Key Points
Tesla is facing potential earnings pressures due to a projected decline in the resale value of off-lease electric vehicles (EVs). Industry experts estimate these vehicles could be worth $10,000 less than automaker finance arms projected, with potential costs to the industry nearing $8 billion by 2028, when approximately 800,000 off-lease EVs are expected to enter the market.
In 2022, Tesla leased nearly 229,000 EVs, significantly more than General Motors’ 101,000 and Ford’s 52,000 combined. With the value of three-year-old EVs now maintaining only about 40% of their original value, the financial impact could be substantial, particularly for Tesla as it solely sells electric vehicles.
Despite these challenges, Tesla’s exposure to losses may be mitigated, as it manages a smaller portion of its lease portfolio independently, relying on third-party lenders for the majority of its leases. Investors should monitor these developments over the next few years.
