Selling Your Tesla Model 3 Reservation – Is It Possible? Video

3 months ago by Steven Loveday 25

If you have a Tesla Model 3 reservation and for whatever reason you can’t keep it, is there a legal way to sell it to someone else?

We’ve already gone over this, and according to Tesla, it’s not legal. However, there’s almost always a workaround right? Ben Sullins of Teslanomics aims to find out by consulting lawyer friend, Franklin Graves, to dive deep into the Model 3 agreement legal jargon. It should be simple. Tesla’s statement, which was attached to Model 3 pre order confirmation emails, reads:

Tesla Model 3

Tesla Model 3 at the recent handover event

“Your Reservation is not transferable or assignable to another party without the prior written approval of Tesla.”

So, if you could somehow secure written permission from someone at Tesla, then maybe you could sell or transfer your reservation. It’s likely that Tesla chose to include this language for extenuating circumstances. Otherwise, even attempting to do so is a bad idea. If Tesla found out, they would cancel your reservation. But wait … you didn’t want it anyway correct? We’re kidding … it’s still a bad idea legally.

Keep in mind, however, that there’s nothing stopping you from selling the car once it’s yours. A plan wouldn’t be difficult to devise, in which a friend buys the Model 3 from you in advance (so that you have the cash in hand upfront for the transaction), and then it’s transferred to that person once you take delivery.

This is really no different in the end. You still unload your Model 3, and some happy person still gets your spot in line, albeit indirectly. Heck, that paying purchaser could/should even be on hand during the configuration process. In a situation such as this, it’s still always a good idea to have a lawyer involved, just in case something goes awry with the deal.

There’s one other caveat to bear in mind. In terms of the $7,500 federal tax credit, you would receive it instead of the potential buyer. You would also be the one paying taxes on the income from the sale.

We don’t claim to know or understand fully how all the tax mess would work out, so this is just another reason to have a lawyer on hand, and/or someone who has thorough knowledge on the tax situation.

Video Description via Teslanomics by Ben Sullins on YouTube:

I’ve heard a TON about people wanting to either buy or sell a Tesla Model 3 reservation. The fact of the matter is that Tesla does not allow this without their prior written consent. That doesn’t prevent you, however, from selling the car immediately after taking ownership. There might be some implications of doing this however so you’ll want to beware before acting on any of these ideas.

Big thanks to Franklin Graves for his legal perspective.

If you take a look at the reservation agreement, which was attached to the email you received in your confirmation, there is a clause stating “Your Reservation is not transferable or assignable to another party
without the prior written approval of Tesla”

So it’s a pretty clear cut answer, right? Well, not exactly…

I wanted to get an expert opinion on this so I called up a friend and fellow YouTuber Franklin Graves and asked his opinion on this…

So since Tesla can cancel your reservation pretty much for any reason, I wouldn’t recommend trying to sell your reservation. Or if you’re thinking about buying a model 3 reservation, know it’s likely a scam and if even it’s real, Tesla could find out and cancel the reservation

In any event, there isn’t really anything that Tesla can do to you once you take delivery of the vehicle. Meaning, you could turn around and sell the car to someone else 5min after taking delivery.

So unless Tesla puts something in the purchase agreement for a Model 3, which is unlikely, you could in theory sell it to someone immediately after taking delivery, and you could even have an agreement with them in advance.

This does bring up the question about taxes, however. The original purchaser of the vehicle is the only one that is eligible for the federal tax credit in the US. And, if you were to take the tax credit as you profits from the sale, you could be taxed on the as income.

So think twice about that and if you are dead set on selling your Model 3 make sure to consult a tax professional beforehand to really understand the implications

So what do you think?

Would you buy a Model 3 reservation to skip ahead in the line and get yours early?

How much would you pay?

Let me know in the comments below!

As a disclaimer also, none of what I shared here should be considered legal or financial advice. While my guest today is a lawyer, we were talking hypothetically about a situation that people have asked and this should only be considered entertainment.

Source: Teslanomics

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25 responses to "Selling Your Tesla Model 3 Reservation – Is It Possible? Video"

  1. jim stack says:

    Yes, I’d buy it right from the person who took delivery and didn’t really want it. I got in line the first day so I have an early reservation but we wanted 2. So I have to wait until January for the base model 3 that I want just to show everyone you can get one for $35K and it does everything needed.

