Let’s Look Into The Resale Value Of A Tesla Model S

DEC 6 2018 BY EVANNEX 41

HOW DOES THE RESALE VALUE OF TESLA’S MODEL S HOLD UP?

It’s always fun to talk about Elon Musk’s tweets and tokes, but when it comes to predicting  long-term financial prospects of Tesla, savvy observers understand that the two metrics that matter are the demand for the company’s products and the margin of profit it earns on each unit. So, if TSLA stock slips in response to an unguarded comment by the Iron Man, consider it a buying opportunity. If you see evidence that demand for Teslas is flagging, then you can start to worry.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla’s Model S (Image: Tesla)

One way to gauge the level of demand for an automaker’s vehicles is to examine how their value holds up in the used market. Generally speaking, vehicles that are more in demand depreciate less. So it’s encouraging to read a recent report from venture capital firm Loup Ventures, which found that the depreciation of the Tesla Model S compares quite favorably with that of other vehicles in its class.

Based on a mathematical analysis of data on used car sales, Loup Ventures concluded that, after 50,000 miles, a typical Model S will have lost around 28% of its original value, whereas competing models in the luxury sedan class will have lost an average of 38%. Even when variables such as model year, miles driven and initial sale price were taken into account, Loup found that a Model S could be expected to retain 7% more value than its competitors.

Two things to keep in mind: higher-priced cars usually show worse depreciation than budget models; and plug-in cars in general exhibit worse depreciation than comparable gas-powered models (among other things, plug-in vehicles tend to be improved every year, and only new vehicles are eligible for federal and state incentives). Of the plug-in vehicles on the US market, Teslas show by far the least depreciation, holding their value better than the Chevy Volt, BMW i3 or Nissan LEAF.

The Loup Ventures team started by looking at an Autolist survey, which included 1.6 million data points gathered between January 2012 and August 2016. Autolist found the following amounts of depreciation after 50,000 miles:

  • Tesla Model S: 28%
  • Lexus LS 460: ~32%
  • Mercedes S-class: ~36%
  • Porsche Panamera: ~37%
  • BMW 7 Series: 40%
  • Audi A8: 40+%
  • Jaguar XJ: 41%

However, the researchers weren’t entirely satisfied with these numbers – during the years covered by Autolist’s survey, the supply of Teslas was limited, which could have artificially kept resale prices high. Therefore, the Loup team decided to conduct their own survey based on today’s prices.

The team examined the same auto models that were included in the Autolist survey, scraping listings of certified pre-owned cars from manufacturers’ web sites. Next they built a regression model to predict the percentage by which each car had depreciated based on model year, miles driven and MSRP. They also included a categorical variable designed to account for any inherent difference between Tesla and its competitors.

The article includes all the details of the team’s analysis, which the statistically inclined may wish to read. The researchers concede that their study wasn’t perfect – they could have used more data on non-Tesla vehicles, and the bewildering array of options available made it impossible to calculate the precise MSRP of some models. However, they believe that their conclusion that Model S depreciates at a rate 7% lower than that of competitors in its class is sound.

Above: A look at an older Tesla Model S (Image: Tesla)

Be the numbers what they may, there’s plenty of anecdotal evidence that Tesla’s vehicles hold their resale value well – comments on the subject by frustrated would-be owners aren’t hard to find. But after all, these cars often seem to have minds of their own, so it shouldn’t be surprising that they stubbornly refuse to lose their value as quickly as most other luxury vehicles do. That may be bad news for car buyers with moderate budgets, but it’s a good sign for the future of the company.

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Written by: Charles Morris; Source: Loup Ventures

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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41 Comments on "Let’s Look Into The Resale Value Of A Tesla Model S"

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Mike

Just don’t expect the top of the line MS to hold it’s value like the base MS. Our 2 year old P90DL was given a 50% trade-in value from Tesla. I have found that people are not willing to pay for the performance model on the resale market. Bigger battery is worth a little (not anywhere near what Tesla charges for it). Base model holds its value the best.

jelloslug

Options never hold their value like the base car.

Doggydogworld

Also, P90DL wasn’t top of the line for long. People pay a lot more for top than “used to be top”.

Vexar

Tesla, Inc trade-in rates are lower than the market sale. Nobody told you?

LS

Trade in value is not resale value.

