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Tesla Trade-In Value Plummets Overnight! OUCH!

Tesla Trade-In Value Plummets Overnight! OUCH!

Had been considering an upgrade to a 100 Model S or X. Checked a couple of months ago and the trade-in offer for my 2015 P90D was $78,000+ from Tesla. As it was below the current payoff I chose to hold off.

Figured with the drastic price reduction recently for the Performance models, I'd explore it again, expecting a new offer to be maybe 2% less than the old one. Car is less than two years old, doesn't need tires (still have the original tires & wheels in brand new condition sitting in the garage) and not a scratch on the car. Had an original price of over $130,000. Car has 25,000 miles and they came back with a new trade-in offer of $63,200. $15,000 (19%) lost in two months, wow! Over 50% loss in less than 2 years, bigger ouch! That's less than Tesla's price guarantee of 50% after 3 years, but you can't take them up on that deal until close to the 3 year mark. Good news is, I can't lose anymore on the car. Their trade-in price offer is well below the residual value in my lease contract, so keeping it for the next year and a month, I'll actually gain significantly if I just turn it in after 3 years. This coincides with the price reduction for new cars so I guess it makes sense. Sucks for existing owners though to have the value of their cars plummet so quickly. So much for Tesla's holding their value better than most cars. I love my car and would have upgraded only as a luxury. Fortunately I have no problem keeping it for another year.

Assuming this will have an impact on the resale market as well. Had seen cars similar to mine priced recently in the $90,000 range, but now am assuming those prices will be hard to get. Either that, or Tesla just expects to make $25,000+ on trade-ins. With my 2013, I remember them saying it was something close to an 8% difference (Trade-in offer versus what they will sell it for) when I got rid of my first Tesla. Tesla has a history of getting people to upgrade from older Model S cars to newer ones. While the new pricing should assist in bringing new buyers into the Tesla family, likely will hurt existing owners that would have otherwise upgraded early. Good for Tesla, not so good for existing owners. I haven't looked lately, does Tesla even still offer the 3 year price guarantee? While I've never doubted leasing my car instead of buying it (my belief at the time being that with as fast as Tesla changes these cars and pricing, with no meaningful model years, that it was impossible to determine what the value would be in 2, 3 or 5 years), but now I'm even happier that I chose to lease it. Now it will be the banks problem rather than mine when the time comes. US Bank does have a history of offering to sell you the car at the end of a lease for significantly less than the Residual Value. Didn't know if that would hold true on the Tesla being that previously, resale values held up pretty well, but with the new pricing for new cars, that will likely be the case. Will consider purchasing the car if their offer is right. My last lease with them, they offered me a sale price at 45% below the residual value on that car. Don't expect it to be that low for the Tesla, but if they come back at $50,000 or so, for a 3 year old car with around 36,000 miles on it, would be hard to pass up. Based on their past history, that's not unreasonable to expect. Was going to get a Model 3, but looks like the one I want it won't be available until late 2018 and it will be well over $50,000, so keeping what I have for the same price would be pretty attractive. Add in the $10,000 rebates, $20,000+ price reduction from the residual value and my $130,000+ car ends up being $100,000 instead. Certainly better than if I had bought it brand new for $130,000 instead of leased it.

patrick40363 | September 5, 2017

Why are you trying to trade in if you are leasing? Have someone takeover your lease and lease another one.

tes-s | September 5, 2017

With the price drop in the new cars, and price drop in your trade offer, what happened to the net difference the upgrade to the 100 S or X you were looking at would cost?

