Used Tesla prices rise after $7
500 EV credit ends, iSeeCars data shows demand shifts from subsidized new to secondhand, Green policy distortion simply moves markets
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Photo of Jonathan M. Gitlin
arstechnica.com
Used Tesla prices are rising again in the US—just not for the reason EV boosters usually advertise.
According to Business Insider, the average price of a used Tesla has climbed 4.3% since the $7,500 federal tax credit for new EV purchases ended in September, citing data from iSeeCars. Over the same period, the average price of used non-Tesla EVs fell 3.6%, with the Porsche Taycan a notable exception.
The biggest used-price jumps were for Tesla’s higher-end Model S and Model X, Business Insider notes. That coincides with Elon Musk’s January statement that Tesla would discontinue those models in the coming months, reportedly to free up capacity for Optimus robot production. A policy shock and a supply shock hit the same secondhand market.
The broader market context is also telling. Business Insider cites Cox Automotive data showing sales of used battery-electric vehicles rose 21% year-over-year in January, while new EV sales fell nearly 30%. When subsidies disappear, buyers don’t stop optimizing—they just move downmarket. The result is a transfer: the government stops writing checks to new-car buyers, and the used market absorbs demand, pushing up prices for the most liquid brand.
Tesla, unsurprisingly, dominates that used EV market. Cox data cited by Business Insider says used Teslas outsold the second-largest brand (Audi) by more than 10,000 vehicles in January. For existing Tesla owners, that’s a rare piece of good news after years of resale-value pain. Used Tesla prices have been falling since 2022 and hit new lows last year, Business Insider reports, amid a mix of price cuts, higher interest rates, and political backlash around Musk’s government role.
It’s that subsidies don’t merely increase adoption; they reshape price formation across adjacent markets. When Washington subsidizes new purchases, it inflates demand at the top end and depresses the relative attractiveness of used inventory. When the subsidy ends, the distortion doesn’t vanish—it migrates. New-car demand drops, used demand rises, and the winners and losers are re-sorted by income, credit access, and timing.
Calling this “green industrial policy” is generous. It’s a tax-and-transfer machine that first bids up new vehicles, then—once the political winds change—hands a pricing tailwind to incumbents in the used market. The market adapts faster than the slogans, as usual.