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I wonder if a number of early Model 3 owners will try to sell it for a profit???

I wonder if a number of early Model 3 owners will try to sell it for a profit???

It's obvious that there is a ton of demand that currently exceeds the not-yet-available supply. I could certainly see some of the people looking at a long wait be willing to pay more than the current sale price to someone who just took delivery. While I think it would be pretty crappy, I could certainly see a few greedy Model S and Model X owners abusing their wait-list priority and buying a Model 3 solely to sell it for a profit to a desperate wait lister.

Any thoguhts?

Me, I figure if I go on the wait list within the next month, the Model 3 with the options I want will come available right around the time I can afford it. My 390,000-mile 2004 Toyota Camry is just going to have to chug along a little while longer.

Steam613 | 14 août 2017

Seems reasonable business move. Free market and all. I wouldn't want to hang out with someone that would do that, but I don't begrudge them for exploiting an opportunity.

dsvick | 14 août 2017

Will someone try to take advantage of a system in order to make a financial gain?

Of course ...

andy.connor.e | 14 août 2017

My thoughts are since you can only make a maximum of 2 reservations, people are going to find it more effective for themselves to drive the cars they reserved. Sometimes the money isnt worth it.

hoffmannjames | 14 août 2017

well, Tesla employees are prohibited from selling their Model 3s for a profit. The only people who could do that are non-Tesla employees.

Carl Thompson | 14 août 2017

While I'm sure a few folks will do that remember this isn't like an XBox where some people will pay a few hundred dollars over list to own one. This is a car and the original buyer will have to pay several thousand dollars in sales or use tax. So that raises the break-even price just from the get go. Then the new buyer will need to pay sales or use tax again on the value of an almost-new used car. Obviously the new buyer also won't get the Federal tax rebate in the U.S. but the original buyer (probably) would. That complicates things.

I just don't see a ton of people willing to pay so much over list price to make it worth everyone's time just because they're impatient. But I could be wrong...

Carl

Tesla2018 | 14 août 2017

When the BMW i8 came out it listed for about 130k but a local stealership was selling them for 250k with market demand wriiten on the sticker. Dont know if anyone paid that much but Im sure people will try to sell them at a profit. Wouldnt surprise me if a lot of line waiters were working for dealers that want to get the cars in and then jack up the price. Sort of like the ticketmaster scum that wait in line just to buy tickets so they can sell them at a profit.

ReD eXiLe ms us | 14 août 2017

Tesla2018: You know what? 'Ticketmaster Scum' sounds so much better than 'Rebel Scum'!

Steam613 | 14 août 2017

Carl - I think I maybe vaguely imagined or heard/read/hallucinated that there was some duration of possession of an EV to get the tax credit. Hogwash? Or is it like cheating on your taxes; only wrong if you get caught (audited)?

PhillyGal | 14 août 2017

Oooh scalpers enrage me! Real Philadelphia families (and everywhere else!) can't afford to take their families to a NFL game. I'd smack anyone I caught trying to sell a Model 3 for a premium.

ramihanna616 | 14 août 2017

when I found out about the model 3 I immediately reserved one to keep, but I encouraged all my friends and family to reserve one. I said if you want it great, but if you don't, you can flip it for a nice profit.

ACDC 2GO | 14 août 2017

Selling a $50.000 car with tax and other fees would require selling it at around $55,000 just to break even. Not including tax rebates. To make a profit making it worth your while would require selling for $60,000. By the time the buyer paid tax on it they would be getting close to $70,000.

At that point why wouldn't they just buy a model S. With code they would get the free super charging an qualify for the federal tax credits.

Captain_Zap | 14 août 2017

It happened with the Model S. They may try it again.

TeslaTap.com | 14 août 2017

I suspect a few, very early non-employee cars could fetch a nice amount by other automakers who want to rip it apart. There may be 3-5 of those. I remember there were similar suspected cases when the S and X both came out.

While there are always a few people with lots of cash that want something right now, I'm not sure the Model 3 will appeal to that crowd - the S and X is better for those kind of owners (i.e. higher end vehicles). So in general, I doubt there is much of a demand to pay a lot more than Tesla's list price, just to get it early. I could be wrong on this, but who knows?

AlMc | 14 août 2017

When I posted that I was going to cancel my Sig X reservation I was offered $20K to order it as the person wanted.
I declined.

I suspect people will offer $ over list for a model 3 'now' versus having to wait.

Some people have more money than sense. :)

PaceyWhitter | 14 août 2017

Remember, you will lose the tax credit if you resell it quickly so it will have to be a significant markup for it to make any sense.