ST70 | September 5, 2017

In America we have this thing called "Supply and Demand" ....and we have this "google" thingy somewhere I hear

KP in NPT | September 5, 2017

Gawd.

stan23 | September 5, 2017

Sell your car to vroom/shift. They will offer you more.

rjt | September 5, 2017

I was think about upgrading to a 100D. Tesla gave me an offer of 28k for my model s (2014) with AP1. I do have 90k miles on my car. I am going to hold on to it. Dont think it can go any lower in value . :-)

tes-s | September 5, 2017

I guess that puts a ceiling on my 2013 with AP0 and over 100k miles... :)

tes-s | September 5, 2017

I guess that puts a ceiling on my 2013 with AP0 and over 100k miles... :)

Sleepydoc1 | September 5, 2017

Keeping it until it dies or they take away my license. Doesn't matter what it is worth. Ok, maybe a new one in 12 years when the upholstery is dated and I would like some new safety features in retirement.

avesraggiana | September 5, 2017

Based on absolutely no data I can bring to bear, I’m guessing our family’s 2017 Model S75D, built before the improved DUs, for which I paid a good deal extra for what now comes standard, with about 8000 miles since late March, is worth less than $60,000. Quite a come down from the $98,000 that I paid, brand new.

It made no financial sense to pay so much when I first bought the car, and it makes even less financial sense to trade in and step up to a P100D, the Model S I really, really want.

I bought the Model S not because it made financial sense to do so, but because I fell in love with it. Am I willing to burn myself even more by upgrading to a P100D? Probably...

2015P90DI | September 5, 2017

@patrick40363 | September 5, 2017
Why are you trying to trade in if you are leasing? Have someone takeover your lease and lease another one.

--------

Tesla calls me constantly (at least once a month) about upgrading. I guess that means they're good at their job since they actually got me to consider it. I had ignored most of the calls up until a couple of months ago. To do it through Tesla, the only way they'll do it is with a standard trade and buy/lease deal. So while they try to sell you on "upgrading", it's really not. They're just trying to sell you a car. An upgrade would be, get me out of my lease, charge me the difference for the new car and send me on my way. Technically it could be considered "upgrading" but the same could be argued if I "upgraded" to Bentley for $300,000 (I know, not all will agree that it's an upgrade, just making a point).

It's honestly not a big deal. Had no intention on getting out early. I'm happy with what I have. Just looked at it because they kept calling and figured if they could make it worth my while, I'd consider it. For me, that would have been, getting me out of my lease and signing a new lease for another three years. Otherwise, no point for me to take a $25,000 bath on my car when I can wait one year and either get a much better deal on it or walk away from it at no cost.

Tropopause | September 5, 2017

OP,

Considering most of your threads/posts are rather negative, I'm curious why you don't subscribe to the "Fool me once, shame on you. Fool me twice, shame on me." philosophy. I've read your statements that you'll never buy another Tesla again. Must be a glutton for punishment.

2015P90DI | September 5, 2017

@Tropopause, you're one of the one's I refer to in many of my threads. People saying stupid things just because I might say something that even hints at criticism (not the case in this thread). Then you try to justify it with completely false statements. Point me to any post where I've said "I'll never buy another Tesla again". It doesn't exist. I am a realist. I love my car, but that doesn't mean I have my head up Tesla's ass. I will criticize when warranted, not for the sake of doing so, but in hopes that enough other realists will speak up and do the same so that Tesla can improve as a company. Happily, Tesla has changed in many areas that I've criticized them and for the better.

Those that choose to live in Fantasy Land and by the belief that Tesla is so perfect and can do no wrong, are actually doing harm to the company. Tesla sells a fraction of a fraction of a percent of cars on the market. In five years, they've done very well, but there's still 99+% of people out there that they haven't convinced. I've referred friends to Tesla, however have also picked up referrals from random people that ask for my referral code simply because they appreciate my candor. I've learned there are a select few that apparently live on the forums daily and do the same thing, choose to bash people for saying anything remotely negative about Tesla. Typically I now ignore their posts because it's just repeated gibberish that I see in thread after thread, and simply, a little sad. I only respond to this one because now you've taken it out of context and chosen to expose yourself. We live in a world were freedom of speech is a right. Don't like what someone has to say, too bad. So go back to your cocoon where the world you live in is perfect and I'll continue on in reality. Have a wonderful day!

