Why are Tesla Model 3 so cheap

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Its no surprise that the vast majority of electric vehicles sold in the United States bear the Tesla logo. In fact, the Model 3, Model Y, Model S, and Model X are so popular that they are becoming household names like the Ford F-150 and Toyota Corolla.

We know how inflation is eating into our savings and how the pandemic affected businesses in general. On top of facing low volumes and poor sales, manufacturers had to put up with semiconductor shortages and supply chain issues.

How did that affect everyday people, you ask? Well, folks looking to buy new cars have seen prices soar greatly. Dealerships are marking up to a point where people are even paying 40-50% premiums on new cars.

Its not just new cars that are getting expensive, though. Have a look at used car listings, and youll see how theyre priced. Teslas, in particular, have been a hot commodity, both new and used.

However, things are finally looking good for buyers, as outrageous markups have come down and used Teslas are becoming cheaper. But before we discuss why, heres a closer look at how used Teslas skyrocketed in value.

RELATED: 10 Reasons Why You Should Buy A Used Tesla Model Y

What Gave Rise To Tesla Flipping?

The advent of COVIDand all that ensued afterled to a series of events that caused a spike in inflation, supply and demand disruptions, and a global semiconductor shortage. The latter had a significant impact on new car production. Some people, however, saw this as a window of opportunity.

When supply doesnt meet demand, prices tend to rise. So naturally, since there isnt enough supply of new cars, dealerships started marking up the existing inventory, which led to consumers paying more. The market was so hot that Tesla owners started flipping cars for profits.

Its not just supply and demand that led to a spike in used car prices. Financing options became expensive since the Federal Reserve increased interest rates to combat inflation. This has also led to people withdrawing their interest in buying new cars. Ergo, more demand in the used car lot.

However, at some point, the greed frenzy has to stop, which is exactly what happened now. Will this last forever? Probably not, but its the way things are at the time of this writing.

RELATED: Heres Why The Tesla Model Y Is The Fastest-Selling Used Car In The US

Why Are Used Teslas Becoming Cheaper?

Markets are usually cyclical and more often than not, follow a pattern. A combination of factors are typically responsible for a market correction. Depending on the severity, though, corrections can end up becoming reversals. Technically, the used market is entering a cold-down phase, as sellers have realized that its no longer euphoria out there and that demand has dropped.

The average price of a used Tesla in November, according to Reuters, was $55,754, which is a 17 percent decrease from the peak price of $67,297 in July 2022. Additionally, with the passing of the Inflation Reduction Act, the EV tax credit has been officially amended. This will apply to all EVs sold from January 1, 2023. So that means buyers are now willing to wait for new cars, as opposed to settling with used Teslas.

Another reason is that the market is flooded with certain models. Remember, Tesla doesnt offer an extended warranty for the 3 and Y, so older models (circa 2018) are getting dumped. This leads to a saturation in the used Tesla space.

On top of that, dealers who are unaware of the EV trends jumped on the bandwagon, hoping for a quick buck or two. However, the markets have turned, and these dealerships are now selling their inventory just to recoup their capital. This is usually done in auctions. According to Find My Electric, auction EVs are extremely cheap at the moment, which impacts pricing on the private market.

The Real Reason Why Used Teslas Are Becoming Cheaper In The U.S.

Another factor that contributed to the drop in used Teslas is that the company cut prices by $7,500 on Model 3s and Ys sold in December 2022. This practice is not uncommon, as OEMs often drop prices to boost their year-end sales numbers. But for the used market, this became yet another reason for a price correction.

Next, its the overall economic instability. Remember the Feds raising interest rates? Well, thats to curb market spending. In other words, everything is getting expensive. Not to mention the fear of a recession looming around. As discussed, the Feds anti-inflationary policies have shot up borrowing rates, which not only affected new car sales but also used car purchases as well. People are hanging onto money and are postponing expenses that arent justifiable. If anything, people are only willing to spend if the prices are extremely attractive.