Carl Thompson | 14 août 2017

@Steam613:
"Carl - I think I maybe vaguely imagined or heard/read/hallucinated that there was some duration of possession of an EV to get the tax credit. Hogwash? Or is it like cheating on your taxes; only wrong if you get caught (audited)?"

I'm not a tax expert so take this with a grain of salt but there is no minimum time to own the car as far as I know. I believe the regulation says simply that the car can't be bought for resale. And I believe resale in that context means bought by a licensed reseller (as in a car dealer) who doesn't pay sales tax and who would resell the car as a _new_ car. I don't think the resale provision applies to a regular buyer who can't resell a car as new (no matter how few miles are on it). That's my interpretation but it may not be correct.

Carl

rxlawdude | 14 août 2017

When the Gen 2 Prius (2004-2009) was released and in very short supply, "dealer markup" was the rule, not the exception.

AlMc | 14 août 2017

@PaceyWhitter: Each state that may grant a tax credit/question of resale is different but the federal one indicates as long as you buy it 'not for resale'. This is the gray area that you would have to defend to the IRS if you resold it quickly.

Once you have registered it with your local DMV you qualify for the Fed rebate. Selling it a day after I am sure would raise red flags, a few months later, get ready to have a good reason.

There is no stated time limit to keep it that I am aware of in the federal statute.

I am Not an accountant/tax lawyer but my accountant explained it to me that way.

socaldave | 14 août 2017

I have heard (first hand) stories of people here in the LA area offering cash to new Tesla owners, and at a very attractive premium. I have zero interest in selling mine, but if someone rolled up offering me 65k for my short range with premium package and AP2 turned on? You gotta have that conversation. I certainly would, and turn around and plow it into an S.

SUN 2 DRV | 14 août 2017

Second buyer won't get the tax credit and will have to pay sales tax a second time. So the second buyer would have to pay about $12,000 plus whatever the first buyer wants for his profit margin. Probably cost $20K+ to get one of the first ones flipped.

Mailrail707 | 14 août 2017

Since the non-employee cars will start rolling off the line approaching Christmas, you can bet this will happen; especially since some folks have 2 reservations.

georgehawley.fl.us | 14 août 2017

Buy for price plus sales tax.
Let's say you decide that you don't want the car after all.
Sell for price plus sales tax.
If you qualify, take the tax credit for bringing another BEV into the world.
Buyer pays no more than they would have if on the resrvation list and, if they don't have a reservation already, they'll probably be too late for the credit anyway. No harm, no foul.

It's not OK with the IRS to buy it just to flip it.

ST70 | 14 août 2017

I've got 2 offers...anybody want to beat $72K?

Haggy | 15 août 2017

If I buy a Model 3 and keep it, I get tax benefits. If I sell it, I don't get those and neither does the second buyer. So that's a $10,000 jump in price if I don't add a penny. If I add $5000, it seems hardly worth it, but with a $15,000 increase I would expect the buyer to look at a used Model S or even a new base model instead. $5000 added to the initial configuration puts it about $5000 below a base model S with tax benefits in my state. I'd break even or even lose money because of sales tax and fees. So I'd realistically have to make it as expensive as a Model S to make a marginal profit.

It seems like a waste of money for anybody to pay a premium.

SpeedyEddy | 15 août 2017

it all will depend on the reservation-growth/produced cars ratio. As long as this results in more than 1 the time to wait increases (which is the case right now, because of low production ratio) the price of a second hand new M3 will rise, but there will be a maximum, posed by the patience of would-be buyers.
I think if I get my M3 late 2018 and someone experiencing my car wants it too and fast, he/she will be happy to hear I have a second reservation, not yet configured.....
For family or friend I will possibly only want to be payed in advance (zeroing my risk). If there isn't anybody in the family, I will probably try to sell te non-configured car with a little profit to an enthusiastic fan, prepared to pay in advance in a blocked account, which will be unblocked upon delivery. I think a delivery time of 1 year or more is nearly criminal so will be happy to let somebody profit from my early vision.

BTW, i Think a lot of people will not be patient at all and run to other EV's, thus lowering the mentioned rate.
I think Elon would give a free Model S3X to anyone that can predict de long-term production-optimum within 10% boundaries.

rxlawdude | 15 août 2017

@Haggy "If I buy a Model 3 and keep it, I get tax benefits. If I sell it, I don't get those and neither does the second buyer."

Let's qualify that. If you keep it for two weeks and sell it, you get the tax credit. If you keep it two hours, that might be more problematic, but if you register it and put miles on it so that it is a USED car when you resell, that's probably still okay.

The feds are only interested in when the vehicle is placed into service by the original owner. The feds aren't interested in denying the credit to those who legitimately placed the vehicle into service originally. And if they did, it would mean the car would never qualify anyone for the credit. That's perverse and not the intent of the law.