Anthony J. Parisio | September 6, 2017

2015P90DI,
I get what you are saying. I have defended Tesla because I realize they are a new company just getting started. Also many of the leaders never build cars before. Until Model 3 there are things they just could not do as well as other car companies. For example coat hooks. If one goes to have 50,000 interior parts made by a supplier it will be a tier two supplier at best or worse is has to be done in house. Tier one wants much larger orders. In this process if you leave out a detail like a coat hook it will be ridiculously expensive to have new modes made, etc. So there will be no coat hooks until sales justify a retooling. There are so many things that volume and a need to grow (which include the super charging network which no other car company has done) just make it difficult for Tesla to respond as other establish car companies do. In this infancy stage I just can't be to critical of them. Harsh criticism is also bad for sales and so it is harder to reach larger volume.

So while I know you think you are helping them (to some degree you are) it is not the path I chose at this time. When they passone million cars sold it will be a different story. Until then I chose to cut them some slack. Also I am shocked at how fast they have grown to responded to the customers needs and desires. I feel they do better than I have expected.

Rocky_H | September 6, 2017

Oh, jeez, this is the @tes-s method all over again:
Quote: “but there's still 99+% of people out there that they haven't convinced.”

You’re talking about changing $130,000 cars like changing your socks, and you think the vast majority of car buyers aren’t buying these cars just because they “haven’t been convinced”? How totally disconnected from regular people’s financial reality can you get?

Quote: “So go back to your cocoon where the world you live in is perfect and I'll continue on in reality.”

HA HA HA! Oh, man, that was just too perfect to put right after that.

I know this wasn’t the main point you were talking about, but it was just so freaking funny, I couldn’t resist pointing it out. As to your main point, Tesla trade in offers have always been ridiculously low and have approximately squat to do with real value out in the used car market.

mot | September 6, 2017

From the comments in this topic, the consensus of this group is that a lease is the smart way to go to get a Tesla.

Correct?

ST70 | September 6, 2017

not mot

SO | September 6, 2017

For me, a lease would not work. Already I have 11,000 miles in 6 months of ownership. I drive more than I ever thought I would because I enjoy driving the Model S.

carlk | September 6, 2017

@mot Not necessarily true. Leasing may be a good way to go if you want a new car every three years but on the other hand you won't have the option of to drive the car for 6~7 or more years which is always the less expansive proposition. I was thinking of getting a model 3 because of AP2 but my three and half year old pre-AP1 P85+ that has been a perfect car for me feels like even better now. I likely will stay with it for a longer time maybe until the Roadster II comes out.

dsteal | September 6, 2017

I think the consensus is that you either lease or you drive it until the wheels fall off. That is the case with any car, but maybe more so with Tesla because of the questionable resale value after a few years. I say questionable because I have seen some people say that the resale value is better than ICE cars and I've seen threads like this that show a horrendous trade-in value after a couple of years. I'm keeping mine for at least 100K miles and longer if it doesn't have problems. If I can amortize the cost of the car over 10-15 years, it won't be quite so expensive.

Bob12345 | September 6, 2017

Wait until they hit that 8 year mark and the battery has no warranty.

inconel | September 6, 2017

Not necessarily to keep longer than three years either. If you like to change your cars every year or two buying is also more flexible.

carlk | September 6, 2017

@dsteal Resale value of Tesla is indeed better than other brand cars of the same level for the simple reason that if a 15' Tesla is better than a 15' Merc or BMW in 2015 it will still be better in 2020 regardless what cars Tesla makes in 2020. And the Tesla will be more better than others because it will be receiving OTA updates during the years. One more advantage for used Tesla is the fuel cost. A buyer of $80K car may noot care that much of gas cost but when you buy a $30K~$40K used one that will become a more significant factr. This is one issue that affects resale value of luxury or performance cars but it does not affect Tesla's.

The op is pure hogwash with no fact to back it up.

dsteal | September 6, 2017

@ inconel If I sold my 75D in 2-3 years, I suspect I would get 50% of the price I paid, if that. That would be really, really painful. I can't afford to do that. So I will keep it as long as it makes sense.

@Bob12345 The battery warranty is a very good point. If I go beyond 8 years, I might as well drive it until the wheels fall off.

I just hope to come out ahead of the cost of a lease by keeping the car for a long time.

To the OP, if you leased it you don't need to worry about this stuff at all. Drive it, enjoy it and then turn in your keys when you're done. Pick up the new model with the latest and greatest technology and repeat. Weird that Tesla calls you to upgrade while you're on a lease.

