You can score a bargain on a used Tesla, but proceed with caution
As rental companies release more used Teslas into the market, be aware of these warning signs of a lemon.
These days, the launch of a new electric vehicle often sparks complaints about high prices—and understandably so. However, the situation is different for used EVs, especially used Teslas, thanks to an influx of former fleet and rental cars now available for resale.
"Tesla resale values have dropped significantly for various reasons, making many models quite affordable. Additionally, some buyers might benefit from a $4,000 federal tax credit on used EVs, making the deal even sweeter. A used Tesla can be a great bargain for savvy shoppers, but there are important factors to consider," says Ed Kim, president and chief analyst at AutoPacific.
Indeed, a quick search on the topic reveals some horror stories about ex-rental Teslas. So, here are a few things to keep in mind if you're looking for a budget-friendly Model 3 or Model Y.
For more than a year, Tesla has been engaged in an EV price war, mostly driven by its attempt to maintain sales in China. Heavily cutting the price of your new cars is a good way to devalue the used ones, and Hertz's decision to sell at least 20,000 of its Teslas was in part a response to the lower residual values.
Things to Keep an Eye On
"The prices are very attractive, but shoppers should remember that rental cars often endure a lot of wear and tear. Some ex-rentals might come with unpleasant surprises from their tough lives. Make sure to have a mechanic thoroughly inspect the vehicle before purchasing," advises Kim.
Minor issues like mismatched tires, dents, scrapes, and rock chips are common. Many Teslas being sold by Hertz were used as Ubers, evident if the odometer is nearing 100,000 miles. Battery degradation is a potential concern, though most cars will have only lost around 4 to 5 percent of their capacity. Long Range Teslas typically come with a powertrain warranty covering up to 120,000 miles or eight years.
Kim told Ars, “A notable side effect of Tesla’s widespread and dependable DC fast-charging network is that many owners rely on it to keep their cars charged, avoiding the often significant expense of installing a home charger and necessary electrical upgrades.” Therefore, before purchasing, ensure to check the battery's health, which can be done on the touchscreen or during an inspection.
Rental Teslas often experience excessive door and trunk slamming—repeated slamming of the trunk can damage the powered strut. Inside, expect noticeable wear on high-contact areas, especially the steering wheel and rear door cards, which can bubble or flake, particularly if the car was used for ride-hailing.
Further Issues to Consider
Teslas are known for their advanced connectivity, with many features accessible via smartphone apps. However, ensuring access requires Tesla's database to recognize you as the car's owner. Transferring ownership from Hertz can be a lengthy process, impacting the car's settings and access to features.
During this transition, the car may be limited to Chill driving mode, which restricts power, acceleration, and top speed. Certain settings may also remain inaccessible until ownership transfer is complete, affecting the ability to use Tesla Superchargers while the car is still registered under Hertz. Forum advice suggests contacting Tesla directly to resolve these issues, though the process can take several days, especially if paperwork needs clarification.
Once ownership transfer is finalized to Tesla's satisfaction, performing a software reset removes any lingering fleet-related configurations from the car.
Not every vehicle will meet the criteria for the $4,000 IRS used clean vehicle tax credit. Eligibility requires the vehicle to be at least two model years older than the current calendar year when purchased used, limiting eligibility to EVs from model year 2022 and earlier. Additionally, the vehicle must not be offered for sale for more than $25,000. Income limits are also stricter compared to the new clean vehicle tax credit, with single-filing individuals unable to earn more than $75,000 annually to qualify.
In the Tesla community, there have been numerous complaints about Hertz initially struggling with the tax credit process. However, recent buyers have noted significant improvements. It's advisable to plan ahead by contacting the specific sales branch from which you intend to purchase your Tesla. Ensuring they can handle the paperwork is crucial, especially if you expect the tax credit to be applied to the car's price at the time of purchase rather than during next year's tax filing.
Alternatively, purchasing a former rental or fleet Tesla from an independent dealer is another viable option. Many used car dealerships acquire Teslas through auctions from places like Hertz, and anecdotal evidence suggests this process is often smoother, particularly regarding ownership transfer and registration with Tesla. On the flip side, buyers may encounter less reliable third-party warranties and similar issues with this approach.
While ex-rental or fleet vehicles may have endured rigorous use, they typically receive more frequent maintenance than privately owned cars. As long as you ensure the vehicle's reliability, it's a practical way to acquire an EV for under $20,000.
