Here’s How Much The Tesla Model S, X, and 3 Depreciate After 5 Years - SUV VEHICLE

Here’s How Much The Tesla Model S, X, and 3 Depreciate After 5 Years

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In the realm of automobiles, depreciation refers to the decrease in a vehicle’s value over time. This depreciation occurs due to a combination of factors, including wear and tear, technological advancements, and changes in market demand. Depreciation is a significant consideration as it can substantially impact the resale value of your vehicle. Tesla, the automaker synonymous with electric vehicles (EVs), has captured the attention of the automotive world with its sleek designs, cutting-edge technology, and impressive performance.




However, despite the undeniable appeal of Tesla models, they often face higher depreciation rates compared to their counterparts. To shed light on the general depreciation landscape, various studies by research firms such as CarEdge and iSeeCars have delved into comprehensive analyses of depreciation data. For example, a recent study by iSeeCars conducted a “comprehensive” analysis of depreciation data encompassing over 1.1 million vehicles sold within the United States between November 2022 and October 2023. Here are the findings.

UPDATE: 2024/04/12 13:00 EST BY ANIEBIET INYANG NTUI

The automotive market is constantly evolving, and depreciation rates are no exception. To ensure you have the most up-to-date information, this article has been revised to reflect the latest depreciation figures for the Tesla Model S, Model X, and Model 3 after 5 years of ownership.

In order to give you the most up-to-date and accurate information possible, the data used to compile this article was sourced from Tesla, CarEdge, iSeeCars, and authoritative sources such as CarBuzz & HotCars.


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The Depreciation Rate Of Teslas Is Quite High

The iSeeCars study unveils insightful trends into the depreciation rates of Tesla’s Model S, Model X, and Model 3. Among these, the Tesla Model S emerges as one of the luxury vehicles experiencing the most significant five-year depreciation, with its market value plummeting by a substantial 55.5-percent.

The Model S ranked 19th in the “Top 25 Vehicles With the Highest 5-Year Depreciation” category and fifth (the lowest ranking position) in the “Ranking of EVs by 5-Year Depreciation” category. This depreciation figure raises concerns for potential buyers considering a resale or trade-in after five years, highlighting the importance of comprehending the long-term financial implications of owning a Model S.


Ranking Of EVs By Five-Year Depreciation

Rank

Model

Average 5-year Depreciation

1

Tesla Model 3

42.9-percent

2

Tesla Model X

49.9-percent

3

Nissan LEAF

50.8-percent

4

Chevrolet Bolt EV

51.1-percent

5

Tesla Model S

55.5-percent

EV Average

49.1-percent

(Data sourced from iSeeCars)

Tesla’s Luxury SUV Also Depreciates

Tesla’s Model X luxury SUV depreciates by 49.9-percent over the same period, ranking third among the top five EVs in terms of five-year depreciation. While not as severe as the Model S’s depreciation, this percentage still places the Model X among electric vehicles (EVs) facing significant value loss over the first five years of ownership.


The Budget-Friendly Tesla Has The Lowest Depreciation Rate

2023 Tesla Model 3
David Traver Adolphus

In contrast, the more affordable Tesla Model 3 experiences a 42.9-percent depreciation after five years. While this is relatively better than its higher-end counterparts, it’s worth noting that the Model 3’s depreciation remains higher than the average for all vehicle types. The five-year depreciation rate of the Model 3, though lower compared to the Model S and Model X, prompts potential buyers to weigh the long-term value retention of this entry-level Tesla.

Tesla Is Not Alone, EVs Have The Worst Depreciation Rate

Electric vehicles (EVs) have the worst depreciation across major vehicle types, losing an average of 49.1 percent of their value after five years. This is more than 10 percentage points worse than the average depreciation for all vehicles, which is 38.8 percent.


Five-Year Depreciation For Notable Segments

2023

2019

Improvement Since 2019

Overall

38.8-percent

49.6-percent

10.8-percent

Hybrids

37.4-percent

56.7-percent

19.3-percent

EVs

49.1-percent

67.1-percent

18.0-percent

SUVs

41.2-percent

51.6-percent

10.4-percent

Trucks

34.8-percent

42.7-percent

7.9-percent

(Data sourced from iSeeCars)

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Tesla Depreciation According To CarEdge

White Model X Charging
Tesla

CarEdge provides a resource for researching car depreciation, including a specific focus on Tesla models. According to their data, Teslas tend to hold their value better than most electric and hybrid vehicles.


Tesla Model 3

The Model 3 is estimated to depreciate by 21-percent after 5 years, with a residual value of $47,040, assuming a starting price of $59,665. CarEdge highlights that a well-maintained two-year-old Model 3 might not see much depreciation compared to buying new.