TeslaKU | September 7, 2017

@DSTEAL - I have only had mine for a month, so I haven't received any upgrade calls. It is my opinion that Tesla has based their model on turn/selling new cars. If they can get a percentage of leased vehicle owners to "upgrade" that is just extra money in the bank.

I had an ICE dealer do the same thing because they needed to be the #1 dealer in the region. They also got a kick back from the bank for the loans. They moved me to the exact same car, but a year newer. I put nothing down. They structured the loan so that I had the same payment and just added one year on the new loan. I drove in with an 11 month old 2011 for a free oil change and drove out with a brand new 2012.

tes-s | September 7, 2017

Teslas depreciate fast because they are technology, and Tesla is constantly making improvements.

Most cars change very little each year, and even when they do a model referesh it is mostly cosmetic.

Tesla hardware is constantly being improved. Autopilot, for example, has 4 major hardware verisons in 5 years of production: AP0, AP1, AP2, AP2.5

carlk | September 7, 2017

tes-s But high end cars all depreciate fast. A $100K car will drop 10%~20% in value the moment you take it out of dealer's lot. In addition like I said a Model S you buy today will still be better than a, say, BMW when both are five years old regardless of what Tesla cars is like at that time. The constant improvement of Tesla will affect all cars not just Tesla's.

Rocky_H | September 7, 2017

@mot, Quote: “From the comments in this topic, the consensus of this group is that a lease is the smart way to go to get a Tesla. Correct?”

No, not “smart”, but a bit less dumb.

(1) Smart: Buying a car and keeping for a decent amount of time
(2) Dumb: Leasing
(3) Really dumb: Buying and selling every couple of years

@dsteal, Quote: “I say questionable because I have seen some people say that the __RESALE__ value is better than ICE cars and I've seen threads like this that show a horrendous __TRADE-in__ value after a couple of years.” [my emphasis added]

My gosh. How many times do we have to keep repeating this? That is because “resale value” is not the same as “trade-in value”.

dsteal | September 7, 2017

@Rocky_H Sheesh. You're getting technical on me. Of course I can sell a car for more than the trade-in. I should have been consistent in my statement and used resale/trade-in in both places in the sentence. Having said that, resale and trade-in values are tied to each other. A car with an excellent resale value will also have an excellent (but lower) trade-in value. I'm done stating the obvious now. :)

Pungoteague_Dave | September 7, 2017

from OP: "Either that, or Tesla just expects to make $25,000+ on trade-ins. "

Yup. Tesla has the same 25-30% gross margin targets for every revenue line item, including CPOs. Don't like it? Sell your car to Car Max. That's what I did.

Mike83 | September 7, 2017

Sorry AP1 owners but everybody wants AP2.

TeslaKU | September 7, 2017

@Rocky_H - I would hardly say leasing is DUMB. Everyone has a different financial and tax situation. Telsa leases are not very favorable, but there are 3rd party leases that are. Dumb is applying your situation to everyone else and then judging.

Pungoteague_Dave | September 7, 2017

Keep your stinking AP2. I promised that I'd upgrade when AP2 reached parity, and remain seriously committed to that. Not gonna happen. Ever. How's that automatic wiper thing working out for ya? That thing you'll never, ever have? In fact, every Model 3 is and will be superior to your silly, Mr. Magoo AP2 Tesla. Mike's got Model 3 envy already, but his car has depreciated so much due to its near-sightedness that an even trade isn't possible.

Mike83 | September 7, 2017

PD don't get mad. I know its sad. Be happy, don't worry. It will all be fine.

Pungoteague_Dave | September 7, 2017

My daughter-in-law said yesterday that she'd never heard of Mr. Magoo. The world is rapidly becoming culturally impaired.

https://www.youtube.com/watch?v=t8GTHXTEvIc

Mike83 | September 7, 2017

I like Mr. Magoo. Thank you.

