed to have a long life, they can last up to 15 years under moderate climate conditions, while lasting only 8-12 years in extreme climates. It is expensive to replace the battery packs in electric cars.

Tesla Cars Demand

In fact, new Tesla automobiles are expensive. But they are still in great demand. Tesla's sales and waiting list are increasing. Tesla motors' inability to meet demand is a part of the reason. Because the demand for Tesla's vehicles is greater than the supply, prices will increase.

Green energy is another factor that could explain the demand for Tesla cars. Teslas are all electric. Since they do not run on gasoline (which has been proven to produce greenhouse gases) or carbon dioxide, they are also more environmentally friendly. Electricity is a great alternative to fossil fuels for those who wish to reduce their carbon footprint.

Tesla's aesthetics, performance, and the interaction between driver and vehicle also increase their demand. Here are some features that appeal to car owners:

  • Elegant and modern design
  • Touch screen dashboard interface for high-tech drivers with extra-large touch-screen display
  • High performance and acceleration
  • The full charge is good for 400 miles.
  • Easy-to-use rechargeable devices
  • Silent noise level while driving
  • The new product range includes a family SUV

In addition to improving and expanding their range of high-performance vehicles and the capacity to manufacture them, Tesla Motors is participating in research and development to enhance batter technology--particularly working towards making the cost of battery power storage comparable with gasoline. Tesla's prices may eventually be lowered, but the demand will increase.

Teslas depreciate?

Teslas are depreciating in value, in that most assets, in general, experience a decrease in value over time. This is true in particular for cars, as they become used when purchased. Depreciation of new cars is likely to be thousands of dollars, or almost 20% in the very first year.

Teslas are considered an excellent investment for luxury vehicles because they hold their value better and longer.

Tesla's Luxury Status: How it Impacts the Depreciation

There's no universal definition of what defines a high-end or luxury vehicle. In the past, luxury cars were defined by their glamor and brand. The current market is more concerned with technology and comfort than ever before. Included in this would be navigation systems, entertainment options, heated seats and other interior or design details.

Luxury car dealerships have become a new aspect of luxury cars. The dealerships are designed to give the customer a unique experience when purchasing a luxury car. They offer a variety of services and have stylized showrooms. Even mainstream automakers offer high-end models for all types of vehicles.

Tesla offers buyers the option to purchase vehicles either online or from company-owned showrooms. Teslas can't be bought through conventional dealer networks. Tesla's e-commerce strategy allows buyers to order their customized vehicles online, without needing to visit any showrooms.

Ironically the higher the new car price, the more the car is considered high-end and luxurious. The initial depreciation of luxury cars is much higher and faster than that of any other vehicle class. For example, if an owner spent $80,000 to buy a luxury vehicle and the depreciation average is 20%, it would only be worth $65,000 after a year.

Teslas are experiencing less depreciation than high-end cars. The value of Teslas is higher than that of other vehicles, even those with a higher price tag. Teslas have a low depreciation, despite the fact that the value of cars can be affected by many factors.

How it normally works

New car buyers are often told their cars lose value the moment they drive off the lot. There are several reasons for the rapid depreciation in car values, both within the industry and amongst buyers. Teslas do not differ.

Here are a few reasons for the depreciation of cars:

  • Dealership Markup: For most of the time, automobile dealerships buy vehicles at wholesale prices from a small number of manufacturers. When comparing prices for the same car, dealerships don't have the same pricing. This causes the value to quickly decrease after the purchase.
  • Manufacturer's suggested retail price (MSRP): In most cases, the MSRP can also be referred to as "sticker price". This is the price at which new cars are sold. It is usually higher than their invoice price, and therefore, they lose more value.
  • New Model Year: The value of previous model years drops dramatically when a new version is introduced. This is because the new model could have upgraded features and functions. Also, buyers are looking for the most recent version of a vehicle.
  • New Cars Become Used: As cars become used when purchased, their value decreases. This is because the pool of buyers shrinks to just dealers and people who buy used cars, both of whom are unlikely to pay the full purchase price.
  • Market Influences: Other factors such as the supply and demand of cars can also affect depreciation rates and amounts. To choose cars that will hold their value the longest, you should do market research.