So here's the issue distilled: are you buying a M3 with the intent to resell it? No tax credit for you. No intent to sell it when you get it, but after a week you don't like it and then put it on the market? Tax credit for you. The key word is INTENT. And intent is a very hard thing to prove in equivocal situations.

Carl Thompson | 15 août 2017

@rxlawdude:
" If you keep it two hours, that might be more problematic, but if you register it and put miles on it so that it is a USED car when you resell, that's probably still okay."

It doesn't matter how long you have it or how many miles you put on it. The car could be 5 minutes old and have 0 miles when you sell. If you're not a licensed reseller it's still a used car.

Carl

SUN 2 DRV | 15 août 2017

And in any case the second buyer has to pay sales tax (use tax) a SECOND time... so that's another $4k+...

jordanrichard | 15 août 2017

Then your state get sales tax twice for essentially the same amount, fairly straight away. You know that thestate would love people to flip thier cars.

rxlawdude | 15 août 2017

Again, Carl, I defer to your clearly superior legal expertise to dispense advice. Please carry on.

georgehawley.fl.us | 15 août 2017

@rxlawdude: you said it better than I did.

Carl Thompson | 15 août 2017

@rxlawdude:
"Again, Carl, I defer to your clearly superior legal expertise to dispense advice. Please carry on."

I said: "I'm not a tax expert so take this with a grain of salt."

What more do you want?

Carl

rxlawdude | 15 août 2017

So if you don't know what you're talking about, heed Mark Twain:

Better to keep your mouth shut and be thought a fool than to open it and remove all doubt.

Carl Thompson | 15 août 2017

@rxlawdude:

Sigh. No, I'm right. As I said: "It doesn't matter how long you have it or how many miles you put on it. The car could be 5 minutes old and have 0 miles when you sell."

A car is no longer new as soon as it's been titled the first time. It has nothing to do with how many miles have been put on it or how long (or short) at time it's been owned. From title 16 of the Code of Federal Regulations (16 CFR 259.1):

"a)New automobile. Any passenger automobile or light truck ... the equitable or legal title to which has never been transferred by a manufacturer, distributor, or dealer to an ultimate purchaser."

https://www.law.cornell .edu/cfr/text/16/259.1

As you can see from the code things like length of ownership or miles have nothing to do with it. So as I said "If you're not a licensed reseller it's still a used car" because when the first buyer takes possession of the car it has been titled and is no longer new.

Yeah, you should have studied harder in law school. You're 0 for 2 tonight.

Carl

dd.micsol | 16 août 2017

Only those who are tesla owner might. The rest of the population who have wanted eons for the car-want it so bad there's no way they'd sell it. Only if they were actively dying and need cash, oh but wait, they could have cancelled.
So no. I don't think anyone would sell it unless someone was stupid enough to pay model S prices for the model 3.
Only way I see it would have to be one serious collector who wanted a very low serial number and would pay anything to get one-extremely highly unlikely.

Shock | 16 août 2017

1) You still get the tax credit. IRS isn't spending time chasing down people reselling their EVs
2) There is little money in this and too much risk; very few will bother, and most people with the money to do it would just buy an S instead if they were that desperate for a tesla
3) Sanctimonious responses about reselling are pretty goofy. Everybody with a reservation has put money down to get the car earlier than otherwise they could. Others will pay for the extended/premium option (many thousands) to get it sooner. If somebody in the free market wants to pay more money for a non-life saving item to also get it sooner, don't worry about it

Carl Thompson | 16 août 2017

@dd.micsol:
"I don't think anyone would sell it unless someone was stupid enough to pay model S prices for the model 3."

This.

Carl

TexasBob | 16 août 2017

FWIW here is a link for a person pre-selling his/her M3 on Craig's List was posted on the GM-Volt forum... https://boston.craigslist.org/gbs/cto/d/tesla-model-3/6248167539.html

rxlawdude | 16 août 2017

Thanks, @TexasBob. That example is a textbook case of clear INTENT to resell. That person is not entitled to the federal tax credit. It's quite clear in black letter law.

rxlawdude | 16 août 2017

"The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States."

Anyone taking advice from Mr. Thompson above may want to read that again. From https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-an....

AlMc | 16 août 2017

@rxlawdude: Correct. he gray area is what is *intent*. Clearly the individual posting it for sale on Craig list has a paper trail indicating his/her 'intent'. If you place the car into service, then sell it, regardless of how long you have owned it then the 'intent' of your acquisition, then sale becomes unclear.

