Here’s How Much A Tesla Model 3 Depreciates After 1 Year

As the world transitions to electric vehicles (EVs), more and more people are interested in owning one, but with less of the financial risks of splurging early into the technology. Especially for those who can only afford one car, resale value is a high priority as they want to be able to lose the least amount of money when it comes to selling that EV in the future.

The challenge, however, at the moment, is that multiple market forces drive the resale values of EVs. This includes Tesla’s price cuts that have forced the new and used EV market to adjust their prices, among other factors. Since Tesla is the most popular EV brand in the United States, most of what they do dictates how the EV market should act—for better or worse.

If you want to be part of the Tesla family in the most affordable way possible, your entry point into the brand is the Model 3. Owning a one-year-old EV sometimes makes a lot of sense, since the heaviest depreciation for these cars happens during the first year. But, if you want to buy a brand-new Model 3 today, how much value does a Model 3 lose in a year? Is it a financial liability, or will it hold its value relatively well? Here’s what you need to know about the one-year depreciation of a Tesla Model 3.

In order to give you the most up-to-date and accurate information possible, the data used to compile this article was sourced from various manufacturer websites and other authoritative sources, including CarEdge, iSeeCars, and Tesla.

You Could Lose Around $17,000 If You Sell Your 1-Year-Old Tesla Model 3

According to CarEdge, selling a one-year-old Model 3 a year from now will mean an average resale value of $31,069, or a depreciation of $17,205. This means 64.36 percent of its value is retained after a year. Now, to determine whether that’s considered good or not, we have to compare how the Model 3 depreciates after a longer duration and versus other vehicles.

How Much Does A Model 3 Hold Its Value?

The Tesla Model 3 received a mid-cycle facelift for the 2024 model year, which will affect its resale value as a result. Thankfully, CarEdge has a graph of how much a Model 3 will lose in a given period assuming you bought one today.

As you’ll see here, if you buy a Tesla Model 3 today, it will lose nearly half of its value after four years. One-year depreciation is very steep but depreciates very slowly from the first to the second year. Depreciation speeds up again by the third year and then becomes incremental until the seventh year.

Versus Other Vehicles

Compared to other vehicles, however, the Model 3 leads the current drop in used EV prices. EVs, in general, suffer the most from depreciation compared to other segments. Internal combustion engine (ICE) cars and most especially hybrids, have more resilient value retention than EVs. We even reported earlier this year the massive drop in used EV prices, which is led by the Mercedes-Benz EQS. In recent months, however, the continued lowering in used EV prices has slowed down to a point that it now reflects the current demand for used EVs, according to iSeeCars.

Why EVs Lose More Value Than ICE Cars

EVs, in general, lose more value than ICE and hybrid cars, and there are many reasons that dictate such forces acting on these vehicles’ resale values.

EV Technology Rapidly Revolves

Unlike in an ICE or even some hybrids, the technology in an EV is still rapidly evolving. The world is still in its quest to be able to release a commercially viable solid-state battery, but until we reach that point, multiple battery technologies are popping out left and right that come with ever-better technologies. Take, for instance, the ultra-fast-charging Golden Battery from Zeekr, which is part of the ever-growing list of lithium-iron-phosphatet-type (LFP) lithium-ion batteries coming out of China. Oh, and even LFP batteries are set to become a more attractive option than today’s more common nickel-manganese-cobalt-type (NMC) lithium-ion batteries, thanks in part to the safety and durability that was proven with BYD’s proprietary Blade battery.

Therefore, an EV today in 2024 could be a lot more rudimentary than an EV that will come out five years from now. As the quest towards ever-faster charging speeds and ever-more reliable batteries with greater energy densities enabling greater range, there’s still a lot of innovation left in an EV, versus an ICE car that’s nearly at its technological peak.

Then There Are Market Forces

Finally, there are market forces, both within the United States and worldwide, affecting the resale values of EVs. For one, Tesla’s price cuts have played a major role in pummeling the resale value of EVs. Those looking for a used EV will now consider a Tesla if it becomes low enough, while those wishing to buy a new EV may get scared of Elon Musk suddenly devaluing the vehicle they purchased. But, even more than Elon Musk, there’s another market force that is influencing the global order of EV prices–China.

Their EVs aren’t sold in North America, but they are sold elsewhere, also competing with what’s being sold in America and what the American brands are selling worldwide. Their EVs are far more affordable and often way superior in engineering, from their fancy battery-swapping that Nio was able to popularize, along with BYD which continues to defy what to expect in an affordable EV. This has put Western automakers on edge, and their low prices are already putting pressure on these automakers, even if these Chinese EV brands haven’t yet started selling their cars in the United States.

Here’s What You Get In A Tesla Model 3

If you buy a Tesla Model 3 today, you’re going to be getting a 2025 model year, and this carries a set of improvements that were introduced during the 2024 model year “Highland” update. Essentially the Model 3’s mid-cycle facelift, this electric sports sedan continues to reign supreme in multiple ways despite newer competition.

Less Is More

The 2025 Tesla Model 3 inherits the updates made

from the 2024 model year
, which means that from the outside, the Model 3 gets a cleaner and sleeker fascia. This has been enabled by its slimmer LED headlights, a new, cleaner front bumper, new alloy wheels ranging from 18 to 20 inches, depending on the variant, along with a cleaner rear end thanks to the redesigned boot lid that combines the LED taillights into one part.

Also part of the improvements is the revised interior. The overall appearance remains similar, but there are key improvements and downgrades, depending on your perspective that have been implemented into the vehicle. For instance, the build quality in the new Model 3 is far better, with nicer materials including textiles on the dash, as well as a wrap-around LED ambient light and a new, rear eight-inch touch screen. The downgrades, however, come in the form of the removal of the stalks for the wipers and the gear lever, opting instead to putting these either in the steering itself, or in the gear selector’s case, in the touch screen.

Improved Driving Dynamics

Crucially, however, the new Tesla Model 3’s driving dynamics have been greatly improved. We’ve recently been able to test a Long Range AWD variant, and our team has commended the much better ride quality (which was known to be firm and unsettled in the pre-facelift), reduced noise, vibration, and harshness, whilst becoming a better-driving sports sedan through its direct steering and playful chassis.

*Pricing before any incentives

Furthermore, for the 2025 model year, Tesla has re-introduced what we think is the best variant they’ve ever offered for the Model 3. That’s because the range now kicks off with the Long Range RWD, which costs less than the Long Range AWD and replaces the Standard Range RWD, whilst having the longest range available in any Model 3 to date. Combine that with the

$7,500 federal tax credit
, and you’ve got an EV sports sedan with excellent value as well as a class-leading range.

If you want a Model 3 on the other end of the spectrum as you prioritize performance, then you can get the appropriately named Model 3 Performance, boasting a 0-60 mph time of just 2.9 seconds. Tesla, however, doesn’t state anymore their power and torque figures, so at this point, this can be anyone’s guess for all three variants.