this is Don di Muro and today we're

going to talk about Tesla car values and

why they have dropped like crazy over

the last couple months a lot of people

have been asking me about this what is

the deal with Tesla prices why are they

dropping so fast so I figured I'd make a

video let's talk about it

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before I get started be sure to check

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carsandbids.com okay so Tesla values are

dropping now I want to make it clear

from the outset I am not talking about

Tesla's stock price that is a different

conversation a different video a

different genre of videos I'm just

talking about the value of Tesla's cars

the used cars have been sinking like a

stone over the last couple of months

three to five months almost crazily

crazily fast as an example on cars and

bids we sell a lot of Teslas we sold a

month ago a 2021 model 3 Performance

with 27 000 miles for fifty seven

thousand dollars a couple of days ago we

had a 2022 model 3 Performance with 3

700 miles and bidding stopped at forty

eight thousand two fifty in other words

that car is a year newer with 24

000 fewer miles and bidding was eight

thousand dollars less than the similar

car a month earlier that was actually

not as good that was both older and

higher mileage and that's not uncommon

that result wasn't some weird outlier

that's what we're seeing with Tesla

prices they are

use the adjective you want cratering

sinking falling off a cliff all of it

Tesla prices are absolutely shooting

down now I could give you several

examples like this from cars and bids

but it's not just me the mainstream

press has gotten word of this not just

car press and a lot of different sites

have covered the drops and Tesla values

here's why Tesla values are dropping so

fast oh Tesla prices are declining Tesla

demand is declining all that stuff

um this is a phenomenon that is getting

noticed all throughout the industry both

the car industry and sort of the general

business community so why why are Tesla

values dropping so fast to me I think

there's four big reasons and I'm gonna

go through them number one is

unquestionably the recent developments

with Elon Musk who obviously runs Tesla

um a lot of people are attributing this

decline in Tesla prices solely to this

factor I think it's more of a small

factor I think it's a factor to be clear

I think the whole Elon Musk situation

with the Twitter purchase this and then

a lot of his public Behavior since then

and leading up to then has definitely

had an impact on his public perception

and I'm not sure if he's yet aware of

that uh based on who he surrounds

himself with but the general public has

sort of shifted their opinions in a

large way about Elon Musk I think before

the last few months he was considered

like this genius who had all these Grand

ideas and was going to space and solving

the EV problem and it was all amazing

and then the Twitter thing has kind of

shown maybe he's not as much of a genius

as we all thought and I think a lot of

people who looked up to him and and

really admired him are maybe starting to

get their realities shaken a little bit

and I think that does have some effect

on the desirability of Tesla's Vehicles

Elon in Tesla are basically inextricably

linked and so if you like really love

him and admire him and look up to him

you want to buy the car from his company

and when maybe some of those people who

admire him start to decline maybe fewer

of those people by The Cars and then

there's the Politics As aspect of it as

well I don't really get political on

this channel but I think it's pretty

obvious most of the people who buy

electric cars are on the liberal side of

the political spectrum and Elon Musk has

clearly positioned himself on the

conservative side of the political

spectrum and the result of that is you

know some of the stuff that he says has

kind of alienated some of the potential

buyers of his cars as well I've talked

to several people over the last few

months just purely anecdotally who are

looking for a new electric car who

specifically told me they're not

interested in a Tesla because of Elon

and kind of his behavior now again I

want to make it clear I really don't

think this is a major factor I think if

you love Tesla and their products you're

going to buy one anyway I think there

are other bigger factors that have

slowed down Tesla demand than this which

I'll cover in a second but I do think

the Elon thing has unquestionably played

at least a part I think the media wants

to sell it as this story of like Elon

has gone crazy nobody wants the cars

anymore it's not that simple but it's a

factor so what are the other factors to

me the single largest factor that has

contributed to this flying in Tesla car

prices uh is the raise in interest rates

now the rise in interest rates has

contributed to a general economic

decline so that was always going to have

an effect on the price you know the sale

of cars the sale of any Goods frankly

and so Tesla was going to be included in

that just like every other brand so

there's already a general economic

decline component to this but then you

add in another interesting thing which I

