If you were listening to the CarPro Show last weekend, you heard Jerry Reynolds and Kevin McCarthy talking about the Tesla shopping frenzy occurring after the EV maker recently slashed prices.
Proof is in the data from Edmunds, which has 20 million visits every month. In a press release, Edmunds says according to its data for the week ending on January 15, 2023:
- On-site shopper consideration of Tesla vehicle pages on Edmunds jumped to 4% of all researched brands compared to 1.9% the week prior, which analysts note is nearly at parity with the brand's spike in on-site shopper consideration that was generated in March 2022 when gas prices skyrocketed.
- The Tesla Model Y became the second most researched vehicle on Edmunds (behind the Honda CR-V), up from 70th place the week prior.
- The Tesla Model 3 moved up 36 spots to become the 11th most researched vehicle on Edmunds.
"Consumers have grown accustomed to price hikes and the expectation to pay over MSRP for quite some time, so a discount this generous or easy to comprehend was understandably welcomed by car shoppers," said Jessica Caldwell, Edmunds' executive director of insights. "These price cuts, as well as inventory on the ground, will win Tesla market share and help consumers overlook the brand's aging lineup. Lower prices and immediate availability undeniably resonate with the American consumer."
Edmunds says its analysts conducted a deeper dive into Tesla appraisal, pricing and days-to-turn data in the aftermath of the price cut announcement. Edmunds data reveals:
- Appraisals jumped as current Tesla owners sought real-time updates on the effect the cuts have on the value of their vehicle. According to Edmunds data from January 13, 2023 (the day Tesla announced its price cuts), Tesla appraisals through Edmunds' free online appraisal tool more than tripled in volume, climbing to 3.1% of all vehicles, compared to 0.8% the day prior.
- Tesla list prices dropped across the board. In the first 17 days of January, prices of 2020 model year or newer used Teslas dropped 24.5% since their peak in June 2022. In June 2022, Teslas listed for an average price of $76,626 compared to $58,657 this month. List prices for all 2020 model year or newer used vehicles industry wide dropped 11.6% during the same time period.
- Used Teslas were already lingering on dealer lots before the announcement — and are expected to sell even slower as price cuts affect their residual values further. Days to turn (DTT) for used Tesla models climbed from a low of 24 days in June 2022 to 39 days in December 2022 (on par with the industry average of 39 days in December). Edmunds analysts note this slowdown is the result of a unique combination of factors driving down residual values and demand, including car flippers jumping into the market as used prices hit their peak, followed by a drop in used values and interest rate hikes, controversy surrounding Elon Musk's Twitter acquisition, and incentives introduced by Tesla in November and December. Edmunds analysts expect DTT for used Teslas will only continue to rise through January.
"The Tesla price cuts will affect consumers quite differently depending on which side of the news they sit," said Ivan Drury, Edmunds' director of insights.
- "For shoppers currently in — or now considering entering — the Tesla market, now is the time to research vehicle inventory, secure financing, and determine how current and upcoming EV tax credits will impact your purchase. Price cuts of 20% or more, with incentives, nationwide don't come around often, so acting now is in your best interest before any corrections in the opposite direction.
- "For those on wait lists for other electric vehicleswith uncertain timelines for vehicle production and delivery, the Tesla price cuts should make you reconsider how much you really want that other vehicle compared to a well-known product with a steep discount from Tesla you can drive off the lot today.
- "For current Tesla owners who've seen thousands in residual value chopped off their investment, the best course of action is to keep the keys and wait for the market to shift. Eventually the value of your Tesla will normalize the longer it's in your possession."
Photo: Tesla Model S. "Courtesy of Tesla, Inc.