BillT

As more model S come out of warranty I think the resale value should settle on a value based on how expensive they are to keep on the road post warranty which is a combination of frequency and cost of repairs, Door handle mechanisms and the $mart air suspension seem like the most likely big ticket repair items, I am happy my model 3 has neither of those :). If the S can match Lexus on repair costs and frequency the less expensive “fuel” should keep resale value of the S north of the LS460 which would be a great competitive advantage for Tesla long term. Higher resale value = cheaper lease rates and leasing drives the luxury market in the US at least,

TheWay

The resale value is also influenced by the tax credit. As the tax credit phases out, resale value would be higher.

LS

Always amazed at the “reports” on depreciation that don’t factor out the tax credit and then conclude that resale value of BEVs is horrible.

Light

Air suspension costs, yes. Door handles, not really. $94 parts and labor and they did it at my house. Zero downtime for me is worth money too. So I wouldn’t put that one under big ticket. The old door handle failures were and old design. New ones don’t have the wiring problem. As the cars age some of the (like my latest) issues are with the gears in the auto-presenting handles. And like I said, $94 parts and labor or not bad at all when you compare to taking any car in for a basic repair.

Your Dad

Charging port $2000, motor, inverter, battery…

Pushmi-Pullyu

Tesla supports the resale value by making it very attractive for people to trade their used Tesla car in thru Tesla’s own CPO program. Tesla bashers would put a negative spin on this by saying “Tesla keeps the prices of used Tesla cars artificially high”… but there’s nothing “artificial” about the dollars you’ll have to pay for a used Tesla car.

There’s a very important point made in comments above: That the trade-in value is lower than the resale value, even thru Tesla’s CPO program.

So the best advice for a used Tesla car buyer may be to buy from the CPO program, but the best advice for a seller — one who wants to maximize how much he can get out of the car — may be to sell it himself thru CraigsList or Ebay or something similar.

scott

Tesla’s CPO program is horrible. They don’t refurbish the vehicle. They don’t let you see or drive the vehicle prior to purchase. Not good.

David

Resale seems pretty solid now. One factor to also consider is that Tesla has a fixed MSRP. Most other cars sell for well below MSRP initially so they appear to depreciate more. I’m also curious to see how long Tesla can go without a redesign. Most cars are redone in 4-5 years. If Tesla does a redesign of MS, it may hurt older gen MS resale.

Light

Don’t forget Tesla makes updates constantly instead of waiting for model year refreshes like most companies. There are new interiors, a new internal computer, more cameras for AP, larger battery, HEPA air filtration system changes all without needing a redesign. I would look for a major change if/when they switch to the model 3 battery cells.

Pushmi-Pullyu

I’ve seen advice not to buy a Model S older than… I think it’s 2014?… because those can’t be upgraded for Autopilot. But other than that, I haven’t seen anyone suggesting that the older, pre-facelift Model S has depreciated in value faster than the newer version.

Some of us actually prefer the style of the Model S with the nosecone!

Mark W

Did they account for the $7,500 tax credit? The price paid may be $100,000 for example, but the car only cost most buyers $92,500.

boyantcho

Of course not. Why would they. It is a tax credit if you qualify. If it is a company car and you are able to deduct the car as a business expense do you have to consider it too?

David Cary

That is a very large difference. There is a very small proportion of people who buy a Tesla and don’t qualify for the full tax credit. So yes it matters.

Light

No, because that is factored into the the resale by the resale buyer. I’m not going to pay 100k for your 105k car brand new at 0 miles since I know you are saving (up to) 7.5k on taxes. I’m going to assume every single buyer received 7.5k right off the top.

In short, the market accounts for it.

Mark W

That is my point. This article is comparing the depreciation percentage of an EV with a tax credit, to other cars that did not have a tax credit. EVs depreciation percentage winds up showing higher than it really is. I’m thinking there should be an * somewhere explaining this.

Billy G

I found it interesting that Audi and Jaguar are at the bottom of the list, and they are producing 2 of the most compelling luxury EV’s since Tesla, I wonder how the resale value of the i-Pace and e-tron’s are in the next 2-3 years.

Light

i-Pace, I predict poor due to the low range vs battery size and the odds are significant improvements in it (in the next 18 months). I believe this because I do not think the i-Pace will have large long term demand based on price/performance. Tesla has been incremental improvements 6-12 months, not major refreshes every ~3 years.

Spoonman.

I keep expecting to see a fall. Autopilot 2 didn’t do it, initial Model 3 release didn’t do it, now volume production of the Model 3 isn’t doing it either. Maybe when they start leasing out Model 3s.