Lastly, supply chain issues are getting sorted one by one. Chip shortages are being addressed by the respective manufacturers, increasing their output, thereby meeting demands. Delays for most new cars have dropped significantly. For instance, the wait for a Model 3 Standard Range used to be a year, but now its only a month or two.

Sources: Reuters, Find My Electric

Used Tesla Model 3 buying guide

Teslas Model 3 is the best-selling electric car in the UK. With used prices making it more affordable than ever, heres everything you need to know before splashing the cash.

When it arrived in 2019, the Model 3 was heralded as the beginning of a new wave of electric cars you didnt have to be super-rich to afford. A sub 30,000 price was touted, and while this has never quite materialised for a brand-new example, used versions are slowly heading towards this point.

With 35,000 registrations, the Model 3 was the best-selling electric car in the UK in 2021, selling almost three times as many as the Kia e-Niro in second place. But buyers have had to wait a while for their new motor. Tesla is transparent with its delivery times for new cars, which can be upwards of six months, making the instant delivery of a used model even more appealing.

Used Tesla Model 3: Pros and cons

Whats goodFantastic performanceBig rangeCool interior

Whats not so goodQuite expensiveQuality issuesSome awkward menu navigation

Click any of the links below to jump to the relevant section.

Is a used Tesla Model 3 a good car?What body styles are available?What are the power options?What trim levels are available?How practical is it?Whats it like to drive?What to look out forTesla Model 3 recallsSafety and securityWhat else should I consider?

Is a used Tesla Model 3 a good car?

The Model 3 is just a regular car in principle, but much like the iPhone did with the mobile phone market, its here to make us rethink just about everything we know about cars. Sure it has all the basics, such as four wheels, a steering wheel and some seats inside, but thats about where the normality ends.

Upon its release, this Tesla was an all-new design that had never been burdened with anything so old-fashioned as a combustion engine, so its sleek styling could be optimised around a compact electric motor and floor-mounted batteries.

That means you get a decent-sized boot at the rear, as well as a froot a front boot where the engine would normally be for some extra storage. You also get decent interior space, with leg room particularly good for rear passengers.

But its the cabin where Teslas rulebook-bashing is most evident. Theres a huge central infotainment display which feels like it rivals a McDonalds self-service screen for size and controls just about everything you can think of.

As with any new idea, the interior design is great in some ways and needlessly complex in others. The good? The only physical buttons youll regularly use are the two on the steering wheel, with everything from wing mirror adjustment and climate controls to even the speedo being accessed via the screen.

The result is a gorgeous, minimalist design that stands out against anything else on the market, but in reality it does make some tasks a bit of a faff. Diving into menus to adjust the steering wheel, for example, feels like change for the sake of change.

Over-the-air updates allow the cars software to be improved and added to regularly, but in 2021 there was also a facelift. Loads of minor tweaks improved the overall package, with some highlights including new black window surrounds on the outside, matte black trim replacing the annoying piano black found inside early cars, and the introduction of wireless phone charging pads.

Charging is a key concern for electric car buyers and this is one area in particular where Tesla ownership excels, because you get access to the Supercharger network. These are Tesla-only fast chargers found at locations such as hotels and service stations, which can add about 170 miles of range in 15 minutes.

These chargers regularly top consumer surveys for their speed, ease of use and affordability.

What body styles are available?

The Model 3 is only available as a four-door saloon. It is targeted at families looking for a premium electric vehicle without breaking the bank, but its spacious interior makes it ideal for those who need to carry adults in the rear, too.

If youre looking for a Tesla SUV, your options are the Model X, which is a much larger and more expensive vehicle, or the smaller Model Y, which sits somewhere between the two but was only launched in 2022 so used versions are harder to come by.

What are the power options?

There are three versions of the Model 3. Starting with the Standard Range Plus (simply called Model 3 on 2021 onwards cars), this has a single motor that powers the rear wheels and can go from 0-60mph in 5.8 seconds on to top speed of 140mph.

