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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.

avesraggiana | September 13, 2017

I financed $98,000 for our family’s 75D. I’m making overpayments on the loan such that in thirty-six months, I’ll owe about $28,000. Assuming we drive the car 15,000 miles a year, I’m fervently hoping that our by then three-year old, 45,000 mile 75D will be worth more than $28,000.

Here’s hoping...

sroh | September 13, 2017

@avesraggiana,
Unless there are major issues with your car, there is no way your car will be worth less than $28K! For the next 5+ years, there will be a built-up demand for the Model S that will allow them to retain value. I think the main issue/concern is the very quick depreciation that happens in the first 1-2 years of ownership. As others have said, this is common for all cars, but it may be more pronounced with Teslas, now that supply of Model S seems to have caught up with demand.

Silver2K | September 13, 2017

My experience shows me tesla vehicles lose more value within tesla's realm, not in the wild.

While tesla originally offered 38k, nada and kbb offered 47k. There were better offers from vroom also.

avesraggiana | September 13, 2017

@sroh. Thanks. I appreciate your optimism very much. I'll go with it.

@Silver2K. That's good to know. Remaining a Gloomy Eeyore, do used Teslas take a really big hit in depreciation once they've fallen out of the standard four-year warranty?

Silver2K | September 13, 2017

the standard loss is 10% every year when driving 12-15k miles per year on a used car whether is has it's warranty or not. my 4yr/50k CPO warranty was still active when I got my offers.

Rocky_H | September 13, 2017

@sroh, Quote: “So over time, Tesla is going to introduce better performance/value compared to previous years. It follows that value of older cars are going to feel pressure.”

Yes, that is true, but that is only applicable if you view your ownership of a car like a share of stock, where the buying and selling price and trade-in value matters to you. I buy a car to drive, and I’m going to keep driving it as long as it still does what I want it to do and until it is getting way too cumbersome or expensive to keep repairing. For this Tesla example, I am expecting that to be about 15-20 years. So trade-in value versus newer models, etc. isn’t even relevant.

MAPC | September 17, 2017

People need to understand that Tesla needs to make a profit, and they also have reconditioning costs. Private party sales will always be more. I sold my early MS60 after 3 years and 36k miles for $50k (original price was $70k) after only 1 week on Craigslist. I would have expected Tesla to only offer me $40k- which would still have been well over 50% of new after 3 years.

Tropopause | September 17, 2017

Don't forget to adjust your purchase price minus incentives when comparing purchase vs trade-in values. I received $13,000 in incentives on my 2014 S85 and I got KBB trade-in offering for it from Tesla. Good deal in my opinion.

sroh | September 17, 2017

@Rocky,

I completely agree. There are many other (and I would argue more important) considerations when deciding to buy a car like a Tesla. I was merely pointing out reasoning for those who are dismayed at the early depreciation.

I buy new cars and and hold for 10+ years. I'm about to make an exception by selling my 5 year old car to get a Tesla. When I pull the trigger, I won't look back. I will enjoy the Tesla for many years and not give one thought to depreciation.

sp_tesla | September 17, 2017

Tropopause | September 12, 2017
If a Tesla is a laptop, then an ICE is a typewriter."

Electric or manual?

Haggy | September 17, 2017

With any car, ones from prior years do less than current ones. The difference is that with a Tesla, people miss out on a lot less. Mine is a late 2014, but there are ones that were made in 2016 that might be almost the same as mine if somebody ordered the same features. Aside from the color and my lack of a self closing charging flap, the latter of which I can understand making the value plummet among anybody who considers that a must have feature, both mine and an early 2016 have gained features that neither had when new.

I can come up with a long list of features that my car has, that it lacked when new, and that I consider important. If I were to buy a new car today, I might consider a CPO that's like the one I have now, assuming I didn't already have one, but there's no chance I would if you take away all the features that were not in place when I bought my car. Back then I had no choice if I wanted a Tesla. These days I'd have to consider that even a 3 year old CPO could have the features I want, or at least it will become more likely in a few weeks when cars like mine hit three years of age, and ones like it will be coming off leases. I'd also have to consider that a new one would have better performance, less frunk space, and features that should eventually show up that I don't have now.

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