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Inflation data indicates used car prices in the U.S. are down 9.1% year-over-year, marking the largest decline since 2012 for the first half of the year. Such price trends could hurt traditional automakers' margins on new vehicles, given that high pre-owned car prices historically support new car prices. Lower prices may lead to reduced profitability in the industry, especially for legacy automakers hesitant to aggressively transition to EVs.
Impact on Tesla and Legacy Automakers
While lower car prices may look negative in terms of margins for traditional automakers, they could prove beneficial for Tesla in the long run. Tesla's ability to lower prices can put intense pressure on incumbent automakers, who may struggle with profitability as their gasoline-powered vehicle sales decline.