Investor's Corner
The ‘Tesla Effect’ is wrecking Europe’s luxury brands in the 2nd-hand market
There was once a time when plush leather seats, chrome-trimmed knobs, metal buttons, and a loud, grumbling engine were the hallmarks of a luxury vehicle. That was the status quo for a very long time, but with the emergence of Tesla and its tech-focused approach to cars, these age-old definitions of luxury in the automotive industry are getting disrupted.
In a recent article, American bank holding firm Capital One opted to examine a phenomenon in the second-hand luxury car segment that it dubs as “The Tesla Effect.” According to the financial firm, the influx of sales generated by Tesla consumers’ reaction to the brand amid the release of more attainable vehicles like the Model 3 has pretty much wrecked the pre-owned luxury segment. And the biggest victims of the Silicon Valley-based electric car maker are some of Europe’s strongest brands.
A key vehicle in this transition is the Tesla Model 3, which went from zero to 140,000 units sold faster than any other luxury car before. The market’s interest with the electric sedan has been consistent, to the point where it is now a driving force in the US’ used luxury car segment. As more and more luxury car owners trade in their vehicle for a Tesla, traditional high-end brands like BMW and Mercedes-Benz are getting the short end of the stick.
Capital One notes that Tesla currently gets European vehicles as trade-ins 22.2% of the time, over two times the industry average of 10.9%. The result of this is the second-hand market getting flooded with luxury vehicles — vehicles that are so far not seeing an increase in demand. These conditions create a perfect storm for veteran luxury automakers.
Data from the Manheim Market Report reveals that a 2018 BMW 320i lost almost 20% of its value in the first half of 2019 alone, dropping from $37,700 to $30,700. One could say that this is the case considering that the new 320i is a new vehicle, and new cars depreciate at a steeper rate, but Capital One maintains that the decline is usually not as prominent. A Mercedes-Benz B-Class also dropped nearly 30% in the first six months of the year, from $18,500 to $13,250.
A rather surprising result of The Tesla Effect is that customers in the market for pre-owned luxury vehicles could see lower prices for cars like BMW’s 3-Series. With their depreciation being so steep, customers could acquire a three-year-old BMW or Mercedes-Benz sedan at a lower price than a brand new Honda Accord or Toyota Camry.
A key driving force behind The Tesla Effect is the apparent change in priorities among luxury car buyers. While buyers of luxury cars in the past valued the exclusivity of materials used in their vehicles’ accents, consumers today appear to be more focused on how much convenience is offered by a car. In this light, a vehicle that can pull itself out of a parking spot and pick up its passengers seems to be a more preferable purchase over a car that just happens to have exclusive leather seats.
Overall, Tesla seems to be lucky enough to hit its stride at a time when consumers care most about tech and convenience. With its silent, stealthy power and its zero-emissions nature, Tesla’s electric cars are starting to become the preferred vehicle for buyers who grew up in a world where tech moves at an incredibly fast pace, and those that cannot catch the most recent update risk getting left behind.
Elon Musk
SpaceX Starship just nailed something it’s never done before
SpaceX’s Starship flew successfully Friday, landing both stages and deploying its first Starlink V3 satellites.
Starship’s thirteenth test flight delivered exactly what SpaceX needed with a clean liftoff, two successful stage recoveries, and the first real payload the vehicle has ever carried to space. Booster 20 and Ship 40 lifted off at 5:51 p.m. CT from Starbase, and by the time the mission wrapped roughly an hour later, both halves of the rocket had done exactly what they were supposed to do.
Booster 20 separated from Ship 40 a few minutes into the flight and stuck a controlled splashdown in the Gulf of Mexico about six minutes after liftoff. That is a meaningful turnaround from Flight 12 in May, when the booster lost several engines during its boostback burn before a hard water landing attempt.
Starship as seen from Starlink satellites pic.twitter.com/e2hvfmnewh
— Elon Musk (@elonmusk) July 25, 2026
Starship 40’s performance was arguably the bigger win. The vehicle deployed the first 20 operational Starlink V3 satellites Starship has ever carried, then flew a suborbital arc to a landing in the Indian Ocean that SpaceX commentator Dan Huot called the company’s softest splashdown yet. “This is a dream scenario for this team that’s trying to get this heat shield data,” Huot said on the live broadcast, according to Space.com’s live coverage. “I’m a little over the moon right now. Wow. Lucky number 13.”
Unlike the mass simulators SpaceX flew on Flight 12, these were production Starlink V3 satellites, meant to extend solar arrays and antennas and attempt to link with the broader constellation before reentering minutes later. Getting real hardware through a full deploy sequence on only the second flight of the V3 generation keeps Starship on schedule for the payload work NASA is counting on for future Artemis lunar landings.
