Buying a Model S - Forget about resale value

Amagansett

3 year old S 85 72,000 Miles, Moonroof, Tech Package, Smart Air Suspension, Ultra Hi Fidelity Sound, Clear bra. Thought about upgrading to a 90D until I received an 35.5K trade offer from Tesla. The car may have miles but why should that matter with a transferable battery and power train warranty with unlimited mileage for another 5 years. This offer stopped me dead in my tracks. The car is pristine. No dings, dents, accidents or paint work. Don't get me wrong, the car has been thoroughly enjoyable with minimal service headaches, however, to be offered a paltry 40% of the original purchase price after 3 years is very unsettling.

robgorman_93517867

That's typical depreciation on a car. But remember, you are driving a "pristine" MS. You are very fortunate.

Unknown

That's about the norm for a high end car. The good thing is deprecaition from here on would be much smaller and, unlike ICE cars, you will not be driving a dirty old gas guzzler.

sambstl_98037816

don't think its too typical for other cars. Fact is, tesla depreciates a lot. A lot. A lot of 100k cars do.

frankie.fingers

I keep reading stories like this. Since this appears to be common, I'm wondering why the residual value on a lease is in the 60% range.

harry pippic

@Amaganset. you don't actually mention the model year, any car/fax reports, condition of the interior. Remember the vehicle has been on the road, you sat in the seat and held the wheel for three years and 72,000 miles , also with out the desirable auto pilot feature.
Considering the car should have averaged 12,000 miles a year, totaling 36,000 - 40,000. miles I, and most others would consider this as a rough vehicle. And that is the major reason for your conceived low offer, this is how the car business works.
You drove the car for at least 72,000 miles, enjoyed it, took the mileage write off, now go out and buy a new one with auto pilot, and stop whining.

SbMD

Sell it on your own, as long as it isn't too much of a hassle to you. You will always do better with a private sale than with a trade in.

Bighorn

@frank
Residual is artificially high because they inflate it by the tax credit to reduce monthly payments.

@harry
That's utter BS.

EdwardG.NO2CO2

You should look for a buyer because you should be able to come closer to this table privately.
EV retained values.......

Tesla retained value

Make...........Model.................1-Year Retention %
Tesla............Model S..............83%
Porsche.......Panamera S-E....78%
Toyota..........RAV4 EV.............71%
Honda..........Accord PHV........70%
Toyota..........Prius PHV...........69%
DATA SOURCE: NADA.

The top two-year results:

Make.............Model...............2-Year Retention %
Tesla.............Model S............71%
Toyota..........RAV4 EV............56%
Toyota..........Prius PHV..........54%
Ford.............Fusion Energi....46%
Ford.............C-Max Energi....42%
DATA SOURCE: NADA.

And the top three-year results:

Make..............Model................3-Year Retention %
Tesla..............Model S.............57%
Toyota...........RAV4 EV.............48%
Ford..............Focus Electric....32%
Chevrolet......Volt.....................31%
Nissan...........Leaf...................25%
DATA SOURCE: NADA.

This last table is particularly relevant. For context, the resale value guarantee assures that the value will be at least 50% of the vehicle base price, plus 43% of all options (including upgrading to a larger battery). Based on NADA's data, Tesla should have a cushion of about 7 percentage points after three years, on average.

The long and winding road
At the end of the day, all of the lease accounting and fuss about the related non-GAAP figures are much ado about nothing. They're simply byproducts of Musk reassuring customers that Tesla vehicles would hold value -- which they are.

harry pippic

@Amaganset. Have you forgotten about the $7,500.00 rebate you banked. Also try adding about a conservative .25 a mile over 36,000 miles = 9000.00. Let me see... $7500 (tax credit) + $9000 (excessive over mileage) =16,500 + 35,500 trade-in = $52,500. now are we getting close to what seems fair ??. Could be close to a 60%- 65% residual value, not too bad right ?
Now go out and buy yourself a new TESLA and enjoy life.

kwen197_92675118

Harry pippic: I believe your numbers are very accurate.

trixiew

2 things my dad told us over and over when we were growing up. Don't buy anything but a house on credit, and cars are a bad investment.

SbMD

To help emphasize @EdwardG's point, here is the table from the NADA that he has reproduced in text, with dollar values:

<img src="https://farm6.staticflickr.com/5749/22606440470_406d71a0e5.jpg&quot; width="500" height="197" alt="">

aaronleider_93563909

You'll do much better with a private sale

inconel

Wow I did not know that a LEAF depreciates that much!

rxlawdude

I can attest to the Plug-in-Prius one year depreciation of 30%. Don't ask me how I know. :-)

Pungoteague_Dave

The issue is Tesla's 25% margin requirements for CPO's. They would resell your car for $45k after refurbishment, with a renewed warranty. Similarly, they offered me $49k for a 19-month old S85 with 33k miles when I upgraded to my P85D. I sold it directly for $63k (in Nov, 2014). Still a tough hit - a $95k car lost $32k in 1.5 years - a 34% drop. It is the nature of these things. Next year a '12 or early '13 S85 will be worth $25k on trade. The fact is that you lose the value of a new fully-optioned Prius in each of the first two years. There is no way to financially justify a Tesla, or any luxury car, despite lots of attempts and rationalization around here. The numbers quoted are correct - Tesla is leaving a margin and cost offset in making you a legitimate offer - a buyer of your car will get more from Tesla than you can provide directly in the private market.

RVC

I never factor in the resale value when buying a car. One less reason to pout.

TaoJones

Sounds like we pay approximately $1/mile to enjoy our rides.

Mas o menos, the effects of applicable rebates, tax deductions and/or credits notwithstanding.

Anthony J. Parisio

When buying an inventory car from tesla they take off 1% per month and one dollar per mile. If we use that means of calculating your car would be worth even less. I'm not saying that this would be accurate at all. What has been written abouve seems to be much more accurate. I hate trading in a use cars! They never seem to be worth what they should be. First and foremost we always have to remember that the buyer only wants to pay wholesale value.

tes-s

Exactly!! If you are concerned about resale value, don't buy the car - lease it.

A car is not an investment. It is an expense.

Silver2K

check your car's trade-in value on KBB, that's what they go buy.
as per kbb for a 2013 with your specs

43-50k excellent
42-49k very good

2013

Silver2K

those are trade-in values

http://www.kbb.com/tesla/model-s/2013/sedan-4d/?category=&intent=trade-in-sell&pricetype=trade-in&condition=very-good&persistedcondition=very-good&options=6193658|true|5012913|true|6193657|false|5013021|true|6193664|true|5012866|true|6193662|true|5012993|true|5012999|true&path=&vehicleid=378824&mileage=72000

drax7_12045

Yeah right, buy a new tesla and move to sag harbor

Tony_93326380

There is a solution if you are worried about it ... just keep it and drive it into the ground. Teslas are really solid cars with simple drivetrains ... they 'should' last far longer than an ICE. I'm hoping to see at least 500,000 km before my 8 yr warranty runs out. It won't owe me a thing at that point

eye.surgeon

LOL. have you ever owned a luxury car before? 40% at 3 years with DOUBLE the typical miles, plus your tax rebates-- be grateful for 40%. Try selling a 3 yr old 7 series with sky high miles. It's almost worthless.