    I’m sure there will some brand new delivered cars on ebay and other places trying to get more for them than they paid. The incentive of $7,500 is a little messy but that may be the profit they will take.

    1. CCIE says:

      Good luck buying a $35k M3 in January. They’ll sell some stripped base models at some point. But not that early.

      1. Rob Stark says:

        You don’t need luck. You need an early reservation number and be a resident of California.

        Tesla starts producing base Model 3 in November and starts delivery in December for California.

        And their is nothing stripped about a base Model 3.

        1. CCIE says:

          He said $35k, which would be a base model with no options (stripped).

          No doubt they will begin delivering base models roughly on time. But, I highly doubt they’ll allow you to order a stripped base for quite some time. Summer next year, at the earliest, would be my guess.

          1. Unplugged says:

            CCIE – I can see that you don’t understand the reservation process. Those who have received reservation confirmations also have an indication of roughly when the Model 3 will be ready for delivery to them.

            There is a two month difference between the long distance battery and the base version. That’s all. There is no “summer of 2018 availability,” there is no “you have to wait six months” for the Model 3 if you don’t order the long range car.

            Tesla has confirmed this two month delay in many ways. If you don’t believe Tesla, that’s your choice. But I’ll go with what they have been stating all along.

            1. CCIE says:

              I understand. And I believe that the base (standard range) M3 will be made available about when you expect. But, I believe Tesla will keep restrictions in place on how the base must be ordered. They will require at least a few “options” be installed. They need to do that to make money on the car.

              As you said, we’ll see. It’s very possible that I’m wrong and Tesla will rely on the stripped base being unpalatable enough to make enough people order some options.

              1. DJ says:

                Just to chime in this would be a bad idea. The person who initially bought the car has to pay sales tax. The person who then buys it from the 1st person then has to pay the taxes yet again when they register it with the state. Talk about screwing you over… maybe some states don’t work like this but CA does.

  2. ModernMarvelFan says:

    I wonder what % of the reservation holder are having that thought (trying to sell an early copy of it for profit) when they booked their reservation.

    In the early days of Model S launch in China, some people were doing exactly that. It is certainly easier and cheaper this time around.

  3. wavelet says:

    This is world-of-duh. It’s pretty obvious Tesla has no way of physically preventing sale of a car post delivery(*).

    However, that means that the buyer will technically be buying a 2nd-hand car, and over here, that reduces the book value of a car by 5-10% (and the number of prev. owners is listed in the registration), even for 0 mileage.
    You’d also have to trust the reservation holder to hold to the bargain once the car is delivered, and the reservation holder would have to trust the buyer to go through with the transaction, or left holding a $35K+ car they didn’t want.

    I can’t see anyone except close friends/family doing this.

    (*) Yes, I’ve read that the early-bird Tesla employee buyers sign some document stating they won’t resell within a time period (1 yr?) — same thing, Tesla can’t physically prevent such a sale.

    1. Lawrence says:

      The initial depreciation doesn’t apply with cars that have limited availability and demand far outweighs supply.

  4. jm says:

    I’m actually thinking of transferring my res to my sister. I guess we are both initially put on the title and reg then I get dropped off a few months later. It’ll be a cash tranaction, so hmmm?

    1. Jim says:

      Finally someone who gets it, Ca allows 2 names on a title. You take one name off after delivery.

  5. Gary says:

    In the described situation, neither party qualifies for the tax credit.

    26 U.S. Code § 30D – New qualified plug-in electric drive motor vehicles
    (d) New qualified plug-in electric drive motor vehicleFor purposes of this section—
    (1) In generalThe term “new qualified plug-in electric drive motor vehicle” means a motor vehicle—
    (A) the original use of which commences with the taxpayer,
    (B) which is acquired for use or lease by the taxpayer and not for resale,

    Very clear that if it is purchased with the intent to resell to another party, you are not eligible for the tax credit.

    If sold to another party, it would be a used vehicle and not eligible for the tax credit. (Once title transfers to your name – which Tesla will certainly require – the vehicle can no longer be sold as new).

