Tesla debuted the 60 kWh Model S In June

Tesla debuted the 60 kWh Model S In June

Tesla Motors's Resale Value Guarantee program once introduced with a blog post accompaniment and much fanfare, was quietly ended for cars purchased after July 1.

The Resale Value Guarantee was designed to secure Tesla vehicle's value to remain at least 50% after three years of ownership (base version and 43% for added options).

Lack of RVG isn't end of the world, it's more like back to norm for the automaker, and letting market forces to determine the value of a used cars.

Because of the lack of RVG for new cars sold, used Tesla EV prices should drop a bit as a result.

Tesla Motors on the other hand will release itself from expensive financial reserves for guaranteed value (total liabilities were valuated at $1.58 billion as of March 31).

The trigger for ending RVG could be the introduction of cheaper Model X with 60 kWh battery (preceded by the Model S sedan's 60 kWh re-introduction).

"The discontinuation of the buyback program, as of July 1, allows Tesla to free up cash that had been set aside to buy back Model S cars after three years at a value of at least 50 percent of the base purchase price."

"Within the next 12 months, Tesla has disclosed it could pay a maximum of $192.4 million to cover resale value guarantees on 4,209 vehicles. That amounts to a maximum liability of $45,711 per car, although Tesla could offset payouts by reselling repurchased vehicles.

Tesla valued the total liability created by the resale value guarantee at $1.58 billion as of March 31, according to its latest quarterly filing with the Securities and Exchange Commission, up over 20 percent since the end of 2015."

source: Reuters

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