One of the common questions I’m asked about electric cars is resale value.
With the Tesla Model 3, I always have responded:
“I love the car so much, I don’t plan on selling it so I really don’t care about resale value”.
The Model 3 has now been selling for over two years, including all of 2018, therefore we can now see initial real data on resale pricing. What does the data tell us? The initial response to the question is really all you need to know – Tesla owners love their Model 3s, and, as a result, are not selling them. As they're not being sold, they see some of the best (if not the best) resale values.
1. Tesla Model 3 owners love driving their cars! A recent survey by Bloomberg reveals it's a rounding error of responses that did not say they loved driving their Model 3.
2. The most valuable level of consumer engagement with a product is the extent to which they will recommend the product to family and friends – close to 99% of Model 3 owners say they will recommend it to family and friends! Literally, there is no other product of any kind that sees this level of “NPS” – (Net Promoter Score rating)
3. As a result, there are virtually no 2018 Tesla Model 3s being sold! Remember, the Model 3 was one of the best-selling cars in the U.S. in 2018 (over 140,000 sold in the U.S. vs. 75,000 BMW 3/4 Series cars), so the base of cars in the market is large – yet, at this time, there are under 100 Model 3s for sale on Autotrader across the entire United States – compared to over 1,000 BMW 3/4 Series cars, and many 1000s of Honda Accords and Toyota Camrys – so it comes as no surprise that Kelly Blue Book estimates that the Tesla Model 3 will hold roughly 50% of its value after five years, versus 31-39% for the other cars.
4. While five-year estimates for resale values are nice, that's not yet possible for the Model 3. So, what are used Model 3s actually selling for? Looking at the Dual Motor variant (one of the most popular variants sold in 2018), I can compare the actual price I paid for my Tesla and the options as they were priced in 2018 with the current used values. The Dual Motor variant was being sold for $54-$65K new in 2018 based on options selected (after the federal rebate). Now, they're being offered for sale at $45-$55K, which is close to 85% of their initial value.
The numbers are clear, people who bought the Tesla Model 3 likely won't race to to sell their car, but if you're one of the few actually wants to sell your Tesla, the asking prices are very high for the few cars that are available.
Sources for the above data:
- Driver Enjoyment: Bloomberg’s Tesla Model 3 Owner Survey – November 2019
- Recommend to Family and Friends: Bloomberg’s Tesla Model 3 Owner Survey – November 2019
- Resale Value: Kelley Blue Book and Hot Rod analysis
- Used Inventory: Autotrader and Hot Rod analysis
- New Price in 2018: Hot Rod analysis
- Used Prices for 2018 Model 3s: Autotrader and Hot Rod analysis