Tesla Market Booms as Owners Sell in Protest Against Elon Musk

The Rising Market for Used Teslas Amidst Controversy Surrounding Elon Musk

In recent months, Ken Harvey, a Northern California dealer specializing in Honda and Mazda, has ventured into an unexpected side business: selling used Teslas. This development has emerged in the wake of increasing political backlash against Tesla’s CEO, Elon Musk, but paradoxically, has fueled the trade in pre-owned Teslas.

Mr. Harvey sources used Teslas from local automobile auctions several times each month. He has discovered that many buyers are drawn to these vehicles, particularly because of a federal tax credit of $4,000 available for those purchasing used electric vehicles priced under $25,000. This incentive allows consumers—especially those eligible for additional state incentives—to purchase used Model 3 sedans for less than $20,000, significantly lower than half the cost of a new one. "We sold three in the last week, and around 20 since the beginning of the year," noted Mr. Harvey, who operates in Alameda County, a suburban area near San Francisco that houses Tesla’s manufacturing facility. With the rapid turnover of stock, he remains optimistic, stating, "They won’t stay around more than a few days."

The burgeoning market for used Teslas provides a striking contrast to the backlash Musk has faced due to his association with former President Donald Trump and his controversial political statements. Although the trade in used Teslas was already growing prior to these events, the current political climate has seemingly turbocharged this segment of the market.

The aftermath of the pandemic saw a notable slowdown in new electric vehicle sales, prompting Tesla—the leader in the electric vehicle (EV) market—to reduce prices significantly. Consequently, the resale value of used Teslas has declined. More recently, a wave of Tesla owners have opted to sell their vehicles, motivated either by protest against Musk or a desire to dissociate from the brand altogether.

This sentiment has intensified over the last couple of months, particularly as Musk has taken on a role within a newly created federal office dubbed the "Department of Government Efficiency," which many interpret as a thinly veiled political maneuver. His controversial actions and statements, such as a gesture interpreted by some as a Nazi salute, have further alienated many Tesla owners.

Dr. Jerome Winegarden, a resident of Ann Arbor, Michigan, recounted his decision to part ways with his Model 3. Despite driving it just 35,000 miles, he traded it in for a Ford F-150 Lightning electric pickup last month, receiving a mere $18,000 for the vehicle—a stark contrast to its original price tag of around $40,000. “I just became increasingly concerned with Elon Musk and what he was doing, and the Nazi salute was the tipping point,” Dr. Winegarden expressed. “The symbolism was just too much. I felt shame just driving the car.”

While Tesla has not commented on these developments, it is evident that the fallout from Musk’s political affiliations has led to protests at numerous Tesla showrooms and significant acts of vandalism against Tesla vehicles and charging stations. A group named Tesla Takedown has gained momentum, urging current owners to sell their cars and encouraging investors to divest from Tesla stock. This movement has led to organized protests across the United States, Europe, Australia, and New Zealand.

Furthermore, the impact of Musk’s actions is particularly noticeable in Europe, where Tesla’s sales plummeted by approximately 45% in the first two months of the year, as reported by market researcher Jato Dynamics. However, quantifying the exact impact of Musk’s political activities on Tesla’s sales in the U.S. is challenging, as the company does not differentiate its U.S. sales figures. Nonetheless, industry analysts have confirmed a striking increase in the availability of used Teslas; AutoTrader.com reported about 11,700 used Teslas listed for sale in late March, up from around 8,000 at the beginning of the year.

Additionally, auto data provider Edmunds noted an uptick in Teslas being traded in. In March, Teslas from the 2017 model year or newer represented 1.4% of the vehicles traded for new or used vehicles, demonstrating an increase from 0.4% the previous year. Stephanie Valdez Streaty, director of industry insights at Cox Automotive, noted that the surge in used Teslas is partly attributed to the increase in sales following the introduction of the Model Y, which may have contributed to a greater number of used vehicles entering the market.

For dealers like Enzo Costa in the Chicago area, the popularity of used Teslas is palpable, with many customers trading in their vehicles. Costa, however, primarily routes traded-in Teslas to wholesale auctions rather than selling directly to consumers, citing the volatile nature of Tesla prices. Over the past month, he has observed a significant decline in the value of used Teslas, dropping by approximately 10 to 15 percent.

In California, the demand for affordable used Teslas remains robust, even amidst Musk’s political controversies. Many buyers are motivated to turn to electric vehicles to avoid soaring fuel prices. “We see a lot of ride-share drivers, and younger, first-time buyers who wouldn’t ordinarily buy a Tesla,” Mr. Harvey pointed out, highlighting a unique opportunity for dealerships and consumers alike in today’s shifting automotive landscape.