Personally, I don't like dealing with the IRS so I would not sell it hours or a few days after taking full legal ownership.

AlMc | 16 août 2017

Wow. I really need to check my posts before hitting 'save'. Clearly from my last post I did not stay at a Holiday Inn Express (for spelling/context) last night.

Carl Thompson | 16 août 2017

@rxlawdude:
"The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States."

Yes, we've all read that but there are a couple of things you're overlooking:

1. The word "resale" is not specifically defined in that part of the tax code. Outside of a more specific definition right there you have to look at the rest of US code for the definition. When you do that you'll see that the terms "resale" and "reseller" have very specific definitions that _do_ apply to car dealers but _do not_ apply to end consumers selling used cars. That's what you're missing.

2. Even if you use a broader definition of "resale" that includes end consumers selling their used car the code simply states that "The vehicles must [not] be acquired ... for resale." The code clearly only deals with the buyer's intent at the moment of acquisition. There is nothing in the code that prevents a buyer from changing their mind as soon as they lift their pen up from signing. (Figuratively speaking. Of course the title is transferred and the car is technically "acquired" later.) There is nothing there to preclude someone buying the car, claiming the tax credit and later that day deciding to sell the car. There are no minimum time or mileage limits specified. So in order for anyone to run afoul of this provision the IRS would need to prove their intent at the time of acquisition. You as lawyer should realize that proving intent is very difficult at best. That's not going to happen unless someone is very stupid and documents their intent to sell ahead of time in a verifiable medium (like that guy on Craigslist).

That said if I were to do it (I won't) I would probably keep the car until after my tax return had been accepted and processed so that at the time I file for the credit I would still be the owner of the car. There's nothing in the tax code that requires someone to do that but it may be wise anyway if you get an overly zealous tax inspector.

Carl

rxlawdude | 16 août 2017

You overlook the conjunction "Additionally, the original use of the vehicle must commence with the taxpayer."

Really, Carl. Interpreting black letter law that is quite clear(at least to an attorney) the way you WANT it is fine if you want to take the chance, but please don't spread MISINFORMATION. You are incorrect. Period.

Carl Thompson | 16 août 2017

@rxlawdude:
"You overlook the conjunction 'Additionally, the original use of the vehicle must commence with the taxpayer.' "

What's to overlook? If you take it home from the dealer you've used it. That's all the "original use" needed in the absence of specific requirements in the code.

Carl

Model_D | 16 août 2017

I was fortunate enough to be the first one in my state to get a very anticipated new car. I could have sold it and made a $10-20,000 profit. I thought about waiting another year for the opportunity to buy that car. I kept the car. I never regretted that decision.

Now if you reserved only to make some money, then you will probably sell it. If you reserved to own it, I doubt you will decide to sell it unless you are having financial problems. I would be surprised that anyone that reserved it on 31 March to own it could find it within themselves to sell it.

rxlawdude | 16 août 2017

@Carl, you previously said "There is nothing in the code that prevents a buyer from changing their mind as soon as they lift their pen up from signing."

Yes, there is. That conjunctive sentence I quoted above.

Now you are changing your tune by saying "If you take it home from the dealer you've used it. That's all the "original use" needed in the absence of specific requirements in the code."

So you admit you must take title AND drive the vehicle, thus placing it in service. I agree with that as far as the letter of law. But someone that then sells the car on the same day runs into that INTENT issue again.

AmpedRealtor | 16 août 2017

Reselling for a profit would work well in Arizona. First title holder gets $7,500 tax credit, which offsets the new vehicle sales tax of 4.5% and puts another $4,000 in your pocket. On resale, the buyer does not have to pay sales tax on a used car. There will be pent-up demand, as anyone who orders now isn't going to see a car until the end of 2018 at the earliest. I'll have one in the October-December time frame. I'm sure I can find someone to pay $10,000 over list to own the car a year in advance. I don't think it's a smart buy move, since in a year you'll be able to get AWD and who knows what else for that extra $10,000. But if there are people in the world who are willing to pay. Who am I to turn away their money? lol

SUN 2 DRV | 16 août 2017

AR: Don't forget to factor in the tax credit (at a likely reduced level) that the second buyer won't get, so his net cost would be that much higher. And also that the original buyer would be footing the cash flow for the sales tax until the next year's tax refund arrives. Interesting that AZ doesn't charge sales tax on used car sales. CA certainly does on almost any title transfer, except for certain exceptions like intra-family gifts etc.

Frank99 | 16 août 2017

AZ realized that everyone lies when they tell the MVD how much they bought a used car for, so rather than encourage that behavior they decided they'd just stop asking.

Of course, decisions like that may be why Arizona is dead last in the US in spending on public schools.

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