How does the loaner sales offer affect resale?

How does the loaner sales offer affect resale?

With regards to the following paragraph from the service announcement, how will this affect the market for a used Model S? Thinking of resale value:

"Nor will this eventually become an aging fleet of overused cars. The loaners will be available for immediate purchase at a price that is lower by 1% per month of age and $1 per mile. If you like the service loaner more than your other car, you can just keep it. This ensures that the service fleet is constantly refreshed and gives customers the best optionality."

alfafoxtrot1 | 26 avril 2013

Between this announcement and the lease/buy-back, Tesla is more or less defining the market price for a used MS. Right?

alextheukrainian | 26 avril 2013

I don't think you'll see much of an effect. That's like saying that Lexus' Service Center pre-owned cars affect overall Lexus cars resale values - they don't. Most of these loaner cars will be sold before they are 6 months old, so there will be no comparison to 2-3 year old cars.

But even if real depreciation was same as loaner cars - 1%/month means 50% over 4 years and 2 months - that's really good. Especially considering that loaner cars depreciate more than real cars, due to heavier usage, less care by drivers (stereotypically), etc.

Still, not muh effect on resale value, IMHO.

MandL | 26 avril 2013

What it really means is that if you are happy with one of the cars on the lot you don't have to wait to buy a Model S any more. I can't imagine those sales will be limited to current owners. So if you want a fully loaded Model S Performance all you have to do is walk in and write a check.

jk2014 | 26 avril 2013

I think this is brilliant strategy... they are creating a secondary market as soon as possible in order to establish resale value in the real world. Accelerate the creation of a secondary market so that the general public (including investors and banking institutions) will see the proof in the pudding compared to other luxury cars, and most importantly, see a big future in electric cars at any price point.

Also, it gets people to experience the latest and greatest so they will want to upgrade or buy a new car! Create the loyalty that will keep them coming back purchase after purchase!

Fantastic developments in gaining wider confidence... applaud this strategic decision all around.

stimeygee | 26 avril 2013

Well, wait a second. The way it's worded says 1% per month of age AND $1/mile. So, let's take the example of a 100K car that drives 10,000 miles per year. At 3 years, it would be worth roughly 100,000 minus 30,000 (miles driven) minus 36,000 (1% per month of age) = $34,000.

That's pretty low.

But how does that even make any sense, given that he's guaranteeing a higher resale value than that as part of his earlier announcement?

I know I might be doing the percentage wrong, in that it could mean 1% of the remaining value which goes down each month, but still that should be roughly accurate, right?

gasnomo | 26 avril 2013

Agreed, creating an immediate secondary market is pretty smart - similar to the offer to 'unlock the extra 20KWH if you buy a "40KWH" car...

my thoughts on stymyg's calculation and question, both of which I believe are correct, is that the car is effectively the same as a rental car...rental car used car prices are much lower than single can get great ICE deals buying from Hertz/Avis...

jat | 26 avril 2013

@stimyg - note that the loaners won't be very old or have many miles on them, so the price will actually be well above the normal market value (when you drive a new car off the lot, you lose 20% or so right then).

jeroens | 26 avril 2013

no way to tell. Could easily mean 1% of the price after the 1$ per mile, so 100,000 - 30,000 = 70,000 - 36% = $44,800

jeroens | 26 avril 2013

but let's also remember Elon said rotate every 2-3 months. We all know the depreciation is the highest in the first months… If they are never kept more then 3 months this does make a lot of sense...

pvetesla | 26 avril 2013

Didn't Elon mention that the cars would only be about 3 months old before they replaced them with new ones? I don't see the big loss in value.

I agree with @jk2014....great strategy.

ken830 | 26 avril 2013

I think everyone is focusing on the price of the loaner and missing stimyg's point. stimyg is trying to point out the other side of the equation: how much Tesla will CREDIT YOU for your existing car when you do the trade/exchange. If it's the same depreciation model, then it's very poor.

Brian H | 26 avril 2013

But will they be P+?

yes, 50 % after 4 yrs, less $1/mi! That might work out to net $0 value, if the car put on 12K/yr.

Dwdnjck@ca | 26 avril 2013

Then you dont have to take that deal. You can always sell the car yourself.

pvetesla | 26 avril 2013

43% of what you purchased it for after 3 years. Right?

Brian H | 26 avril 2013

Only if you used their financing plan and partners.

pvetesla | 26 avril 2013

That's true. And it's not available to everyone yet. I'm getting the minimum financing just to have that option....eventhough I know I'm not going to use it. Just a back up plan.

info | 26 avril 2013

I have an 85 but I want a P85. There are a bunch of questions and few answers. First, in CA, in order to get the $2500 rebate, I had to sign something that said I would own the car three years. Do I pay it back and then apply for another? But it won't qualify because it's not a new car? Do you get another $7,500 federal tax credit or do you lose the one you have? The CNN story I saw said the P85 had a list price of $84,500. This can't be right. The P has a lot of standard features that us regular 85er's paid extra for. I talked with a Tesla rep who had few answers but he said the loaner cars will be base P's but they all have leather and air suspensions and single stage paint and body colored roof.

I've had my car three months with a list of 88,000. This means that I start at 2,640 off or $85,360. I have $6500 miles on the car so that makes it $78,860. But I paid $96,000+ with the sales tax that's gone and if you buy the new car, there's more tax.

Depending upon pricing and equipment it may be worth giving the state of CA another $8,000 in tax. Who knows?

rbgliny | 26 avril 2013

What happens with an existing service plan if you trade your car for a P85 loaner. Does it go with the old car or can it be transferred to the purchased car. If you would need to purchase a new one, the price of the plan would have to be plan price minus the proration of the existing plan - providing you wanted another service plan. Otherwise they would prorate the current plan and refund your money.