Resale Value

Resale Value

I am getting ready to place my order and have a battery question. What do you think the resale impact will be with the 60Kwh verses the 85kwh? I plan on keeping my Model S five years and if the resale is much better with the 85 khw battery, it could end up covering most of the upgrade cost.

Thanks for your input.

JoeFee | 22 augustus 2012

Get the 85kwh: more range for a longer period of time, better resale because it will appeal to more buyers. You may not get the full upgrade cost back but you'll have a more capable car (faster/more range).

Jolinar | 22 augustus 2012

I also think that 85kWh is better option, but I am not in buyers position so think for yourself and think carefuly :-)
I know that this 25kWh extra isn't cheap and probably you won't get all money back after 5 years, but you will get some extra performance and of course extended range (especially important during very tough winters when you need to run A/C a lot - not so important if u are from hot country).

And there is also one way to look on it: Bigger battery -> more money for Tesla and battery supplier -> more money for further research in battery tech -> better future batteries :-)

E-Brian | 22 augustus 2012

If we assume you're keeping the car for a while, here's how I would calculate it:

The cost difference at purchase is $15k. Assume you drive your car to the end of the battery warranty (8y). Your vehicle now has ~100k miles on it and is worth ~30% of what you paid for it (this will vary based on care, etc). The difference between the batteries is now just $5k. Do you really spend $15k to capture $5K at resale? When you include the expectation that batteries in the year 2020 will be more efficient, both the 60 and 85 kWh may become dinosaurs, which means there's likely to be even less difference between the two (as an example, look up the list and resale prices of an Acura TL and a TL-S. the advantage of the S is gone by the time you re-sell).

We may all need to install new "2020" batteries before we resell, or take a haircut on price b/c the buyers will want them. Or we will have to sell our luxury cars (with less range than when new) to college kids for $15k.

That's what I'm thinking anyway.

Electric Machete | 22 augustus 2012

The battery pack on the Tesla was designed with the capability of hot swapping. In the future that Tesla imagines we won't be stopping to charge our batteries. We will stop at a station and a machine under the car will remove the spent battery pack and install a charged battery pack in just a few minutes.

With many fewer moving parts than an ICE vehicle the mileage on the car won't be a tremendous factor in my opinion. The car itself, I believe, will have inherent value, historically speaking, and I think people will always be interested with the Model S to some (or great) extent.

The touch screen brings the ability to update the software and user interface as technology changes. It also allows for great customization potentially.

Performance-wise, there really isn't that far to go. This car already "goes to eleven." It is lightning fast and handles incredibly well. It is a sedan and I think it will continue to perform beyond the capabilities of most other sedans for years to come. My first car was a 68 Camaro that I started driving in 1990. It kicked the crap out of every other one of my friends' newer cars. I think the Model S has a similar future.

I think the best thing you can do to protect your investment is to get the performance package. The batteries will only get better in time. And cheaper too. The battery will be easily replaced but the drivetrain will not. I think the superior performance of this car will be the best shot of maintaining the value in years to come. The 85 kw battery is the only way to get the performance package.

Brian H | 22 augustus 2012

Ya, that's about right, IMO. Consider your battery as a short-term asset, and exploit the cr** out of it. Options by replacement time will be much greater and cheaper. It so happens that we're on the cusp of major improvements (5-10 yr time frame). 2020 is a New Battery Ball Game.

SMOP | 22 augustus 2012

Battery is a consumable (and should be seen as a capital cost not as a benefit)...Tesla also said with the Roadster the battery would cost less than it does now but that has not been the case (~40k replacement cost). We will see what happens with the Model S battery but at the end of the day if the battery's useful life is only 60% after 100k miles and you have to go and buy a new one all the savings in not having to fill gasoline etc may be a myth. I know with the Roadsters that the resale has been abysmal (even with a perfectly good battery with close to 100% capacity).

The 40kwh Model S will probably hold its resale very well as it is somewhat of a bargain in base trim (~50k after rebates). The top of the line 85kwh Performance will take a huge hit in resale just because there is not much differentiation interior/exterior wise between the 50k Model S and the 100k Model S.

petero | 22 augustus 2012

Mikep33. In general, the value of a new car after 3 years is approx. 50% and about 33% after 5 years. Bottom, will the 85kWh battery be worth $10-15K more than a 60kWh in 5 years? I don’t think so. I suggest you buy the best “S” you can and enjoy the heck out of it.