It has the lowest range of any Model 3, but official figures put it at 305 miles between charges, giving it comfortably more range than other popular EVs such as the Nissan Leaf.

Long Range models live up to their name. Coming with a twin-motor design that powers all four wheels, contributing to a 4.2-second 0-60mph time and 145mph top speed, the battery offers a range of 374 miles. If you regularly travel longer distances this is the version to aim for.

At the top of the range is the Performance model, which, again, does exactly what it says on the tin. Another dual-motor set-up, this offers extremely fast acceleration with a 0-60mph time of 3.1 seconds and 162mph top speed but range suffers slightly, at 340 miles.

What trim levels are available?

The three models listed above Standard Range Plus, Long Range and Performance also act as trim levels for the Model 3.

All cars come with a 15.0-inch infotainment display, tinted glass roof, heated steering wheel, and heated seats all round. This includes the rear middle seat, which is a rare treat, though all can only be controlled through the screen in the front. You also get basic Autopilot functionality, which is Teslas advanced cruise control system, as well as over-the-air updates and the mobile phone app that lets you control various functions and can even act as a key.

Long Range versions have a similar specification but, on top of the extra performance and battery capacity, also get a premium audio system.

Opt for the Performance model and you get 20-inch wheels, performance brakes, a carbon fibre rear spoiler, aluminium alloy pedals, and a top speed increased from 145mph to 162mph. Track Mode is also included, and tweaks some settings to improve how the car handles track driving.

How practical is it?

The Model 3s saloon body shape means that its boot opening isnt particularly big, which will be especially noticeable to those coming from hatchbacks. Theres a small lip to lift items over, which isnt ideal, but the rear seats fold down to provide more space if needed.

Six suitcases can be accommodated in the rear, so its a decent size, and when that and the front cargo areas are added together, you get a total of 425 litres. The front space is better-suited to a few carrier bags than anything substantial, but it does get a few hooks so your weekly shop isnt flung around.

The cabin itself is incredibly roomy, thanks in part again to the lack of combustion engine. The front footwells are spacious, making it easy to get comfortable, while leg room is impressive for those at the rear, too.

Negatives? Taller passengers might find headroom rather limited in the back seats. Meanwhile, the batteries being placed beneath the cabin means the floor is quite high in relation to the seat cushion, so your legs are unsupported, which could prove tiresome on longer journeys.

Build quality is also not on par with the likes of other premium car makers such as Audi and BMW. While Tesla has made great strides since the Model S, youll still find the odd cheap material or poorly secured section.

Whats it like to drive?

One of the most exciting aspects of driving an electric car is the instant acceleration afforded by the motors.

If someone put you in the entry-level, single-motor Model 3, hit the accelerator and asked if you thought this was the Performance, you almost certainly would. Its incredibly quick for what is pitched as a regular family car.

However, go for the Performance model and youll find yourself capable of embarrassing exotic supercars in a straight line. Its an exhilarating feeling.

Typically when you have extreme performance like this its at the expense of comfort, but the Model 3 actually does a good job of ironing out bumps in the road when youre just cruising around.

The result is a fantastic all-rounder. The Model 3 is great when youre on your own and want to have fun, but will keep your friends and family comfortable on a long journey.

What to look out for

Tesla always scores highly in customer satisfaction surveys, but the one area its let down is build quality.

There have been reports of wild differences in fit and finish between cars too, meaning one Model 3 you view could be pretty much perfect while another has lots of annoying issues.

For the used buyer, that just means being extra vigilant when viewing a car. Some Model 3s have real issues with panel alignment, so go over the bodywork and make sure the lines match up. Whether this is a deal breaker is personal preference, but could point to other less obvious build issues.

Because electric cars use the brakes less, give them a check to make sure they are still in good condition. You can do this visually for signs of rust and corrosion, as well as listening out for squeaks and grinding, or signs of sticking, while on the move.

