Musk took back leased cars for robotaxis — Tesla sold them instead

For most car companies, offering lease buyouts is a “no-brainer” because dealers don’t have to find a new buyer when a lease ends, said Joseph Yoon, consumer insights analyst at automotive data provider Edmunds. Now that used Tesla values are “kind of tanking”, Yoon said, the company most likely ended the lease-end-purchase ban to avoid being “caught holding the bag”.

As Tesla models age and face rising competition from other electric vehicle makers, the cars now lose value faster than almost any other vehicle. An analysis by CarGurus, a used-car sales and data service, found average selling prices of used Teslas have fallen 7.6% over the last year, compared to a decline of 0.8% for a composite index of all brands. Prices for Tesla’s Cybertruck have plunged 46% over the past year, while Model Y prices fell 14.1%.

During Tesla’s January earnings call, Vaibhav Taneja, the company’s CFO, blamed “lower profit from used car business” as a reason for declining margins at one of its units. Unlike almost all other automakers with US sales, Tesla owns and operates its own dealerships.

At dealerships before the lease policy changed, one of the people familiar with Tesla’s retail operations said, customers sometimes asked why used prices were so similar to those of some new models. Salespeople would cite the software upgrades to those interested in buying.

For those seeking leases, they continued saying the cars would be used for robotaxis at lease-end. The explanation never changed, the person added, because until November the company never deviated from it.

Marshall Distel, a transportation planner from Vermont who leased a Model 3 in 2023, said he understood from researching Tesla’s policies that he would have to return the car. At the time, he said, he thought a buyout option would have been nice. Now he has no interest in buying anything from Musk, whose high-profile activities as an adviser to US President Donald Trump have alienated some consumers.

“I love the car, I just don’t like what has been going on at the top with the CEO,” Distel said. “I don’t want to be associated with that any more.”