Elon Musk doesn't care that Tesla values are tanking — but it could drive buyers to Ford and GM

• Used Tesla values are down 30% year-over-year, according to firm Recurrent.
• Tesla doesn't seem to mind as it continues to blow production and delivery numbers away.

Tesla might eventually have to care about its plummeting resale values.

Used Tesla values have dropped dramatically from last year as the company continues to slash prices and flood the market with more new cars. So far, Elon Musk's electric car company is unphased. Tesla is still hitting its targets in other places and Musk has told investors the company is ready to compensate for lost profits down the road.

But eventually, as more competition hits the EV market and Tesla's edge wanes, poor resale values will be hard to ignore — especially as competition from other automakers threatens to take a toll on Tesla's dominance.

"They see the writing on the wall, that there's this major proliferation of EVs hitting the market," Liz Najman, Recurrent lead researcher, said. "If they find the sweet spot where people are willing to buy Teslas without thinking too hard, then maybe they can stay in front of the splintering market share."

For now, Tesla's still on a roll. It's still easily the market leader and continues to break quarterly production and delivery records. It's also dropping its prices. Both moves are overshadowing news of the company's slowly faltering market share and falling profit margin.

And with all of the company's momentum, Musk doesn't seem to be thinking about the value of his vehicles in the used market falling 30% year-over-year, per firm Recurrent (a direct result of the demand and price falls). That's because resale value hasn't been the biggest priority for Tesla buyers so far.

"I just don't think that's where, for the average buyer at this end of the market, their consideration set lies," Stephen Beck, managing partner at consultancy cg42, told Insider.

There are a few reasons for that: Tesla buyers are loyal to the company. In many cases, a driver's Tesla is their second or third vehicle. It might just be used for basic commuting, and those owners might keep their purchases for several years.

Tesla's challenges could still come

But "it will affect them over time," Beck said. Combined with today's industry headwinds, the concerns of future EV customers might catch up to Tesla — and convince buyers to consider a slew of other EV brands.

Resale value could mean upcoming Tesla customers opt to lease rather than buy in the future. On top of that, Musk's tech claims and lack of refresh could catch up to him.

"They do not have a refresh on the horizon or redesign on the horizon or any of the things that historically, automotive companies have used to reinvigorate demand in existing model lines," Beck said, "all against competitors that look new and fresh and different.

"The seeds of Tesla's challenges are a dramatically different competitive environment that they are in now than they have been in historically," he added.

All automakers will still need every leg that they can get up on Tesla, as they'll all have to contend with similar challenges eventually, even as the gap closes in.

"There's a little bit of a method behind the madness," Martin French, managing director at the consultancy Berylls, said of Tesla. "They've proven that they're the leader in EVs, and now they seem to be encroaching on some market share from other segments.

"The question is," French added, "does the consumer still consider that to be a really ace product?"

The Tesla dynamics benefit more EV-buyers

In the meantime, Tesla is forcing the EV market to become more affordable for mainstream buyers — a noticeable impact especially in the used EV space.

"Even at the risk of alienating loyal drivers or people who bought a Tesla in 2021 or 2022, there's a lot of ground to cover by lowering prices and making things more affordable for new drivers," Najman said.

"Overall, the ballooning percentage of cars, not just Teslas, but all used EVs that are available under $25,000 and under $30,000 is really important," she added.