Check the glass roof for any signs of cracking, and operate the sunroof, which can become laboured and noisy if not used regularly.

Inside, the piano black trim in the centre console was poor quality on early cars and was updated as part of a mid-life refresh. Check pre-2021 cars in particular for scratches and other marks.

The synthetic leather upholstery isnt particularly hard-wearing so is prone to damage and cracking, and while youre checking for that, look for signs of water damage that could have leaked in.

Finally, go through the on-board systems and check if the car has the assistance systems the owner claims it does, such as Enhanced Autopilot or the so-called Full Self-Driving Capability.

Tesla Model 3 recalls

Recalls happen regularly in the car industry as the result of a manufacturer or the Driver and Vehicle Standards Agency (DVSA) finding an issue with a vehicle.

These are mostly preventative, and can be related to issues as wide-ranging as intermittent electrical faults to potential failures in major components. You can type your number plate into the Government website to find out if there are any related recalls.

You can read more about what recalls are in this handy guide, or continue below to see what recalls have been issued for the Tesla Model 3.

Despite the cars questionable reliability record, there arent too many recalls to note. The first affects about 26,000 cars built between July 15th 2017 and September 30th 2022. The rear-view camera harness can fail so no image is displayed when reversing.

Nearly 10,000 cars built between January 31st 2018 and November 16th 2021 can have issues with the low voltage setup, which results in an audio failure that also affects the emergency call system.

Just under 11,000 vehicles have a problem where the speedometer displays a number for how fast the car is travelling, but not the measurement (e.g. MPH or KM/H). This relates to cars built between February 18th 2018 and April 6th 2022.

A few other recalls affect limited numbers of less than 600 Model 3s each. These include a problem with the front suspension, a missing upper steering column bolt and an insecure seat belt.

Incredibly, there is a recall caused by a side airbag that may not deploy correctly that affects just one car, so youd have to be very, very unlucky to encounter it. This Model 3 was built some time between September 20th and December 30th 2020.

Safety and security

Tesla makes some of the most technologically advanced cars on sale today, and while some of its assistance systems dont work quite to the standard of class leaders like Volvo and Mercedes-Benz, theyre mighty impressive for a car at this price point.

When it was safety tested by Euro NCAP in 2019 it received the full five-star rating, scoring 94% for its safety assist systems, a record high at the time. It scored highly for occupant protection in crash tests, too.

The Autopilot upgrades are naturally an enticing option to look for when buying used. However, if you spot a great deal on a car without these upgrades, they can be added once you take ownership of the car at the same price youd pay when adding them to a new car.

Tesla includes all of the hardware for these features on every Model 3, so to upgrade you simply need to connect the car to Wi-Fi and purchase the software to unlock it. Its not cheap, so its usually more cost-effective to find a car that already has it fitted.

What else should I consider?

In the new market, Tesla is no longer alone in offering more accessibly priced premium electric family cars, but being one of the first on the scene means that in the used market, its also one of the few electric saloons available with a decent selection of cars.

At the lower end of the used Model 3 price range there arent too many other premium manufacturers, though you can find examples of Hyundais excellent e-Niro that are less than two years old.

The Audi e-tron SUV is approaching this price, too, but as with the Tesla, theyll likely be older, higher mileage or poorer condition than options with less badge appeal.

If your budget stretches to a nearly new Tesla there are some other tempting options, though. The Jaguar I-Pace is bigger and arguably more stylish, while the Mercedes-Benz EQA is worth considering if practicality is less important.

Hyundai might not be a premium car maker but the Ioniq 5 is a fantastic choice, sporting truly unique looks and a practical interior that makes it a compelling alternative to the Tesla.

And if you like the Model 3s minimalist interior with a big infotainment display, the Ford Mustang Mach-E is another option, with a cool design and more space inside.

If youre interested in buying a used Tesla Model 3, you can find the latest stock from a network of trusted dealers. You can also sell your old car though carwow, and its quick and easy. Tap the button below to find out more.