What is the residual value of a Mercedes S Class

What is the residual value of a Mercedes S Class

Does anyone know the residual value of a Mercedes S Class, as Elon mentioned on the call today? This should be what the Model S is worth after 3 years.

Captain_Zap | 02. april 2013

Not much with Teslas on the market.

brdunton | 02. april 2013

Mid S looks to be about $48K private sale. So if you think about it, you can buy an Model S (60KwH base) and drive it for 3 years and get back almost all your money (when you consider fed credit and any state credits).

hikerockies | 02. april 2013

Press release release says "same residual value percentage", not same residual value as Mercedes S class.

mauterin | 02. april 2013

If I'm reading the release correctly, it's the residual value percentage, not actual cost of sale. MB S class are $95k cars base, and go up to $200k. Math not my strong point, so I would botch up even guessing at the value percentage.

Jamon | 02. april 2013

Elton's answer: 43% after 3 years.

shop | 02. april 2013

+1 captain zap

carlk | 02. april 2013

That's pretty tricky. There is a significant differences between the price dealer will pay you, dealer will sell you or between private parties. Somehow I got the feeling the wholesale price will be used as a guide.

Jamon | 02. april 2013

Elon - not Elton :)

stimeygee | 02. april 2013

If you go to "buy" a car and follow that, you'll see the terms of the agreement - and they list the figure as 43%.

Brian H | 02. april 2013

If the market is even higher, TM will pay the difference.

prytog | 02. april 2013

S-Class MBZ may sound good, but 40% after 36 months did not.
Lesser MBZ had higher 36 month residuals. (So did Kia's)
Same pattern w/BMW, Audi, Jag. Higher-end models had less residual.
Nevertheless I like that a 36 month floor is in.

I now have a answer to my son-in-law who asked me: "Dude, so how do you know it won't be totally worthless in 3 years?"

glenster | 02. april 2013

I am sorry to burst everyone bubble here but 43% after 36 months is WEAK! Most cars with good resale value (think Porsche) have a residual in the mid 50's.

mwojcie | 03. april 2013

Do you think Elon would personally guarentee 50%+? He has no way of truely knowing this so picking the Mercedes S Class - a world class car that just happens to have only a 43% residual is a stroke of genius! And it promotes Tesla's major investor and partner! All so carefully calculated - he's not worth $11 Billion by accident!

ddruz | 03. april 2013

@glenster - While it might seem that most cars retain over 50% of their value after 36 months the data don't support it. The Edmund's web site is a good place to find residual values. So is Kelly Blue Book.

Those sources indicate that most cars, including Porsche, have residuals in the low 40% range after 36 months, which is what it looks like Tesla is going to use. Tesla is being very fair and commensurate with 43%.

Brian H | 03. april 2013

And they will pay market; the 43% is the floor, the minimum. If actual resale is 90%, that's what you'll get.

JaneW | 03. april 2013

Tesla Roadsters are selling at almost 80% of original value -- 3 year-old cars, mileage under 20,000.
About 20 for sale from Tesla around the country. Of course, far fewer were made.

Captain_Zap | 03. april 2013

Excellent point JaneW.

Tesla may have realized just how well their Roadster buy-back/trade-in program for the Model S was paying off and decided to double down on that end of the business.

I waited and waited for the price to come down on Roadsters. It never really happened until the Model S hit the streets. I ended up waiting so long for the price to come down that I gave up and ordered a Model S.

I don't expect the price of a Model S will come down a great deal any time soon. The styling is great and on the verge of being timeless. Not much to wear out compared to an ICE. They are a great value as far as performance cars go. Not many of us will be wanting to go back to gas stations either.

eAdopter | 03. april 2013

+1 glenster. 43% is weak. Very weak. I wish TM hadn't made such a big deal of the buyback offer. Instead, they could have quietly worked it into the MVPA to provide a level of security for people who are worried about losing too much money on a new company/concept/car. The public, bold statement may lead 2nd owners to expect they can buy a used Model S at a 57% discount in 36 months. In fact, they probably will because TM will have the discounted inventory. This places a very unwanted downward pressure on resale prices that probably wouldn't exist by itself. Also, I think TM could have used a better benchmark. The TM Roadster, for example. Or another car with great resale value. I think the Model S defines a new class. Why compare it to a resale dog like the MB S class? I think this was a mistake. Hopefully, no one will remember in 36 months.

Brian H | 03. april 2013

No, the guarantee will operate as a floor, not a ceiling. Supply an demand will determine the ceiling.

EPGLCG | 04. april 2013

The residual for April on an Mercedes S550 lease is 56% of MSRP for 36 months at 12K miles per year. Frankly, if my MS 60kw is only worth 43% in 3 years, I will be very unhappy. If Mercedes is willing to hold the S550 on their books at 56%, then Telsa should do the same. I absolutely love my Tesla and it pains me that Tesla has basically using similar tactics to traditional car companies to increase sales. You have a great product, let good advertising, PR and word of mouth drive sales. When everyday people that pay in the $500's for a lease go down the path of considering a MS and then they find it is really just a 63 months loan with a buy back provision, it it will create distrust. Tesla should back a traditional 36 month lease with the same residual as the S550 and they will radically increase sales.

christurbeville | 04. april 2013

There is always this trade off. Tesla has a strong marketing approach so they say things like "300 miles of range" when we all know its near impossible to do that in the real world. Or "$500/mo" when its a $1100 loan and they've backed everything out. On the other hand it grabs attention and brings people in. The car isn't hype and its strength is how it drives looks and works so it balances the hoopla with fact.

stimeygee | 04. april 2013

The whole point of this is to help those fence-sitters who are worried about the worst case scenario - that the bottom will fall out of the Model S market and the cars would become worthless after 3 years, either because Tesla goes out of business, or some new battery technology comes out, or the batteries start catching fire, or who knows what. All highly unlikely, and if you're already a Tesla owner you've decided you don't mind taking the small risk. But now you don't have to!

DouglasR | 04. april 2013

However, only if you use their financing product. If you finance with another company or pay cash, the buy-back guarantee doesn't apply.

jim b | 04. april 2013

Tesla has it wrong on this. A major reason why ICE depreciate so much is the wear on the engine and transmission. My last Lexus needed the transmission replaced and it was $4500. Tesla's should be worth much much residual value due to the fact the engine is much smaller, more efficient and less expensive and their isn't' a transmission or timing belt replacement costs, etc. Does anyone agree?

Xerogas | 05. april 2013

@jim b,

I agree that, rationally speaking, the simplified design of Tesla's drivetrain makes it more reliable and less expensive to repair compared to ICE. Sadly, though, residual value is based on free market value and we just don't know how people will react emotionally to other factors: battery depletion, perceived difficulty of charging during road trips, etc. Time will tell.

That said, I personally am betting on much higher residual, closer to Roadster's 80%, and plan to sell my 40 to some lucky person 3-4 years down the road, so I can afford to buy whatever Tesla makes next!

Captain_Zap | 05. april 2013

+1 jim b

I have seen some well maintained variable speed electic motors that ran almost continuously for 70 years and they are still going strong. There wasn't that much to the maintenance either.

All the heat, expansion, contraction and friction along with all the corrosive, thermally degraded and/or contaminated fluids are hard on internal combustion engines and transmissions. Some of the biggest failures on my most recent car was due to thermal degradation of components.

I saw a car that was spewing water out the tailpiple for miles the other day. All I could think about was how much a muffler replacement would have cost me on my old car. It is no wonder that some people only want to hold on to new gasoline ICE cars until their initial warranty runs out.

I plan on hanging on to my Model S for a very long time to get my money's worth out of it and then some more.