A new Tesla (NASDAQ: TSLA | TSLA Price Prediction) Model 3 with All-Wheel Drive has a base price of just $50,000. A similarly featured Model Y costs about the same. Each is priced below the industry average for a new EV, which is $60,000. One of the barriers to EV adoption in the US is price.
Tesla has begun addressing the EV price hurdle by offering used versions of its cars at its stores. It risks competing with its new cars, and Tesla may recognize that the market is flooded with used EVs, some of which are coming off two- and three-year leases.
A number of the used Teslas are priced below $25,000. Those sold by Tesla carry less risk than those sold by another dealer or an individual. “Your pre-owned Tesla vehicle comes inspected and refurbished by Tesla technicians, so you know your vehicle is road-ready.” That should give buyers a sense of comfort. These cars also come with a limited warranty, which is another advantage over those sold elsewhere.
Tesla’s sales in the US have been slow. The big EV company produced 408,383 and delivered 358,023. That puts it in the same bind as the industry. The $7,500 federal tax benefit is gone. There is still anxiety about range and charging time. Tesla does have one edge. Competition from most major car companies is gone as manufacturers like Ford (NYSE: F) and GM (NYSE: GM) exit the market. Tesla’s US market share should improve based on that alone.
Tesla’s founder and CEO likes to say Tesla is no longer primarily a car company. Investors should value it based on AI development and robotics. However, the used-car discounts show that the car part of the firm has not disappeared.
Whether used cars cannibalize sales of new ones aside, Tesla wants to sell cars
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