What an awesome launch, really seems like everything went super well and it was all incredibly smooth.
SpaceX is awesome. Very interested to see how the market will respond on Monday pic.twitter.com/KSHmyBfV55
— TESLARATI (@Teslarati) July 25, 2026
— TESLARATI (@Teslarati) July 25, 2026
The flight also arrives at a moment when SpaceX needed a win. SPCX has traded below its $135 IPO price since mid-July, as Teslarati reported when the mission slipped to Friday, and short interest has climbed to roughly a third of the tradable float. A clean flight will not fix a balance sheet, but it does answer the one question SpaceX absolutely needed answered this week: whether the fixes made after the July 16 abort would hold up under real flight conditions. They did, on both stages, on the first try after the redesign.
SpaceX has not set a target date for Flight 14, though the company has said it wants to push toward an orbital attempt on the next mission. After Friday, that goal looks a lot more within reach.
Tesla short sellers won big following the company’s massive fall on Wall Street after it reported subpar Earnings on Wednesday.
Tesla short sellers collected about $4.12 billion in single-day profits on Thursday, according to Bloomberg. Shares fell as much as 15 percent during Thursday’s session. It closed as one of the worst days for Tesla on Wall Street in the past three years.
Investors sold off the stock after Tesla said it would aggressively direct its spending toward AI and its Optimus robot project. The company had record revenues, which were driven by one of the strongest quarters in terms of vehicle deliveries in company history.
However, it missed EPS estimates by reporting just $0.33, a far cry from the $0.53 analysts expected.
S3 Partners reported that about 3 percent of Tesla’s outstanding stock is sold short. Managing Director at S3, Ihor Dusaniwsky, provided the short seller’s potential profit, as well as another figure: shorts have likely had paper gains of $8.92 billion this year, as Tesla shares are down 30 percent in 2026.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla has burned short sellers many times in the past, but the company’s latest Earnings Call was a chance for those skeptics to taste some payback. Although the company gave some very transparent information regarding future projects, the rollout of Robotaxi, Optimus, and Semi, many investors took their profits on Thursday.
Notable short sellers like Michael Burry have been transparent about their skepticism around Tesla shares. Burry just revealed three weeks ago that he had opened up a new short on the stock, stating he shorted Tesla shares at $416.22. “Happy it jumped back to this level,” he said in a blog post.
At the time of publication, Tesla shares were down about 3 percent and the stock was trading at $309.92.
Tesla stock (NASDAQ: TSLA) endured one of its sharpest single-day declines in years on July 23, tumbling approximately 14.5 percent and closing near $320 after opening the session around $374. The drop erased more than $140 billion in market value amid heavy trading volume and left the shares at multi-week lows.
The sell-off followed the company’s second-quarter 2026 results, released the previous evening. Tesla reported record revenue of $28.2 billion, up 26 percent year over year, driven by a Q2-record 480,126 vehicle deliveries. Energy storage deployments also rose strongly.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Yet profitability disappointed sharply. Operating income fell 57 percent to $398 million, compressing the operating margin to just 1.4 percent. Non-GAAP earnings per share came in at $0.33, well below the roughly $0.53 analysts had expected. Free cash flow turned negative by $1.1 billion as capital expenditures surged 142 percent to $5.8 billion, largely tied to accelerated spending on artificial intelligence, robotics, and autonomous systems.
The losses on capex were expected, as Tesla said it would be spending heavily in 2026.
Investors also reacted to lingering uncertainty surrounding key product timelines. During the Earnings Call, management reiterated ambitions for Robotaxi deployment and the Optimus humanoid robot, but offered limited new concrete milestones, renewing questions about execution pace that have long accompanied Tesla’s ambitious roadmap.
The magnitude of the decline places it among Tesla’s more severe one-day percentage losses since its 2010 initial public offering. Historically, the two largest single-day drops (split-adjusted) remain September 8, 2020, when shares fell 21.1 percent amid broader market volatility and valuation concerns, and January 13, 2012, with a 19.3 percent plunge during the company’s early growth struggles.
Other notable declines include an 18.6 percent drop on March 16, 2020, at the onset of pandemic-related market turmoil. Thursday’s move ranks roughly ninth on the all-time list but stands out as the steepest in more than a year.
Despite the short-term pain, Tesla’s long-term trajectory has repeatedly recovered from such volatility. The latest results underscore both the strength of its core automotive and energy businesses and the near-term costs of heavy investment in next-generation technologies.
SpaceX Starship just nailed something it’s never done before
Tesla’s Supercharger Diner probably just secured more locations