Depreciation is due to the fact cars are assets that wear out with time. As vehicles are used, the likelihood of future expenses increases. As a result, the value decreases. The value of the car doesn't go to zero. Even vehicles that do not function have some "scrap value" because of metals and raw materials.

Tesla Statistics and Depreciation Studies

Depreciation is based on market forces and can vary depending on the vehicle's mileage, condition and purchase price. Depreciation is generally based off the MSRP sticker price for new cars. This may not represent an individual's original price because of special manufacturer options or consumer negotiation. Depreciation of new cars and their resale values are affected by several factors.

Based on driving conditions and wear-and-tear, the annual depreciation rate for a car is usually between 15-20%. In the first year, vehicle depreciation is at its highest. Depreciation can also be affected by unexpected or future market values. An appraisal service is one way to determine the depreciation rate of a brand new car.

Between January 2012 to August 2016, Loup Enterprises collected millions of data points in a study based on an Autolist Survey. According to the depreciation rates of comparable vehicles with a mileage over 50,000, they were:

  • Tesla Model S: 28%
  • Lexus LS 460 - 32%
  • Mercedes S class: 36%
  • Porsche Panamera: 37%
  • BMW 7 Series: 40%
  • Audi A8: 40%
  • Jaguar XJ: 41%

Researchers acknowledge that Tesla's supply during the time of the survey was limited. This could have allowed Tesla to maintain a high resale price, and thus low depreciation. Loup’s study examined the same list and built a method of predicting depreciation based on model year, mileage driven, and MSRP.

Researchers again acknowledged flaws that limited the accuracy of calculations. Loup's study found that Tesla Model S depreciates at a rate almost 7% lower than other cars in its class. Aside from anecdotal evidence, based upon buyer demand, Tesla cars have a high value.

The Overall Findings

Tesla has consistently shown that their vehicles depreciate at a similar rate and are worth more than rival models and makes.

Here is an overview of general findings concerning Teslas.

  • Tesla Model S & Model X are more valuable than their gasoline-powered competitors
  • Model S depreciation was on average 27% at 50,000 miles. The overall classification of similar vehicles depreciated an average of 36%.
  • Model X vehicles are depreciated at an average rate of 23%, whereas comparable cars depreciated at an average of 33%.
  • Even with increased inventories (supply), the resale prices of Model S remain stable.


Tesla has, in a way, grown its competition through the production and sale of the Model 3 an electric and affordable sedan. The company's models are much more expensive. Several established automakers also have production plans for all-electric vehicles. These will be a direct competitor for Tesla Motors in the all-electric market.

Despite the fierce competition they face, Tesla Model S and Model X cars still hold their resale price better than gas-powered vehicles and their lower-priced Model 3 rivals. Depreciation gaps between Model S & Model X Teslas vs. comparable brand names are growing.

Tesla Model S & Model X are still in demand, and their value is high.


Overall the fact that Tesla Motors vehicles are maintaining their value at the moment is good for the company. As usual, the resale values of manufactured vehicles influence the demand level. Higher demand indicates a decrease in depreciation.

Tesla's depreciation is particularly high since higher-end models generally depreciate faster. The depreciation of "plug-ins" has always been higher and more rapid than that of gas-powered cars. This is primarily due to the annual improvements in technology as well as tax incentives for plug-in vehicles. Teslas however show a depreciation rate that is lower and faster than comparable plug-in vehicles.

Tesla's reputation in the industry for technology and innovation may also contribute to the difference between the prices of Tesla cars and those of its competitors. Tesla’s mission was to facilitate the transition away from fossil fuels and towards a future of renewable energy. The company stated this at its founding, in 2003. Tesla has since launched the Roadster sportscar, Model S sedan and SUV, Model 3 medium-range vehicle, and Tesla Semi. Each of these vehicles has been awarded safety, efficiency, performance, and other ratings.

Tesla Motors' safety record is well-known among its employees. This is true even though it continues to expand and increase production. Tesla will make its all-electric models more affordable, making them more accessible to consumers.

Tesla, therefore, has been able to combine the production of renewable energy and cars with batteries and hold a value that is lower than competitors. This could lead to an increase in demand for Teslas and their long-term values.

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