don't think I really realized until the

last couple of months an enormous number

of Tesla's customers are

disproportionately affected by the

rising interest rates and by this what I

mean is a large portion of them are loan

officers mortgage lenders work at some

sort of Bank lending industry real

estate agents Realtors a large portion

of Tesla drivers had jobs that were

directly affected by the rise in

interest rates you know me and you we're

affected by Rising interest rates

because borrowing gets more expensive

but if you're in a field where lending

is your main source of income the rise

in interest rates actually directly

affects your income it doesn't just make

it cheaper to buy Goods it actually

slows down the money that you're earning

and a large large number of Tesla buyers

especially when they submit cars to cars

and bids I discover I our mortgage

brokers are realtors that sort of thing

and those people have been

disproportionately hit and now have to

get out of these cars or just don't want

the pain anymore their income can't

support it and they're just like ready

to move it on and take a loss in some

cases in addition to that that the

people in in the Tesla world who aren't

the mortgage brokers the mortgage

lenders the Realtors I think a lot of

Tesla buyers are sort of younger kind of

new money people a lot of times tech

people for whom the rise in interest

rates has a big effect they look at

getting a Tesla and they think about how

they can fit it into their monthly

budget as opposed to paying for a car

with cash or buying something cheaper I

think it's a lot of kind of younger

people who don't necessarily have

significant cash reserves who are

stretching a little bit to buy this cool

product this Tesla and so a rise in

interest rates a car loans go from two

percent to six percent suddenly that

Tesla simply doesn't look as attractive

anymore you pair that with the fact that

some of these younger people are not

only stretching their finances but if

they're in the tech industry maybe their

job isn't as secure as it was six months

ago working for obviously Twitter but

all of the Bay Area Tech companies

Google Amazon Seattle Facebook Etc et

cetera et cetera a lot of these

companies are doing some significant

layoffs and so when you you consider

that you consider okay these are the

people who were buying Teslas it's the

mortgage lenders who are getting killed

when the interest rates go up nobody's

buying homes and then it's these kind of

young new money tech people who have or

are affected by the rates pretty

severely and I think that that more than

anything has been the biggest factor in

the decline in Tesla prices over the

last three months Elon again has a

factor but I think that this stuff has a

much much much larger factor I think

this raise on interest rates really hit

Tesla hard because of the specific type

of people buying the cars now there are

a couple of other minor factors as well

uh that I also think continue to

contribute to the decline in the Tesla

used car prices number one is the The

Disappearance of the waiting list so

over the last two years vehicles have

been tremendously difficult to come by

because there have been production

shortages that started when covet hit uh

three years ago

that has led to a lot of pent-up demand

for new cars and in Tesla's world what

that led to was an extremely long

waiting list so if you wanted to buy a

model y there was a period where there

was like six to eight month waiting

lists on a Model Y which meant you could

either wait six to eight months or you

could buy a used one but the used one

was actually going to cost more than a

new one because there was no waiting so

what people were doing was they were

buying a model Y and then they would

turn around and sell it two months later

and make a profit which is not a

realistic thing in the used car world to

last but some people did it and made

some money that way or they bought the

car drove it for a year sold it and sold

it for what they originally paid and and

they came out okay and so that was going

on because of this waiting list however

the waiting list is gone there's really

no wait for a lot of Tesla products now

and in fact they're starting to offer

incentives or or just cut new car prices

and the result of that is with no

waiting list putting pressure on used

car prices used car prices are free to

fall and so this is obviously tied in

with the thing I just mentioned

regarding interest rates and demand but

as interest rates have risen and demand

has fallen the Tesla waiting list has

fallen or basically disappeared as well

and that has really put downward

pressure on used car prices again a year

ago you could buy one and flip one for

10 grand more than you paid it is not

the situation today because there's no

long waiting list of people who are

willing to pay extra to get one early

you don't have to pay extra to get one

early you can go and buy one today if

that's what you really want to do with

no up charge and so that has also

contributed to this kind of extreme

slowing of what these Teslas are worth

and finally the last thing that nobody's

really talking about all that much

surprisingly to me in terms of declining

