tesla-model-s-value-retention-2020-2025

Research Question

How well has the Tesla Model S retained its value over the past 5 years (2020-2025)?

Executive Summary

The Tesla Model S has experienced poor value retention over the past 5 years, with depreciation rates significantly higher than the automotive average and comparable to or worse than traditional German luxury sedans. The Model S loses approximately 63-71% of its value over 5 years, depending on the source and specific model year.

Key Findings:

5-year depreciation: 63-71% value loss
Recent acceleration in depreciation (2024-2025)
Better than some competitors, worse than market average
Significant variation by model year

Detailed Depreciation Data

Overall 5-Year Depreciation Rates

Tesla Model S (General):

CarEdge Data: 71% depreciation over 5 years (resale value: 88,880 MSRP)
Alternative Estimates: 63.3% ($46,215 loss) to 65.2%
Optimistic Estimates: 35% (likely based on different baseline pricing)

By Year:

Time Period	Depreciation	Resale Value	Residual %
After 1 Year	$25,091	$63,789	71.77%
After 3 Years	$57,736	$31,144	35.04%
After 5 Years	$62,856	$26,024	29.28%
After 7 Years	$69,549	$19,331	21.75%

Specific Model Years (2020-2024)

2020 Model S:

Current resale value (2025): $30,193
Trade-in value: $24,774
Ranking: 75-100% percentile for depreciation among 2020 sedans (relatively good)
Assessment: Attractive year with relatively good value

2021 Model S:

Assessment: Attractive year with relatively good value
Specific depreciation data: Not provided in sources

2022 Model S:

Best value year - buyers pay ~35% of original price while retaining 75% of useful life
Ranking: 75-100% percentile for depreciation among 2022 sedans
Assessment: Offers the best value proposition

2023 Model S:

Ranking: 25-75% percentile for depreciation among 2023 sedans (worse than 2020/2022)
Assessment: Moderate value retention

2023 Model S Plaid:

Specific tracking available but exact figures not provided in search results

Recent Market Trends (2024-2025)

Accelerated Depreciation:

Model S lost most value of any model in recent study
Year-over-year loss (March 2024 - March 2025): 17.2% (-$9,944)
Average used Model S price (March 2025): $47,931

Contributing Factors:

Tesla’s frequent and unpredictable price adjustments
Brand perception challenges
Market oversaturation
Competition from newer EVs

Comparison to Luxury Sedan Competitors

German Luxury Sedans (5-Year Depreciation)

Mid-Size Luxury Competitors:

BMW 5 Series: 70.1% depreciation (worst in class)
Mercedes-Benz E-Class: 69.0% depreciation
Audi A6: 69.0% depreciation

Full-Size Luxury Competitors:

Mercedes S-Class: 67.1% depreciation
BMW 7 Series: Among fastest depreciating cars

Brand Averages:

Audi: 64.6% average depreciation across model line
BMW: Notorious for fast-dropping resale values

Comparative Analysis

Tesla Model S vs Traditional Luxury:

Model S (71%): Slightly worse than BMW 5 Series (70.1%)
Model S: Comparable to or slightly worse than E-Class/A6 (69%)
All luxury sedans significantly worse than market average (40%)

Positioning:

Tesla ranks in top 3 among luxury brands for 5-year and 7-year value retention periods
Better performer than many luxury EVs
Still loses more value than average vehicles

Depreciation Pattern Analysis

Depreciation Curve Shape

Year 1: Moderate depreciation (~28% loss)

Most “new car” depreciation hit
Better than traditional luxury first-year drop

Years 2-3: Steep depreciation (~65% cumulative)

Sharpest value loss period
Price adjustments hit existing owners hardest

Years 4-5: Curve flattening

Depreciation slows significantly
Percentage loss decreases
Market stabilization for older models

Years 6-7: Continued gradual decline

More predictable depreciation
Approaching “used EV” baseline value

Key Inflection Points

First 3 years: 30-40% drop typical (some sources show steeper)
5-year mark: 63-71% total depreciation
Post-5 years: Curve flattens substantially

Factors Affecting Model S Depreciation

Primary Negative Factors

Tesla’s Price Volatility
- Frequent, unpredictable MSRP adjustments
- Example: $10,000 overnight price cuts destroy existing owner equity
- Creates uncertainty in used market pricing
Technology Obsolescence
- Rapid improvements in newer models
- Battery technology advancement
- Software/hardware updates make older models less desirable
High Luxury EV Depreciation Trend
- EVs generally depreciate faster than ICE vehicles
- Luxury segment compounds the effect
- Battery degradation concerns
Brand Perception Issues (2024-2025)
- CEO controversies affecting brand value
- Quality control concerns
- Service network limitations
Market Competition
- Increased EV options from traditional luxury brands
- Better build quality from competitors
- More dealer support infrastructure

