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Depreciation

Depreciation

Anyone have feedback on this article?

https://seekingalpha.com/article/4078314-tesla-resale-value-myth

I'm concerned about the resale of the model 3.

DoctorU | 01. Januar 2018

I plan on keeping mine for 10-15 years. Depreciation isn’t really on my mind but my current leaf that I’m leasing is a 30K car that now can be bought for 10K. Electrics seem to drop faster since they are improving so rapidly.

Ross1 | 01. Januar 2018

Depreciation is the lesser part of the article

Madatgascar | 01. Januar 2018

Another Sinking Anchor article concluding “sell short, Tesla stock is a disaster waiting to unfold.” They argue that better battery and charging technology and higher charge rates are on the way, therefore Tesla resale value will drop. Compared to what? The ICE dinosaurs that will be rendered totally undesirable and obsolete by those same innovations?

stevea137 | 01. Januar 2018

Well, Just looking at that "authors" past history, it is pretty clear what his attitude of Tesla is. Article after article on any negative tidbit he/she can find, but not followup on the exact same topic a month later when the issue resolves or reverses (for example, M3 parts order slow down (sell! sell! sell!) vs M3 5k parts per week ASAP! (*crikets*)).

The author has a couple valid point, but then a lot of FUD to try and bolster his short position.

Regardless of that article; I don't think these early run M3's will have great resale value in 3+ years. Tesla's aren't like typical automobiles where there are clear model years. Instead, Teslas just evolve over time, getting better piece by piece. Our first run M3's will be the most primitive, with the lowest resale value.

The value of a Tesla should be evaluated partially as a car and partially as a piece of technology (and we all know how the value of technology goes the instant you walk out the door with it).

Just my perspective. Not gonna stop me from buying one though ;)

Madatgascar | 01. Januar 2018

@stevea137, in 3 years Tesla may not have caught up with its Model 3 backlog, which is going to keep growing once people see how great the cars look and perform. Nothing drives resale value up like the fact that YOU CAN’T GET A NEW ONE without waiting in line for a year because the demand is off the hook, even though the company does zero advertising.

stevea137 | 01. Januar 2018

I just had to come back and emphasize: *Don't believe everything you read on the net* (especially when it comes to investing advice, lol).

Going back further on this author "EnerTuition" (why don't they want to use their real name?), this person has 127 articles tagged TSLA, more than all his other articles combined, going back to 2014 beginning with solar city. A quick scan and I would estimate at least 98% are negative towards Tesla and probably 50% predicting Tesla's imminent death.

After reading his prediction on M3 resale value, the only reasonable conclusion then would be M3 resale value will be excellent ;)

keichhor | 01. Januar 2018

Depreciation in the first few years was great, but not so much anymore. I am trading in my Model S for a 3 and they are only giving me 26.3K. 2 years ago they offered my 44K to trade in for a Model S or X.

I don't care that much, but it is interesting how much it has fallen in value. Model S 60 still gets 202 miles on full charge.

Haggy | 01. Januar 2018

These people predicted in 2014 (and many other times) that the Model S had achieved market saturation and claimed that Tesla had thousands of unsold cars on lots somewhere. They are wrong time and time again. The demand for the Model S and X is so high that inventory cars are virtually non-existent. EV-CPO shows 10 inventory Model S cars for the entire US. They show another 10 used in the entire US. At the end of December, the website was showing me March delivery for a potential new Model S for Fremont delivery. Demand is not going away. What will go away is the tax credit. People won't buy a used car for $5000 off when they can get a $7500 tax credit. They will buy one for $5000 off when there's no tax credit.

The buyback guarantee argument is a red herring. Tesla offered it so the very first customers wouldn't feel that they were taking a big risk, since Tesla had to set aside money for it, effectively, by having it as a liability on the books. Because of that, Tesla wanted to get rid of the program, not because people were taking them up on it, but because it wasn't needed. Tesla would have dropped the program in 2015 except they were afraid that people would see it as a sign of a lack of confidence. People realize that nobody is taking Tesla up on the offer because they can get much more for the cars used. You can look up a three year old Tesla and see the market value. Tesla is doing quite well.

Supercharger costs are so low that out of an approximately 65 page 10-K, those expenses don't even warrant a line item. The average owner uses about 400kWh/year of supercharging, and at commercial rates, that works out to about $50/year per vehicle, not counting the fact that Tesla is installing more and more solar power. Compare that to the thousand dollars per vehicle spent by the competition on advertising, including at dealerships, and it's a bargain for Tesla, given the marketing value. Not to mention Tesla charged thousands of dollars per vehicle for the so-called early vehicles mentioned in the article. Or customers got it for "free" with an upgraded battery. Tesla started including it with the base Model S because of how little it costs. The only real consideration is not wanting to flood the supercharger locations with half a million new cars per year.

Tesla did the opposite of technological obsolescence. My three year old Model S has essentially all the software features of a new one. Granted that won't be the case as new EAP features come out, but the car has improved a lot over the years. That's the opposite of what the article says.

The line about the effect on recent buyers of 60 and 75 batteries was nothing but a blatant lie. Tesla did drop the 60 but dropped the price of a software upgrade for upgradeable batteries, so owners of those were even better off than when the 60 was still in production.

The part about charging speed is more nonsense. Most owners charge at home. Whether my car finishes charging at 1 am or a new technology could have it finish by midnight, I won't see the difference. I can make a 400 mile trip in my Model 3 with a single stop for lunch. Faster charging won't speed up the trip.

