Is Model 3 Affecting Used Tesla Sales?

AUG 18 2018 BY VANJA KLJAIC 20

The Tesla used car market may not be as affected by the entry-level battery-powered vehicle

U.S car sales have recovered from their recession-crisis levels. The economy is continuing to improve, but that hasn’t affected the car market that much. The U.S. SAAR (Seasonally Adjusted Annual Rate) has hovered at around 17 million units for several years now. Even though a worry about “peak auto” subsided over the last few years, the stagnation in the market has kept the things at a steady pace throughout 2017 and 2018. However, for Tesla, the situation couldn’t be better in that regard.

Sales of Tesla vehicles are continuing to surge higher now that the carmaker is able to produce the Model 3 in higher volumes. With an expected production rate of more than 50,000 units this quarter alone – including the Model 3, Model S and Model X – Tesla is headed up to an easy streak sales wise. In reality, their deliveries continue to ratchet higher even in the face of a sluggish sales environment.

With the influx of new Teslas hitting the market, one would think that the used Tesla market is shrinking and facing a downturn. According to the recent data revealed by CarGurus, the average price of a used Model S has decreased by about 10% over the past two years. While those that like to jump to conclusions might see this as proof that demand is faltering for Tesla, that might not exactly be true. Back in August 2017, a 2012 Tesla Model S was just four years old. Now, in 2018, the same vehicle is over six years old. And this puts it in danger of being viewed within the notable seven-year cycle where many buyers look for a brand new car – alongside several other potential issues.

Tesla comes with several proprietary issues, not experienced by other, non-battery powered vehicles. For example, the increased mileage over a two-year span means additional battery degradation, possible drivetrain issues. This doesn’t include all the other problems that plague not just Tesla, but also any seven-year-old car out there. According to data from CarGurus, the average Model S prices are down about 1.25% over the last 30 days and 2.7% over the last three months.

Tesla Supercharger

Tesla Model S and X at Supercharger

However, year-over-year, prices are actually up 2.7%. That means the used market for a Tesla Model S is actually growing. This was revealed by the analysts at CarGurus, who told TheStreet that volume over the last 90 days and one year is actually up more than 200%.

This could mean several things. First, the demand for Tesla, due to the increased visibility in media and culture, is increasing. For those that cannot afford a new Model S, or don’t want to wait for a Model 3, a used Model S may be the right choice. Second, a lot of historical owners of German saloons like the Mercedes-Benz E-Class, BMW 5 Series or the Audi A6, have, in face of newer models from these carmakers, actually decided to go with a used Tesla Model S. As a result, we don’t see the Model 3 impacting sales of used Teslas anytime soon. Neither do we see the used Tesla market facing a downturn anytime soon either.

Source: TheStreet

Categories: Tesla

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20 Comments on "Is Model 3 Affecting Used Tesla Sales?"

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eject

The actual question is how the prices of MS and MX are going to behave after the 8 years of warranty on drivetrain and battery is over.

Matt

Likely very well. Tesla seems to have a good reputation for battery longevity vs all other manufacturers.

BenG

I expect them to continue to depreciate rapidly, like other expensive vehicles out of warranty. The price will relentlessly drop through the floor because repairs cost a fortune.

Speculawyer

Repairs cost a fortune? Unless you crash, electric cars need very few repairs since they have FAR fewer moving parts and generate much less heat.

Andy

They still have suspension (expensive air suspension in some Teslas), CV joints, electronics, rust etc.. A lot of the repair costs for vehicles are drive train unrelated. A Model S is going to be affected by those just as much as any other vehicle.

It’s a premium vehicle with a lot of high tech parts that can go wrong. Repair costs will be at a premium cost too, even though it doesn’t have an ICE engine. Expensive repairs are part of owning a premium vehicle out of warranty.

bioburner

I would expect that also. The older versions of Autopilot will hurt the resale value. Who is going to pay $75K for a 4 year old model S when they can get a new model 3 with the latest and greatest tech?

MDEV

The question is how the price of Tesla will be affected when the car has 20 years and battery degradation. I have the answer for you, that’s the car that shorters will afford after get broke before year ends.

Some Guy

Well, even if the battery is degraded after 20 years, as long as electronics still work, one could live in it in a trailer park. Just plug it in and go for permanent camper mode, nice air condition, and even some appliances can run. Can’t do that in an ICE.

Pushmi-Pullyu

“…the demand for Tesla, due to the increased visibility in media and culture, is increasing. For those that cannot afford a new Model S, or don’t want to wait for a Model 3, a used Model S may be the right choice.”

I thought that was entirely predictable… and it was, at least by many of us!

pjwood1

Agree. Resale of Tesla’s EV has been an entirely different, much better, affair than other brands. With the S, I’m less concerned about Model 3 than sticking to a plan of going without $4k warranty extension, after 50k miles. With the $200 per issue deductible, and a boatload of equipment at home, I’m going to go without. Without warranty extension, there is somewhat of a depreciation cliff after 50k miles. The next guy can’t get one, and Tesla buyers aren’t typically car-handy people. I’ll be worried about having to sell, but am pretty convinced I’ll be better off as miles stack up.

Seven Electrics

Used S prices are up year over year because Tesla raised the price of a new Model S when they eliminated the 60 and 60 D last year.

Agzand

It is too early to say, Model 3 has not fully propagated in the market yet. Where I live there is no “wait” for model 3. You can order it and get it in about a month.

BenG

Last I heard, a month wait is a ‘wait’.

Agzand

Not for an ordered car. Any car you order takes longer than that.

Mint

I think the X is much more vulnerable to sudden depreciation.

The Y is coming in 2020 and the other automakers all have SUVs in the works. It’s selling well now with lack of EV competition, but in the ICE market, SUVs sell at a lower price than large sedans: GLS costs less than the S, Q7 costs less than the A7, etc.

If you can get a good residual, lease the X instead of buying, IMO.

Some Guy

Well thats in 2 years. And as usual reservation holders and higher trim orders will be serviced first, and production has to ramp. So the X-price should be save until 2021 or 2022 at least.

Also: Free OTA Updates continue to make the cars better, even older models. BTW: Daimler now has to recall 700 k vehicles in Europe for a mandatory software update, as they were found guilty of cheating emissions tests. They even had illegal software in the S-class hybrids…

Mint

With automakers dragging their foot on EV development, and the OTA updates you mentioned, Teslas have definitely fared very well in depreciation thus far, especially considering how fast EV tech is changing compared to ICE.

But remember that a standard lease today protects you in three years, i.e. mid 2021. Few people will want a 3-year old X for $50k at that time when new EV SUVs will be $40-70k.

Huhu

Because of the uniqueness of model X and having Significantly more features, X should hold value better than S, and it seems to be what is happening now.

Speculawyer

The Model 3 has put several Tesla Model S cars on the used market. That list of 5 cars turned in when buying a Model 3 explicitly was “excluding Tesla cars” thus implying Tesla turn-ins (presumably Model S not X) were in the top 5 turn ins.

Mark.ca

It’s affecting them alright! They went up! Before the TM3 came along you could see used CPO Ss on their page for under $40k. Good luck finding one now. I regret not buying the one i saw for $33k but then again, my garage is not big enough for an S and another car.