Study: Prices for Tesla Model 3 are falling like a “lead balloon”

• Prices for used electric vehicles between one and five years old have fallen by 25% in the past year.
• The average price of a used electric vehicle in the United States is currently $27,000, which is lower than the average price of used gasoline and hybrid vehicles.
• Tesla Model 3, Kia Niro EV and Hyundai Kona Electric are among the leaders in this decline.
• As prices fall, their sales accelerate and they spend fewer days on lots.

We've seen this trend over the last year: electric cars are losing value much faster than their gasoline and hybrid counterparts. This trend followed Tesla's rapid price cuts last year, sparking a price shift that's both exciting and concerning. But let's focus on the positives for now. Lower resale values ​​of electric vehicles mean you can snag a cutting-edge used electric car for less than the average price of a used hybrid or gasoline vehicle.

This is a win for your bank account And a win for the environment.

Automotive research company iSeeCars released a study this week explaining the dynamics of the used electric vehicle market in the U.S. According to the study, prices for cars like the Tesla Model 3, Nissan Leaf, Hyundai Kona Electric and Kia Niro EV have fallen six times faster than gasoline vehicle prices over the past 12 months.

First, used electric vehicles have lost 24.7% of their value since September 2023, compared to 6% for used hybrids and 4.4% for used gasoline vehicles, according to a dataset that includes 1.6 million one- to five-year-old used cars sold between August 2023 and 2024.

“The significant drop in electric vehicle prices over the past year appears to have brought them into line with demand. Used electric vehicle sales are significantly lower today, suggesting a faster rate of sales than a year ago,” said Karl Brauer, executive analyst at iSeeCars. In short, affordability is driving sales.

Brauer added that the price cuts we're seeing now aren't quite as drastic as before. Used electric vehicle prices fell 30-40% in late 2023 and early 2024. The 25% suggests things are stabilizing somewhat. The average price of a used electric vehicle is currently $27,000. It should stabilize at around $25,000 – a price many automakers are aiming to hit with their next-generation models.

This has resulted in used electric vehicles spending an average of 55.3 days on the market in September 2023, compared to just 38.6 days today. This means that used petrol cars, hybrid vehicles and electric vehicles now take the same amount of time to sell.

The study also added that demand for hybrids remains robust, with fewer fluctuations and price drops than electric vehicles. Used hybrid vehicle prices have only dropped by 6% over the past year, while used electric vehicle prices, as mentioned earlier, have dropped by a whopping 24.7%.

“People who have been waiting for a good deal on a used electric car have been rewarded for their patience,” Brauer said. “Anyone who bought a used electric car a year ago was probably too early, but at today's prices, a used electric car is starting to make sense — assuming your lifestyle and vehicle needs align with the benefits and limitations of an electric car.”

So which models are leading the way in this trend? The average price of a Tesla Model 3 is currently around $26,000, over $8,500 less than it was a year ago. The average price of a Kia Niro EV is around $22,000, about $6,000 less than last year. The humble Nissan Leaf is currently $16,000, about $4,000 less than it was 12 months ago. Other notable cheap used cars include the Chevy Bolt EV and the Jaguar E-Pace.

This is great for the new wave of mass users, as long as they are willing to accept used models.

The Model 3 in particular makes sense. Even the versions that came before the Highland are still relevant today. It benefits from the vast Supercharger network, has equipment that can travel over 300 miles on a single charge, and gets better over time with software updates.

Unless Tesla and CEO Elon Musk scare you away from cars with their cultural shenanigans, the Model 3 remains a great bargain. If that happens, you have plenty of other great options to consider. Either way, if you're looking for a used electric car, there's never been a better time.