Yahoo Autos Used Tesla Prices Plummet, Ending The Days Of Sky-High Demand
The floor falls out from under used Tesla prices, while the company slashes Shanghai production — and automakers as a whole consider doing the same. All that and more in The Morning Shift for Tuesday, December 27, 2022.
1st Gear: Good Luck Offloading That Used Tesla
Tesla’s cars once came at the tail end of a long waiting list, meaning those who actually twiddled their thumbs long enough to get one could immediately turn around and offload it to less-patient buyers for a quick buck. Now, as Tesla enthusiasm wanes and demand levels out, that business model seems to be dying out. From Reuters:
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Tesla buyers who waited months for their new car have had an unusual choice for much of the past two years: keep the new electric vehicle, or sell it at a profit to someone with less patience.
But the days of the Tesla flip are numbered - a potential threat to new car prices that are already getting cut.
Prices of used Teslas are falling faster than those of other carmakers and the clean-energy status symbols are languishing in dealer lots longer, industry data provided to Reuters showed.
The average price for a used Tesla in November was $55,754, down 17% from a July peak of $67,297. The overall used car market posted a 4% drop during that period, according to Edmunds data. The used Teslas were in dealer inventory for 50 days on average in November, compared with 38 days for all used cars.
I, for one, am not sure the economy can handle this incredible loss. You’re telling me that we may see an end to the days of good, hardworking scalpers reselling brand-new cars for a profit? But that’s the American Dream!
2nd Gear: Mr. Musk, Sir, Are You Sure You Need More Factories Right Now?
Maybe used Teslas aren’t the only ones seeing a drop in demand. The company will idle its Shanghai plant for nearly half of next month, supposedly due to the Chinese New Year. That’s it, that’s all, no other reasons to do with demand or the company’s financial footing turning to quicksand. Just the New Year, nothing to see here. From Reuters:
Tesla (TSLA.O) plans to run a reduced production schedule at its Shanghai plant in January, extending the reduced output it began this month into next year, according to an internal schedule reviewed by Reuters.
Tesla will run production for 17 days in January between Jan. 3 to Jan. 19 and will stop electric vehicle output from Jan. 20 to Jan. 31 for an extended break for Chinese New Year, according to the plan seen by Reuters.
Tesla did not specify a reason for the production slowdown in its output plan. It was also not clear whether work would continue outside the assembly lines for the Model 3 and Model Y at the plant during the scheduled downtime. It has not been established practice for Tesla to shut down operations for an extended period for Chinese New Year.
You know what would really help Tesla out, in this demand lull? More factories. That’s how supply and demand works, right? Demand drops, so you build another production facility to increase supply. I am very smart.
3rd Gear: Automakers Are Quitting China Over Zero-Covid ‘Uncertainty’
When you run a big expensive company, you want to produce your small expensive products so that people can buy them and give you money. So when a government starts shutting down your big expensive factories, you may start looking for other locations to set up shop. It seems, in the wake of Covid, that’s exactly what carmakers are doing. From Financial Times:
...international groups have now launched a quiet yet concerted effort to cut their reliance on China’s sprawling network of components makers, according to industry executives and supply chain experts.
“There is a large-scale rethinking of logistics operations [across the industry],” said Ted Cannis, a senior executive at Ford. “The supply chain is going to be the focus of this decade.”
The move has been prompted by two developments. The first is uncertainty caused by China’s zero Covid-19 policy that forces plants to close at short notice.
“The longer the pandemic stretches, the more uncertainty there is,” Volvo Car boss Jim Rowan said earlier this year, when announcing the Geely-backed carmaker was increasing its use of non-Chinese components.
But the second is a longer-term concern about a larger political decoupling in the event of a breakdown in China’s relations with the international community, similar to Russia, that could threaten trade.
Zero-Covid, as a policy, is fraught. Many in China seem unhappy with the constant lockdowns and testing interfering with daily life. On the flip side, we in the U.S. seem to have just given up, forcing everyone to be continually reinfected with a still-not-entirely-understood virus for the sake of the almighty dollar while entirely barring immunocompromised people from participating in society with our lack of countermeasures. But hey, the line goes up!