The part about autopilot hardware is more nonsense. A used Model S or X will always be more up to date and have better features in that respect than a used car from any other vendor. Indeed, those features will work substantially better than they did when the cars were new.

Tesla never had a poor reliability record. Consumer Reports rated the Model S as below average (but not well below average as "poor" implies) two years ago. The following year they were deemed reliable and the one after that they were rated as above average reliability. The so-called reliability issues won't affect used cars in a big way. I had one of those supposedly faulty drive trains. In reality it had noisy bearings and was swapped out for a 2016 version. It's not like another car with a poor engine design where maintenance is only temporary.

Tesla decided long ago not to run the service centers as a profit center. They didn't think it was right to profit off of their own mistakes.

I could go on but I think you might get the point by now.

carlk | 01. Januar 2018

Op I'm going to call what you are, a troll, if you post one more SA aritcle again.

Rutrow | 01. Januar 2018

Funny that this post is right next to another post about how somebody sold their $60,000 Model 3 for $68,000.

Depreciation is apparently = negative $8,000.

jordanrichard | 01. Januar 2018

I really don’t get this serious pre-occupation with depreciation. People are in net effect selling the car before they even get it.

Cars that have generally less depreciation, cost more from the outset anyways. So what are you gaining?

ReD eXiLe ms us | 01. Januar 2018

A 2017 or 2018 Model 3 doesn't have to hold its value compared to a 2020 or 2021 Model 3. Like running from a bear, the Model 3 just has to stay ahead of Acura TLX, Alfa Romeo Giulia, AUDI A4, BMW 3-Series, Buick LaCrosse, Cadillac ATS, Chrysler 300, Genesis G70, Infiniti Q50, Jaguar XE, Lexus IS, Lincoln MKZ, Maserati Ghibli, Mercedes-Benz C-Class, and whatever else happens to be seen as a direct competitor when it comes to residual percentage of remaining valuation three, four, or five years from now. The others will get to discuss breakfast, lunch, and dinner plans with the bear.

PhillyGal | 02. Januar 2018

I won't even click on an article by Seeking Alpha regarding Tesla. I suggest you adopt the same.

andy.connor.e | 02. Januar 2018

A piece of advice, dont take seeking alpha articles so seriously. They are just people who say alot of things that they want to hear themselves say. Mostly based completely off opinion and speculation. Its not actually a news site.

carlk | 02. Januar 2018

ReD +1000. Five years old Tesla will have most software similar to a brand new Tesla and likely still better than a brand new Merc or BMW at that time. Especially important for people who buy used cars is the large fuel saving. That becomes an even bigger factor when cost of car becomes lower. That's the reason why a six or seven years old Corolla can sell for more than a BMW 3 or Mercedes C of similar age. The model 3 would be better than all of them in that regard.

Shock | 02. Januar 2018

Seekingalpha hates Tesla, so take this all with a grain of salt. I agree in the broad sense that assuming model s depreciation will apply to 3 is probably short-sighted.I think these will hold value better than the Leaf (which has a laughable depreciation rate), but not as well as the S.

SamO | 02. Januar 2018

I have a private sale offer of 40% of the original sale price for my 2013 S60 with 90,000 original miles. The battery has 95% of original range. No squeaks or rattles. Some wear to the leather, a handful of tiny scratches on the doors paint and at least another 200,000 or so miles of life left in the car.

#DriveFree

SamO | 02. Januar 2018

correction: 42.1%

SamO | 02. Januar 2018

If you remove the federal and state credits, I'm getting 47.9% of original out of pocket.

andy.connor.e | 02. Januar 2018

Credits dont affect the price of the car out the door. You should never value your car after any credit/incentive. The cars value doesnt change because of financial incentives.

ebiggs | 02. Januar 2018

Buying new cars has never been a financially sound thing to do... don't expect Tesla to be any different. The only way to mitigate the financial stupidity of buying new cars is to either a) make a ton of money such that a new car isn't that big of a deal to you, or b) hang onto it for 10-15 years such that the initial drop in value is absorbed over that entire timespan.

andy.connor.e | 02. Januar 2018

@ebiggs

I say the same thing. I'll be hanging on to my Model 3 for a very long time. And the best part about it, is the constant software updates. Kind of keeps the car "in the times" as the years pass, keeping you from feeling like the car is getting outdated.

carlk | 02. Januar 2018

It's all that better if there are a lot of cheap used Model 3, or for that matter cheap used Model S/X, on the market although that is not going to happen.

Garyeop | 02. Januar 2018

I always buy used cars. My last new car was a 1987 Camry which I drove for 175k miles. I want the coolness of the model 3 but plan on it being my last car. I should be able to get 200k out of it. Yes battery tech will get cheeper. Yes competitors will push down prices. I can buy one now, or a used one in 3 years. I choose to enjoy one now.

Haggy | 02. Januar 2018

What's nice about SA articles is that they work out to be a FAQ, in a perverse way. They essentially ask whether a list of negative qualities exist, and then anybody who responds can easily refute them. Reading the comments in SA articles pretty much points out the errors anyway.

If somebody wants to post about an SA article, that's fine with me. If there's legitimate debate, then we might as well debate it. If it shows that it's nothing but short sellers trying to make a buck, then let people know that's what's going on. I have no problem with short sellers. If anything I should be happy that people are willing to buy puts on Tesla because I've made more money writing them than I have on my long shares. I can't help it if people want to be irrational or downright spread misinformation but I do feel bad for anybody who is misled by any of this. But I'll gladly take money from put buyers who want to be dishonest about things.