Elon Musk: It won't be long before people view gasoline cars the same way they view steam engines today
Tesla CEO Elon Musk stated that the residual value of gasoline cars bought today will be much lower than people think. In the same set of public posts, he also wrote on September 13, 2022, that it won't be long before people view gasoline cars the same way they view steam engines today.
The original public statement about residual value was "The residual value of gasoline cars bought today will be much lower than people think," published on September 12, 2022. The statement about steam engines was "Won’t be long before we view gasoline cars the same way we view steam engines today." Neither statement provided a year, depreciation rate, or model.
This is a repetition of his assessment from October 2019. At that time, he shared an article about the depreciation of luxury gasoline cars being impacted by the Tesla Model 3, stating that the world is quickly shifting to electric vehicles, and the residual value of gasoline or diesel cars bought today may be low. All three statements framed the residual value of fuel vehicles as a trend result without providing a calculation table.
Data for used cars in 2026 has not yet fully aligned with his direction. Research by iSeeCars states that vehicles lose an average of about 41.8% of their value over five years, while electric vehicles lose about 57% to 59%. The Tesla Model 3 retains about 45.5% after five years, the Cybertruck about 43.2%, the Model Y about 41.9%, and the Model X and Model S about 38.8% and 37.9%, respectively. CarEdge reports the average depreciation for the Tesla brand at 61% over five years.
Cox Automotive's Q1 2026 data states that the average price of used electric vehicles is $34,821, while the average price of used gasoline vehicles is $33,487, with a price difference of $1,334. During the same period, used electric vehicle sales increased by 12% year-on-year, reaching 93,500 units. Sales of new electric vehicles dropped by about 28% year-on-year after federal subsidies ended, while the price reduction of new cars has also pressured the prices of used electric vehicles. Recurrent states that the retail price of used electric vehicles in 2026 is still 8% higher than a year ago.
Sellers include gasoline car buyers, dealers, and financing companies who still factor in residual value into loans and leases, while buyers are the group he aims to persuade to switch. Tesla's own price reductions will first compress the prices of its own used cars, as older cars must compete with new car prices. The narrative benefits new electric vehicle sales, while the narrative under pressure relates to gasoline car loans secured by residual value. Public five-year residual values still show that gasoline cars overall retain higher value than the average for electric vehicles, contrary to his judgment.
He did not mention inventory, interest rates, or fuel taxes in these two statements. The judgment relies on the assumption that as penetration rates continue to rise, buyers will no longer pay today's residual value for gasoline cars.
Source: Public information
ABAB AI Insight
Musk has been framing residual value as a reason for trade-in since 2019. At that time, he shared an article about the Model 3 impacting the depreciation of luxury gasoline cars. On September 12, 2022, he changed it to "much lower than people think," and on September 13, he used the steam engine analogy to reframe gasoline cars from assets to obsolete equipment. Tesla has repeatedly lowered new car prices in 2023, causing the residual value of old cars to be first driven down by its own price list, while external gasoline car residual values have not collapsed in sync.
The capital path lies in automotive finance, not in manufacturing. Leasing and loans set residual value as the end-of-term recovery price; if residual value expectations are lowered, monthly payments increase or end-of-term losses fall on financing and leasing companies. What he aims to mobilize is the trade-in budget: to make buyers see today's gasoline cars as soon-to-depreciate inventory and shift their money to Tesla's new cars. The motivation is sales, not residual value research. Even the best retaining Model 3 from Tesla only reaches about 45.5%, lower than the overall market vehicle average of about 58% for five-year retention.
The analogy is similar to how digital cameras disrupted the residual value of film cameras in the 2000s, and also closely resembles the decline in diesel car residual values in Europe under emission regulations after 2010. The current position is still a penetration phase, not a clearance phase. In Q1 2026, used electric vehicles are only $1,334 more expensive than used gasoline vehicles, and new electric vehicle sales have dropped by about 28% year-on-year, indicating that the price war and subsidy withdrawal first hurt electric vehicle residual values, not gasoline car residual values.
Structurally, this represents a transfer of pricing power. New car manufacturers are using price reductions and narratives to reprice old fuel vehicles, while the used market still accounts for transaction prices. The mechanism is that residual value is determined by the next buyer, not by the manufacturer's analogy. If the next buyer continues to price based on fuel consumption, maintenance, and five-year retention, gasoline cars will continue to depreciate less than the average for electric vehicles. The narrative must translate into price, which requires seeing gasoline car transaction residual values consistently fall below the preset values in loan contracts.