Positive Factors

Strong Brand Recognition
- Tesla remains aspirational EV brand
- Name recognition drives demand
Government Incentives
- Historical purchase incentives helped initial values
- Used EV tax credits (where applicable)
Over-the-Air Updates
- Vehicles improve over time
- Extended useful life vs traditional cars
Performance Reputation
- Desirable acceleration/handling
- Technology leadership perception
Supercharger Network
- Exclusive access (historically)
- Infrastructure advantage

Value Retention by Use Case

Best Model Years to Buy Used (2025)

For Value:

2022 Model S - Best value proposition (35% of original, 75% useful life)
2020-2021 Model S - Good balance of features and depreciation
Avoid: 2023+ (still depreciating rapidly)

Best Model Years for Original Owners

Least Bad Depreciation:

2020 Model S - Strong performer in its cohort
2022 Model S - Good residual characteristics
Avoid: 2023-2024 (accelerated recent depreciation)

New vs Used Decision

Buying New (2025):

Expect ~28% loss in year 1
~65% loss in 3 years
~71% loss in 5 years
High risk due to price volatility

Buying Used:

2022 models offer best value
5+ year old models have flattened depreciation curves
Lower risk of sudden price-cut impacts

Comparison to EV Market

Tesla vs Other EVs

Tesla Performance:

Model S performs “remarkably well for an alternative fuel vehicle”
Top 3 among luxury brands for long-term retention
Better than most early-generation EVs

Industry Context:

EVs generally depreciate faster than ICE vehicles
Luxury EVs worst segment for depreciation
Model S competitive within luxury EV space

Financial Implications

Cost of Ownership (5 Years)

Example: $100,000 Model S purchased in 2020

Depreciation Loss:

Pessimistic: $71,000 (71% depreciation)
Optimistic: $63,000 (63% depreciation)
Average annual loss: 14,200

Comparison to competitors:

BMW 5 Series (60,000 loss
Mercedes E-Class (45,000 loss
Model S loses more in absolute dollars due to higher starting price

Total Cost of Ownership Considerations

Depreciation Impact:

Largest single ownership cost
Higher than fuel savings vs ICE
Partially offset by lower maintenance

Mitigating Factors:

Lower operating costs (electricity < gas)
Minimal maintenance requirements
Tax incentives (historical)
Insurance considerations (higher for Tesla)

Recommendations

For Prospective Buyers

If Buying New:

Be prepared for rapid depreciation (70%+ in 5 years)
Plan to keep vehicle 7+ years to ride out steep curve
Avoid if resale value is important to you
Consider leasing to avoid depreciation risk

If Buying Used:

Target 2022 model year for best value
Consider 5+ year old models (flatter depreciation curve)
Verify battery health and warranty coverage
Factor in potential continued depreciation

For Current Owners

Value Preservation:

Minimize mileage accumulation
Maintain detailed service records
Keep software updated
Consider extended warranty for resale appeal
Time sale before major model refreshes

When to Sell:

Before 3-year mark if minimizing loss
After 5+ years, curve has flattened (less urgent)
Avoid selling immediately after Tesla price cuts
Consider private sale vs trade-in ($5,400+ difference)

Data Quality & Limitations

Source Variability

Different sources show 63-71% depreciation range
Methodology differences (MSRP baseline, regional pricing, trim levels)
Time period variations (some 2020-2025, others 2024-2029 projections)

Market Volatility

2024-2025 showed unusual acceleration
Brand-specific factors may be temporary
EV market rapidly evolving

Limitations

Data primarily US-focused
May not reflect regional variations
Trim level differences not always specified
Limited data on very recent model years

Conclusion

The Tesla Model S has experienced poor value retention over the 2020-2025 period, with depreciation comparable to or worse than traditional German luxury sedans. While it performs well relative to other luxury EVs and benefits from factors like OTA updates and the Supercharger network, prospective buyers should expect to lose 63-71% of the vehicle’s value over 5 years.

Key Takeaways:

❌ Model S is NOT a good investment for value retention
✅ Model S performs relatively well compared to BMW/Mercedes/Audi luxury sedans
⚠️ Recent acceleration in depreciation (2024-2025) is concerning
💡 Best used value: 2022 model year
📉 Expect ~14,200 annual depreciation on $100k purchase

Bottom Line: If you’re buying a Tesla Model S, buy it because you want to drive it, not because you expect it to hold its value. Plan to keep it long-term or lease to avoid depreciation risk.

Sources & References

CarEdge: Tesla Model S Depreciation
EVDepreciation.com: Model S Depreciation 2025
TopSpeed: How Much Tesla Models Depreciate
Kelley Blue Book: 2020/2022/2023 Model S Depreciation
Jalopnik: Tesla Model S Lost Most Value (2024-2025)
Various automotive industry reports and depreciation calculators

Research Metadata

Research Date: November 3, 2025 Time Period Analyzed: 2020-2025 (5 years) Primary Focus: Tesla Model S value retention and depreciation Comparative Analysis: German luxury sedans (BMW, Mercedes, Audi) Data Quality: Multiple sources with some conflicting figures; general trends consistent