Do Tesla hold their value? If so, then how well do they hold their value compared to the competition? The questions regarding Tesla’s depreciation can be tricky. This is because with Tesla, you have to use a different approach when calculating their depreciative potential. Nonetheless, you’ll see that Teslas, in fact, hold their value better than other vehicles.  Let’s look at why.

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Depreciation

What is depreciation? In short, the depreciation of a Tesla refers to the decrease in its market value from when you purchase it to when you resell it. If the resale value of a car is lower than the purchase value, then the car has undergone depreciation. There are a few factors that are responsible for the depreciation of cars. These include expected lifespan, operational maintenance cost, feature and brand appeal, and more.

The expected lifespan plays a bigger part in depreciating a car’s value than other factors. Each car comes with a specific lifespan which forecasts the car’s expected running condition, when maintained properly, over a certain number of miles driven.

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With the operational and maintenance cost estimates, one can better predict  a specific car's component needs and future repairs. AAA can also provide help when estimating these costs.

The appeal of a car’s features and brand is also taken into account when determining a car’s depreciation. Appeal, of course, will depend on an individual’s personal feature preferences and how that matches with a particular brand of vehicle. Fortunately, when asking the question, Do Teslas hold their value?, a lack of brand appeal is not an issue.

All these factors play a role in depreciation, but keep in mind that the valuation of any car keeps fluctuating according to the combination of many factors, along with the current state of supply and demand.

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ICE vs. EV car depreciation

Car resale companies such as Edmonds and Kelley Blue Book are incredibly accurate at evaluating internal combustion engine (ICE) cars according to their current market conditions. They have a great system for estimating the fair value of a car by looking at factors such as new and used car prices and transactions, milage, and car features.

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However, electric vehicles are different, and you cannot estimate their value using the ICE model. The EV depreciation model reflects a new generation of cars. For instance, a Tesla is primarily a software driven vehicle with battery packs instead of combustion engines. Hence, they offer a completely different metric and outlook to the depreciation model, and one cannot estimate that using the standard ICE system.

Due to the nature of electric drive trains, continual software updates, battery degradation, and rapid technological advancements in the software and hardware of electric vehicles, it has become easier for one to dissect the market value of a Tesla.

Lifespan of a Tesla

When you look at the lifespan of the Tesla vehicle, most Tesla models will last well over 500,000 miles.  Given the average person drives about 13,500 miles per year (source: U.S. Dept of Transportation’s Federal Highway Administration), it is unlikely that a car owner will drive that many miles during their car ownership considering it would take more than 35 years to reach half a million miles.

What this ultimately means is that a Tesla is not affected by the marginal depreciation that is caused by miles driven. Nevertheless, battery range will be something that most people will turn their head towards and will become one of the determining factors for depreciation.

Reliability and operational costs

Apart from the incredible lifespan of a Tesla, they also require very little maintenance. Unlike combustion engine cars, EV’s do not require you to make oil changes, replace timing belts, air filters, address transmission issues, or stay on top of multiple fluid levels.

This means that some EV vehicles with thousands of miles will still provide users with a reliable mode of transportation with very little ongoing transportation maintenance. This makes EV’s far more appealing to a buyer than a gas car.  When you add that to the low running costs of electrically driven vehicles, it translates to very slow depreciation of an electric car.

Features

Tesla features share a different system to any other brand of EV or ICE car. The car’s infotainment and operational unit is updated with the user’s mobile application and thus, the integrated software in the car is subject to upgrades. This means that even an old model Tesla will have the latest features in regards to software, keeping its resale value high.

Final words

Considering all the factors of the Tesla, such as their high mileage, reliability, appeal, low maintenance, cost effectiveness and eco-friendliness, it is fair to say that Teslas retain their value incredibly well.

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