Light

There isn’t a reason for it to fall. Plenty of people want one, and each thousand reduction in resale value adds more buyers to the list. The pool (of buyers) becomes larger with each decrease as well.

Pushmi-Pullyu

Indeed. With Tesla car owners giving rides to friends and co-workers, and in some cases actively working to proselytize owning a Tesla car, the pool of people who want a Tesla car will continue to grow for at least a few more years. In other words, demand will continue to grow, which will keep the resale value high. I think it’s safe to believe that will continue for at least the next 5 years, if not longer.

Zach

Tax credit expiration is working against that, at least in the US.

F150 Brian

I always wonder if these are using MSRP or transaction prices.

Toyota was the market darling in the 90’s and early 2000’s and the media raved about their resale values, but most of the gap was covered by MSRP – transaction.

Good on them for not advertising higher MSRP and offering big discounts, but the clowns in the media coundn’t figure out that the “S” in MSRP is “suggested”, making MSRP irrelevant to depreciation cost calculation.

cab

The base models must be really skewing this. I purchased a 3 year old CPO P85+ a couple of year back for less than half the sticker. Given how many of the early cars were loaded, I do wonder about this research.

Pushmi-Pullyu

Comments above indicate the Performance trim level depreciates more than more basic trim levels of the car. Your experience is along the same line.

scott

I’m assuming you purchased a CPO back when Tesla actually refurbished the vehicle?
If they still refurbished I’d buy one of the many $40k CPO’s they currently have listed.

cab

Yes, although I have always said the CPO process for Tesla consists of 2 steps: Wash Car and Sell Car. I drove it off the lot with an audible “clunk”. Drive unit obviously had an issue and I brought it back a week later and they replaced the drive unit and a slew of other more minor items.

Billy G

if thats the case, there were like 40k model s’s sold in 2012-2013, maybe Tesla will not resell them all, use them to replace parts or for mobile rangers.

Pushmi-Pullyu

You keep trying to use your dad’s very outdated Tesla bashing.

If you must troll, then at least try to be entertaining about it. You’re just boring, “dad”.

Get Real

The only thing that is “all” breaking down is your “Dad’s” brain on Faux News’ ridiculous anti-EV/Tesla FUD that you lazily cut and past off of Breitbart or whatever right wing-nut website you spend most of your time on.

You most assuredly have never seen Tesla components because that would require that you lived in the real world (the one where Tesla has by far the best customer satisfaction scores of not just any auto company but of almost any company in existence) instead of the “alternate facts” universe that you stay in.

Speculawyer

This is pretty amazing since the tax-rebate causes most EVs to apparently depreciate really fast. As soon as you drive an EV off the lot, it loses $7500 in value since a person could always buy a new one.

That said, it won’t be the case any longer for Tesla since they will soon lose 1/2 their tax credit.

Roy_H

I had a laugh a few months back. I live in BC Canada, and out of curiosity I looked up used Model S & X for sale. There was only 2 listed in the Canadian Autotrader.ca website for BC, both in Vancouver and 1 S (only 7 months old) and 1 X (just 1 year old). Both with over 10k kilometers. Both were listed a few dollars more than could be bought brand new with BC government credit applied! Who would ever pay more for a used car? No idea if these cars actually sold.

ModernMarvelFan

that is due to short supplies. People who don’t want to wait would have to pay more.

Since there aren’t lots of Model S/X available for used inventory, the price is held “artificially” high. We will see if that is the case for Model 3 as the volume increases.

ModernMarvelFan

Low inventory and relatively higher demand (due to lack of alternative options) is what keeps the used Model S/X price up.

We will see in few years how the Model 3 holds up over time.

Nix

“scraping listings of certified pre-owned cars”

This would completely distort the results, because certified pre-owned cars come primarily from lease returns. And different companies have very different percents of their cars getting leased in the first place.

Cars with very high lease rates can greatly distort the used car market for non-preowned cars. When 80% of the 3 year old used cars of a particular model are pre-owned because 80% are lease returns, that sets the market price, and the market price then includes the cost of an extended warranty.

Rob R

Hardware upgrades in new Model S will hit used prices, but of course that is not the case with software upgrades, since the used cars get them too. Even with Autopilot, the Mobileye was so good that it is only in the last couple of months that the in-house offering is clearly better. I wonder where prices are with the very early cars, with no Autopilot hardware at all?
Quibbles aside, Model S was and remains a great purchase, as does Model X if you need all that fancy, but fault prone, door tech.

Eric

These are the kind of facts that make short sellers weep! 🙂