Tesla Model 3 Depreciation Over 10 Years

Years Old

Depreciation

Residual Value

Resale Value

Mileage

Resale Year

1

$1,187

98.01%

$58,478

12,000

2022

2

$0

100.00%

$59,665

24,000

2023

3

$7,828

86.88%

$51,837

36,000

2024

4

$10,394

82.58%

$49,271

48,000

2025

5

$12,625

78.84%

$47,040

60,000

2026

6

$19,487

67.34%

$40,178

72,000

2027

7

$26,736

55.19%

$32,929

84,000

2028

8

$30,029

49.67%

$29,636

96,000

2029

9

$27,446

54.00%

$32,219

108,000

2030

10

$28,574

52.11%

$31,091

120,000

2031


(Data sourced from CarEdge)

Tesla Model S

The Model S fares well for an alternative fuel vehicle, depreciating by an estimated 35-percent after five years. This translates to a potential resale value of $64,451 for a Model S initially priced at $99,800. CarEdge points out that the Model S depreciation curve suggests a steeper decline in the first few years, followed by a slower depreciation rate in later years.


Tesla Model S Depreciation Over 10 Years

Years Old

Depreciation

Residual Value

Resale Value

Mileage

Resale Year

1

$6,407

93.58%

$93,393

12,000

2022

2

$6,677

93.31%

$93,123

24,000

2023

3

$15,639

84.33%

$84,161

36,000

2024

4

$28,323

71.62%

$71,477

48,000

2025

5

$35,349

64.58%

$64,451

60,000

2026

6

$40,579

59.34%

$59,221

72,000

2027

7

$47,714

52.19%

$52,086

84,000

2028

8

$53,223

46.67%

$46,577

96,000

2029

9

$53,892

46.00%

$45,908

108,000

2030

10

$55,778

44.11%

$44,022

120,000

2031

(Data sourced from CarEdge)

Tesla Model X


CarEdge estimates a five-year resale value of $79,566 for a Tesla Model X, which translates to a 29-percent depreciation from a starting price of around $112,000Based on CarEdge’s data, a Tesla Model X driven an average of 12,000 miles per year can expect a 29-percent depreciation after five years, leading to a $79,566 resale value.

Tesla Model X Depreciation Over 10 Years

Years Old

Depreciation

Residual Value

Resale Value

Mileage

Resale Year

1

$14,575

87.04%

$97,886

12,000

2022

2

$16,869

85.00%

$95,592

24,000

2023

3

$19,118

83.00%

$93,343

36,000

2024

4

$28,621

74.55%

$83,840

48,000

2025

5

$32,895

70.75%

$79,566

60,000

2026

6

$36,539

67.51%

$75,922

72,000

2027

7

$61,842

45.01%

$50,619

84,000

2028

8

$70,895

36.96%

$41,566

96,000

2029

9

$77,767

30.85%

$34,694

108,000

2030

10

$82,265

26.85%

$30,196

120,000

2031


(Data sourced from CarEdge)

Tesla Model Y

CarEdge estimates that a Tesla Model Y will hold its value relatively well, depreciating 39-percent after 5 years. This translates to a projected resale value of $36,363.

Tesla Model Y Depreciation Over 10 Years

Years Old

Depreciation

Residual Value

Resale Value

Mileage

Resale Year

1

$2,920

95.07%

$56,312

12,000

2022

2

$10,087

82.97%

$49,145

24,000

2023

3

$13,546

77.13%

$45,686

36,000

2024

4

$18,409

68.92%

$40,823

48,000

2025

5

$22,869

61.39%

$36,363

60,000

2026

6

$26,832

54.70%

$32,400

72,000

2027

7

$32,572

45.01%

$26,660

84,000

2028

8

$37,340

36.96%

$21,892

96,000

2029

9

$40,959

30.85%

$18,273

108,000

2030

10

$43,328

26.85%

$15,904

120,000

2031


(Data sourced from CarEdge)

CarEdge acknowledges that these are averages and individual results may vary. CarEdge paints a generally positive picture of Tesla depreciation compared to other electric and hybrid vehicles. The Model 3 and Model S show a promising trend in resale value retention. However, it’s important to consider that CarEdge’s data is based on averages and shouldn’t be taken as a guaranteed outcome.

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Battery Concerns And The Impact Of Incentives Contribute To EV Depreciation

EV Design Charging
JLStock/Shutterstock

Electric vehicles (EVs) have taken the automotive world by storm, revolutionizing transportation with their promise of zero tailpipe emissions and enhanced performance. One of the primary reasons for higher EV depreciation lies in the relative novelty of the technology.


