The price of the Tesla Model Y has depreciated heavily since the EV hit the roads back in 2021; five years later, and it’s now categorized alongside other “cheap” EVs. That’s because when it arrived, this model looked like a game-changer for many fans of electric vehicles. A long-range SUV combined with Tesla’s technology sounded like the perfect future-proof purchase for a lot of users, especially for those looking for a smart investment for their money.
In 2021, the demand for a new Model Y was so high that a used Tesla briefly became more expensive than a new one at the dealership. However, with new rival models being released in the all-electric SUV segment and Tesla slashing prices to keep momentum and fend off those competitors, this version of the Model Y depreciated far more sharply than most would have expected. During this time, it lost more than 60% of its original valuation over five years according to iSeeCars, turning into one of the steepest cases of depreciation in the EV market.
However, some reports are conflicting. According to KBB, a 2021 Tesla Model Y was available for around $40,000 MRSP; today, that value sits at around $21,000, meaning that almost 50% of its original value has been lost in only five years. Regardless, whether its depreciation sits at 50% or 60%, the Tesla Model Y represents a rather large financial loss for early buyers who saw in this model a chance for a future-proof investment. At the same time, this opens the door for many drivers to buy a used Model Y for a fraction of the cost.
The 2021 Tesla Model Y has lost around half its value
There are several reasons that contributed to the steep decline in price of the 2021 Tesla Model Y, but one of the most direct causes was the manufacturer’s own pricing strategy. Between 2022 and 2024, the EV SUV segment debuted a lot of new options for customers; in response to the growing competition, Tesla made a series of aggressive and unannounced price cuts on new units of the Model Y to keep its share of the market.
The situation surrounding the Model Y price, and also other Tesla vehicles, was further complicated by a surge in used inventory flooding the market. Hertz, the rental car company that committed to having 25% of their fleet based on electric cars by 2024, reversed course and started to sell many of their EVs, including Tesla models, at more competitive prices. For this reason, combined with the price cuts, the depreciation curve the 2021 Model Y accelerated even further.
Demand for these models also started to cool due to other manufacturers entering the segment, some of which rank among the most reliable EV brands. Resultantly, sellers were forced to aggressively lower prices, and the 2021 Model Y couldn’t command its previous premium price. For instance, a fair market value for a used unit in 2023 was still hovering at around $40,000. However, barely a year later, that same vehicle saw its value plummet to below $30,000, and today the value is only at $21,000.
Buying a used 2021 Model Y still offers high value
If you’re interested in buying a used 2021 Tesla Model Y due to the its low resale price, it may be worth your while. Its current value offers a much more accessible entry point into the Tesla ecosystem than ever, since you would be paying way less than an early adopter did in 2021; you can also see for yourself what makes the brand appealing but only pay a fraction of the original cost.
However, those interested in buying a 2021 Model Y also should have clear expectations. It’s important to consider that it is a 5-year-old car and this version lacks many updates and upgrades Tesla has introduced since then. Additionally, the battery in an older Model Y may not have the same capacity as it did when it rolled off the production floor. Also, depending on when the previous owner bought one, your Tesla warranty may not offer much in the way of coverage. This could lead to some increased repair costs down the road. With questions about the reliability of used Tesla vehicles, this becomes a major consideration point.
Still, the fundamentals remain strong. The Model Y offers a competitive range, access to Tesla’s Supercharger network, and many of the characteristics that made the model a bestseller in the first place when it arrived in 2021. For those who can look past these limitations and find one in good condition, the depreciated price can make it a good purchase.