Rocky_H | September 7, 2017

@kevinu69, Well, "financial and tax situation" doesn't have much, if anything, to do with it. Notice what is the same between those last two I mentioned? It's getting another new car every couple of years, which loses huge amounts of money in depreciation. I suppose you could say that it is my opinion that choosing to lose large amounts of money isn't smart, and I'm OK with that.

tes-s | September 7, 2017

Sorry AP2 owners, but everyone wants AP2.5. Well, until AP3 comes out and then they will want that.

Smart: buy used

Me (not smart): AP0 and will likely keep until it dies. Hoping for a 400-mile range replacement that will charge to 300 miles in 15 minutes. FSD and coat hooks would be a bonus.

Silver2K | September 7, 2017

Pungoteague_Dave

As per Christian Newcomb (CPO advisor), Tesla make 7% on CPO vehicles.

The issue with tesla offers are based on what Tesla thinks the car is worth not the general market. Also over 99% of the market has no autopilot negating the value of autopilot to the general public. Autopilot is a big deal to current owners and a few in the general public, because they've never had the system and couldn't care less about it. This was agreed upon by Christian to me after I mentioned it to him.

RPMTESLA.COM | September 7, 2017

Sell it on your own. Tesla won't take a trade unless they can make $10,000 or more on it. Sell it privately and your warranty transfers, let the new buyer get the $4,000 extended warranty. Tesla should be in the business of selling cars, not making $10,000 on every trade !! RIGHT ???

TeslaTap.com | September 7, 2017

After 8 years, most luxury cars are going to need some very expensive repairs - from timing belts, water pumps, fuel pumps, mufflers, etc. Stuff seems to go wrong on older ICE cars at an alarming rate that greatly diminishes their value.

The based on the number of owner that have little range loss at even 200K miles, I don't think the loss of the 8 year battery warranty will have much effect to the resale price. No way to know until it happens though.

RPMTESLA.COM | September 7, 2017

7% on CPO's no way !!!! try 15% which is $10,000 on a $75,000 car.

MAPC | September 7, 2017

To those that insist that leasing is a bad deal, they may not be in states where there is a sales tax benefit. When buying new, you pay sales tax on the entire purchase. When leasing, you only pay sales tax on the Cap Cost Reduction and the Monthly Payment.

On a $100K car, that means you are only paying sales tax on approx. $40-50,000, depending on the terms and length of your lease. In California that amounts to a $5,000-6,000 savings! NOT INSIGNIFICANT! :)

In CA you also don't get any sales tax credit when you trade in so you lose there too.

2015P90DI | September 7, 2017

Yes, clearly selling the car private party or maybe to Car Max is the smart choice and would certainly bring a higher price.

And two years ago, the margin Tesla priced their cars at was in fact 8%. Tesla has a unique way in which they determine pricing for used Tesla's coming in on trade. It's based on percentages of the original price, age and mileage. In 2015, when I purchased my car and considered trading in my 2013, they told me the margin was 8%. My offer on my 2013 came back at around $51,000. 2013's on their website were priced at around $55,000. That was then, this is now. Clearly back then, they were more interested in getting more people into the Tesla fold, thus weren't looking at making huge profits on trade ins. They also needed inventory at that time. It helped get existing owners to upgrade and provide a lower price point to get more people into a Tesla. Based on the huge reduction in price of the new Performance Models, large list of new inventory cars and CPO cars, they no longer have that need. So clearly their desired profit margin has increased significantly. So, the low price has to do with increased margins and significantly reduced pricing on new cars.

The 8% margin was confirmed a month later when my dad also upgraded from his 2014 Model S. I was actually surprised at how much they gave him. His car had higher mileage. They paid him $56,000+ on trade and the car was on their CPO website inventory list a month later priced at $61,300, almost exactly 8% more than what they paid him for the car.

