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The Tesla Effect Is Making Luxury Cars Lose Value Faster Than Ever

• By: Gustavo Henrique Ruffo

Everyone that follows car news knows Tesla has made a considerable impact on premium carmakers. Most of them are now developing fully electric sedans or SUVs just to have something to compete with the American EV manufacturer.

But how huge was this impact? Capital One, a company that deals with financing cars, has made a study and discovered it was so impressive it even deserved a proper name: The Tesla Effect.

This phenomenon has a simple explanation. People that used to buy new cars from Mercedes-BenzBMW, or Audi now want a Tesla. So they are trading in their vehicles from these brands to have their new EVs. But the demand for these brands has not increased.

If you are familiar with supply and demand laws, you already know what this means: severe devaluation of cars from these European luxury brands. To measure it, Capital One used the Manheim Market Report.

One of the largest auction companies in the world, Manheim is part of Cox Automotive, a company that recently announced an investment of $350 million in Rivian. We bet the large holding realized The Tesla Effect before its christening. And that it bets Rivian will have a similar performance.

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