If you are hung up on resale value, the best time to resell your “S” is when you first get it. The demand will far exceed the supply, and there will be people who don’t want to wait a year+ to get an “S” and may pay a premium over your cost.

jerry3 | 22 augustus 2012

Reasons to consider the 85 kWh battery:

The 85kWh battery will have the least degradation over time given similar use.

You might have a lifestyle change (e.g. job change) that requires more driving or you might find yourself driving longer distances, at least on the weekends, because with the Model S it will be cheap and fun.

The "cheaper batteries will be available in five years and Telsa will sell them for the Model S" is speculation. There's a fair chance that it's going to happen but there is some risk that it won't. Tesla has not stated they will do this.

I always assume any car I purchase will have little value when I sell it (compared to the purchase price).

Volker.Berlin | 22 augustus 2012

Some more arguments for/against various battery sizes:

Vawlkus | 24 augustus 2012

Here's one more that I don't think we covered before: the 85k battery has beefier wiring and supporting electronics. If batteries do increase in size/power/etc, it is more likely that the 85k option will not need any upgrades/work to be able to handle the newer batteries down the road.

My $0.02

pilotSteve | 24 augustus 2012

I just have to laugh..... we haven't received our cars yet, and we're talking about resale value!

.... yes I realize its a reasonable point, but ....

Brian H | 24 augustus 2012

Every 1.0 early adopter is also thinking about being first in line for 2.0. Part of the deal. When the peloton catches up, it's time for a surge ahead!

pilotSteve | 24 augustus 2012

BrianH - I consider my vocabulary substantial yet your post forced me to look up "peloton". Love it, your are advancing both our spelling/typing skills as well as lexicon and argot. :-)

Robert22 | 26 augustus 2012

Yes, I think we've found our copy editor for Model S 1.0, The Missing Manual. Now......who wants to write the book?

J King | 27 augustus 2012

The purchase agreement/contract includes a clause that forbids modification or reverse engineering. While I think it would be great to work on writing the missing manual, doing so may void you warranty and result in Tesla suing you.

Robert22 | 27 augustus 2012

I'm referring to a second independently penned user manual that expounds on tips and tricks for maximizing the use and enjoyment of your car. I was really aping David Pogue's Missing Manual series for various Apple devices and computers. Contrary to suing me, the company would likely welcome the book as free marketing in the same way that Apple appreciates Mr. Pogue.

Mark K | 27 augustus 2012

There are sounder arguments for more battery than the resale question.

Never bet on the future value of a current technology.

Technology is know-how. Knowledge-based value inherently has a half-life since we are constantly getting smarter. The half-life of products today measures in quarters, not years.

You can't rationalize the purchase of bigger batteries financially based on resale.

The only practical financial upside is if the better battery will let you defer buying a new car longer. Since new car depreciation is substantial, deferral of replacement for 2-5 years longer could save you one or two depreciation hits. If the longer range would have that effect for you, then it might have some economic worth.

A lot of older buyers on this forum will be happy with this car for the foreseeable future, which spares them any more depreciation hits ever. That can make sense for some to buy extra capacity margin.

But really, the argument should not be financial.

After all, it's mathematically demonstrable that If you want to save money, the optimal plan is not to buy any car (i.e. take the bus).

So to justify a bigger battery, there has to be a time and place utility provided by the greater ability of more battery. That's very personal to each consumer and their individual lifetstyle.

Maybe you want to take more long trips, or you like to use more HVAC, or drive 75 a lot, or perhaps it's simply very emotionally gratifying to experience the thrill of high performance when you drive.

In essence, since we don't live forever, ask if would it have made your life meaningfully better over the next several years. If not, save your money. But if so, what more important use are you saving it for?

You are the only person qualified to make that call.

Michael23 | 28 augustus 2012

Mile, that's too much thinking for me! Performance forced me into biggest battery which made my decision easy. If I had a performance option at 60 battery not sure what I would do haha.

jerry3 | 28 augustus 2012

Mark -- the optimal plan is not to buy any car (i.e. take the bus).

That only works if the bus is practical in your area--this excludes most of North America. Were I to take the bus it would be four hours each way for a 25 mile one-way commute. The reason is that the transfer points are not timed so at each transfer point there is a 30 to 45 minute wait.