I had previously checked the CPO inventory list and pricing for similar cars to mine were around $90,000 up to $93,000. Looking at the current CPO inventory list. Now, I see P90Ds' priced from $80,700 to $90,000 for a car with far fewer miles. They all have the $4,500 wheel option mine does not. Based on current inventory and mileage and options, looks like they'd price my car around $85,000. So that reflects about a 22% margin from their offer. Certainly much higher. Others that have actually traded in their cars and then seen them on the website would know better if 22% is consistent with what they got for their cars. I have a feeling the margin is higher right now since the major price reduction just kicked in and they likely don't know what the impact on CPO's will be in the market place. When I got the $78,000 offer a couple of months ago, pricing on the website was around $90,000 for available similar CPO's. That reflected only a 13% margin. Certainly more reasonable based on the 8% margin 2 years ago. Two months later, it's 22%. So again, pretty sure, the difference is due to the pricing change more than anything. There are several P85D's available for right at $80,000, certainly lower than I remember them being a few months ago.

Just ran my car through Kelley Blue Book. Trade in value through them is at $79,000. Probably about 5% more than what could be expected from Car Max. Certainly much better than what Tesla is offering. Probably be lucky to get much more than $80,000 through a private party sale. As noted, I'm happy to keep it. Love the car. Not an ounce of trouble with this one other than a finicky front sensor that occasionally goes off for no reason. Being that AP2 is no better than AP1 and likely won't be in the next year, there's nothing that I feel like I'm missing out on with my current car versus what I'd get in a new one. I will absolutely want AP2 once FSD is functional, but until then, none of the other changes Tesla has made are enough to entice me. If the price was right, would have done it now, but it wasn't. But it is nice to see that inventory P100D's can be leased at about the same amount I'm paying for my lease. A few months ago, an equally equipped P100D showed a lease price at over $2,200, before tax!!! At that pricing, I was thinking this one could, sadly, be my last. Hopefully the current pricing holds for another year until I'm ready.

2015P90DI | September 7, 2017

And for me, leasing is the smarter and cheaper option. It's simple math.

The lease price and payment price were pretty close to the same (and still are). Difference being cash out of pocket to start was about $13,000 less. When I did the math, based on the 50% price guarantee Tesla had at the time, from the time I walked in the door until the time I sold it for 50% 3 years later was $8,000 more than leasing the car and turning it in after three years. For me, I'm close to mileage either way. The difference is, I save more being that my entire lease payment is deductible (big difference).

For those that drive a lot more miles, leases don't make as much sense. But again, comes down to the math. 25 cents per mile or added loss in value due to higher mileage. What's higher? For those that want to keep a car for a long time, certainly doesn't make sense. But then again, based on my past experience with US Bank, they've offered to sell me the car at WELL BELOW the residual value. Don't know if that will be true on the Tesla, thinking it's a much higher possibility now based on the price reductions, then I could save another $20,000 over what I would have bought it for. Say they're willing to sell me the car for $50,000, between that, paying tax for only 3 years and then on only $50,000, I'd end up owning the car free and clear for about $25,000 less than if I had bought it to start with.

I was originally one that was 100% against leasing. Then I wised up, did the math and learned the error of my ways. Haven't "bought" a car since.

Further advantages to leasing, never have to worry about it going out of warranty. Never have to spend $5,000 for an extended warranty. Never have to worry if the value suddenly plummets (as just happened), don't have to worry if you charge to 100% every single time or if you launch it hard from every single traffic light (I do it about once every two months LOL, but peace of mind is still there). Hassle free to get rid of the car (don't have to deal with selling it) and considering Tesla is a Technology Car, never get too far behind on today's technology. How often do you change cell phones? At a much greater extreme, Tesla somewhat falls into that category.

TeslaKU | September 7, 2017

@2015P90DI - +1. Rocky_H is just imposing his situation on everyone else. If it turned out the car was more trouble than it was worth and had constant maintenance issues, just hand the keys over and say, goodbye. I think there may be a couple of owners in this forum that wish they were on a lease. It all depends on the leasing program and your specific financial and tax situation.

inconel | September 8, 2017

+2 We can have quite different utility functions, income levels, priorities in our current stage in life etc.
It is not very smart to assume that everyone is in a similar situation.

bob | September 8, 2017

2015P90DI, I bought a 2013 85 CPO and then immediately after regretted buying a CPO and decided to buy new. I paid $52,000 for it and they offered a trade-in at $43,500. Looks like their margin is now 16%.

Silver2K | September 8, 2017

does you 52k include tax?

Silver2K | September 8, 2017

your

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