Tesla prices is increased competition I

think that you know Elon being a little

crazy has had an effect and the interest

rates have had a huge effect and the

waiting list has had it had an effect as

well but increased competition is really

really starting to nip at the heels of

Tesla for a long long time Tesla

enthusiasts would pretty much be able to

carry a high and mighty attitude about

their favorite brand because the cars

were just better and car enthusiasts

didn't want to admit it but Tesla had

better autopilot better technology

better pricing better range better

performance and the supercharging

network that's not true anymore almost

none of that stuff is actually a Tesla

Advantage any longer Tesla now has

rapidly aging cars that are really

starting to look old model S is 10 years

old the design is not fresh and cool the

technology has pretty much all been

caught up to Tesla's autopilot like

hands-off steering braking accelerating

has been equaled by basically every

other automaker and some automakers do

it even better than Tesla and it's now

trickling down into pretty inexpensive

cars frankly it's not like you have to

get some crazy luxury car to get it

anymore Toyota's Fords they all kind of

offer this now and Tesla doesn't have a

big Advantage there the Giant Center

screen has been replicated by so many

other brands the EV range and perform

permits has been replicated by so many

other brands and again aside from

supercharging there's not a massive

advantage to Tesla and it seems like

they've slowed down in their Innovation

Tesla had kept its competitors

completely on their toes by Rolling Out

Model S with this giant screen and then

the performance was crazy and model X

came out the performance of that was

crazy you could get seventh seats and

then the three comes out and it's

reasonably it's like every new Tesla was

like sent the competitors scrambling

it's not happening anymore the last

couple years the only Innovations I've

seen out of Tesla have been like the

yoked steering wheel I mean it's not the

Plaid was cool really cool but it's not

like it was where Tesla would just drop

something and kill everybody and that's

especially proven by the Cyber truck

which isn't out and everybody else is so

for once the competitors beat Tesla to

the punch and not by a matter of weeks

but by a matter of years so this has all

kind of strewn itself into one pot and

is being stored around and is really

having a negative effect on Tesla you

have people leaving because of elon's

rep and kind of the things that are

coming out about him you have the

interest rates driving people out the

general economic uncertainty driving

people out you have this increased

competition and you have the diminishing

of the weightless and all of this has

sort of shaken Tesla status as the

golden brand and I mentioned I wouldn't

really get into the stock price but that

is also reflecting the stuff that I'm

saying here people are starting to

realize hey maybe Tesla isn't the golden

god that we thought it was that it has

been honestly over the last 10 years and

things are maybe starting to reverse

course a little bit so a big question is

what does this mean what exactly is

coming next for Tesla

um I'm not exactly sure I'm curious to

see how cyber truck will do I'm curious

to see if model 3 and Y and S continue

to kind of soldier on at the end of the

day again these cars are old they all

kind of need to be redesigned

um but I'll tell you what it means on

the used market and that is bargain

priced Tesla so when I'm setting

reserves now on cars and bids for

vehicles

a higher mileage 2018 model 3 is now a

mid twenty thousand dollar car I gotta

say I've never been like a huge Tesla

Enthusiast I think the cars are

fantastic and I think they're great like

commuting appliances if you will but

I've never been really an Enthusiast but

at the 25

000 price point for a car with that

level of tech and autopilot Etc that

becomes a pretty substantially desirable

purchase and you got to start thinking

if you can get a model 3 for 22 Grand or

19 Grand I mean that's like Corolla

money for a really desirable car and

we're not that far away from that and so

I do think that there's gonna the prices

aren't going to continue in free fall

there's going to be some floor somewhere

where people look at this and say this

deal is too good to pass up and I'm

almost at that point myself but at the

end of the day I think the Crazy Prices

we've seen over the last 18 months for

Teslas they're gone they certainly are

not coming back there's no question

about that I still get people submitting

Teslas to cars and bids asking crazy

reserves I want to be like and then we

go back and forth for a few days and I

want to be like dude stop arguing with

me get this car listed because it's

worth like a thousand bucks less today

than it was last week like you gotta get

this thing going

but not everybody's ready to accept that

yet but it is really clear to me and I

think it's clear to the car industry and

the business industry as well and those

are my thoughts on exactly why and I

guess we can all look forward to picking

up cheap Teslas over the next couple of

years

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