EVs are still undergoing significant advancements, with new battery chemistries, charging infrastructure, and vehicle designs emerging rapidly. This constant evolution can lead to a perception of obsolescence among potential buyers, who may be hesitant to purchase an EV that could be outdated in just a few years.

Battery Degradation And Replacement Concerns

Electric Car Battery Replacement
BBRDRVN | Shutterstock

The heart of any EV is its battery, and battery degradation is a major factor influencing depreciation. While EV batteries have improved significantly in recent years, they still experience gradual capacity loss over time, affecting the vehicle’s range and overall performance. The potential for costly battery replacements can further deter buyers, contributing to higher depreciation rates. The cost can vary significantly depending on the Tesla model, the severity of battery damage, and whether the repair falls under warranty.


A single module replacement for a Model 3 with minor wear might only cost $3,000-$7,000, while complete pack replacements for damaged batteries, especially in larger Model S and X vehicles, can reach a staggering $20,000. Tesla’s official parts pricing puts a full battery pack at $13,500 for Model 3/Model Y and $13,000-$20,000 for Model S/Model X. These high costs are further amplified if the warranty has expired, pushing owners towards potentially risky third-party repairs that can be 75-percent cheaper.

Impact Of Incentives On Initial Pricing

Solar Roof and Tesla Model S
Tesla


Governments around the world have implemented various incentives to promote EV adoption, often in the form of tax credits or rebates. These incentives can significantly lower the upfront cost of purchasing an EV, but they also tend to artificially inflate the initial vehicle price. As a result, when these incentives expire or are reduced, the market value of EVs may not hold up as well as that of gasoline-powered vehicles.

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The Implications If You Are Buying Or Selling An EV

2024 Tesla Model Y parked in a city
Tesla

The rapid depreciation of electric vehicles (EVs) carries multifaceted implications for both buyers and sellers in the automotive market. Before you buy an EV, it’s important to consider how much its value might drop over time. Take note of how much you’ll get when you sell the car. So, before you sign on the dotted line, make sure you factor in expected depreciation costs. You might also want to consider buying a used EV. Used EVs typically have lower depreciation rates than new ones, so you could save some money. But be sure to inspect any used EV carefully before you buy it to make sure it’s in good working order.


Depreciation Will Make It Harder For You To Sell Your EV

If you’re selling a used EV, you might find it harder to get a good price than you would for a used gas-powered car. This is because EVs depreciate more quickly, and there’s not as much demand for them. But don’t despair! You may be able to get a better price if you sell your EV to a private buyer instead of a dealership. Private buyers are often willing to pay more for used EVs than dealerships.

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The Pandemic Influenced Depreciation

Shot of four different Tesla models
Tesla

The study by iSeeCars also acknowledges the pandemic’s influence on the automotive market. Reduced new car production during the pandemic and constrained used car supply have resulted in overall improved value retention for all vehicles. The average 5-year depreciation has decreased to 38.8-percent, down from 49.6-percent in 2019.


Impacts of the Pandemic

  • Reduced new car production:Disruptions to manufacturing and supply chains caused by the pandemic led to a significant decrease in new car production. This constrained supply of new vehicles rippled through the automotive market, affecting both new and used car inventories.
  • Increased demand for used cars: The pandemic’s impact on consumer spending and travel habits caused many individuals to shift their preferences towards used cars. Used cars offered a more affordable and flexible transportation option, particularly in the face of economic uncertainty. This increased demand for used cars further supported higher value retention for both EVs and gasoline-powered vehicles.
  • Extended vehicle ownership: The pandemic also led to an extension of vehicle ownership cycles. With individuals spending more time at home and driving less frequently, the need to replace vehicles with newer models diminished. This trend contributed to further improvement in value retention for both EV and gasoline-powered vehicles.


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In conclusion, the depreciation landscape for Tesla’s Model S, Model X, and Model 3 reveals a noteworthy trend, indicating higher rates compared to some traditional counterparts. While the allure of cutting-edge technology and sleek designs defines Tesla’s appeal, prospective buyers must weigh the potential challenges in value retention over time.

As electric vehicles (EVs) gain prominence, factors like battery concerns, government incentives, and the pandemic’s impact further shape the intricate dynamics of vehicle depreciation. Navigating this landscape requires careful consideration of individual preferences, usage patterns, and long-term financial implications.

Ultimately, as the automotive industry continues to evolve, the future holds promise for addressing and potentially mitigating the challenges associated with EV depreciation.

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