    1. Mark.ca says:

      Not to mention that a transfer of ownership will prevent you from getting a state credit such as the $2500-$4000 California credit.

  6. Just Asking says:

    Could you do a one time gifting of the vehicle to someone and that person also does a gifting to you of money? I was just thinking that since Elon was gifted his vehicle, anybody can gift a vehicle to somebody else.

    1. ItsNotAboutTheMoney says:

      IANAL.

      Gifts have to be without conditions. Hiding a sales transaction as an exchange of gifts would be fraud, I expect.

    2. Pushmi-Pullyu says:

      “Could you do a one time gifting of the vehicle to someone and that person also does a gifting to you of money?”

      I want to be a fly on the wall when you try to use that excuse with an IRS agent. 😉

      Courts and judges generally take a dim view of such obvious efforts to circumvent laws. In fact, altho again I’m not a lawyer, I’d be concerned that you might wind up getting charged with conspiracy to defraud the government.

  7. Randy says:

    I have two early reservations. Maybe sell one?

  8. Terawatt says:

    Being in Norway, my estimated delivery is late 2018 (if all goes well), and by then perhaps production rate will exceed reservation/purchase rate by enough that there won’t be a long wait for the newly converted. In any case I want to have one myself. I’ll spec it to my liking, not try to make a deal with someone else who then gets to spec the car.

    But if the line is still very long and it turns out I can sell it at a decent premium I’d certainly consider doing so and just get in line again – or get something else, if good alternatives exist by then.

    I doubt it’ll fetch a big premium in Norway though. And I really don’t know whether reality will conform to the delivery estimate! Perhaps I can get it a bit sooner. Maybe I can’t get it until 2019 sometime. Nobody, including Tesla, knows.

    Looking forward to seeing updates on the ramp-up. It should be 150 this month if the latest-announced plan is on track. Next month really is the start of small-scale production in any real sense (it’s a volume car after all) and by the end of it there should be loads of owner-generated reviews and other content all over the place – blogs, YouTube, you-name-it. I hope it all goes really well!!

    1. Mister G says:

      Are you a citizen of Norway? If you are you are a multimillionaire LOL…Norway’s sovereign wealth fund is almost $1 trillion WOW

  9. PK says:

    In Ontario you must keep the car for 12 months, otherwise they’re after you for the $14k rebate.

    “If you own the vehicle, you must keep it for 12 months from the date it is registered and plated; if you do not, you must return the incentive in full. If you lease your vehicle, you must maintain the lease for the term specified in the lease agreement and in no case can you lease the vehicle for less than 12 months.”

  10. Pushmi-Pullyu says:

    Hmmm… I’m not a lawyer, but wouldn’t the title transfer to the new owner be considered, under State laws to be selling a used car, and not a new car?

    If so: This may be the worst piece of advice ever given in an InsideEVs article.

    At best, the new buyer would not get any of the legal protections that State laws provide for buyers of new cars. So anyone contemplating buying a Model 3 under a title transfer agreement should check out how his State laws differentiate between the two. For example, it seems unlikely that “lemon laws” would apply to buyers of used cars.

    Furthermore, before anyone even contemplates doing this, they should have some firm answers… and by “firm”, I mean in writing answers from Tesla Inc. … regarding the following questions:

    1. Do all warranties, guarantees, and service plans (if any) for the car transfer to the new owner?

    2. Does any Supercharger access which the car comes with, transfer to the new owner?

    3. Will the new owner be entitled to all the same OTA updates which buyers of new Tesla cars get?

    Even if reserver (reservationist?) turns around and immediately resells the car after taking possession, without even setting foot inside, by law (as I understand it) it still becomes a sale of a used car, and not a new car. Anyone buying a title transferred car ought to investigate what differences there may be under their State laws about buying a used car vs. a new car.

    That’s in addition to the caveat given in the article about any tax rebates going to the original buyer, not the buyer of the used car.

  11. ffbj says:

    This is a pretty cool wheel, too.

  12. Trebor says:

    Sales tax is not paid until the car is registered, as far as I know.

    I think you can buy a car from a dealer, and flat bed it to your house because you plan to register it in another state, and never actually register it, and never pay sales tax.

    The question is – would Tesla let you take delivery without registering it?

  13. RS says:

    How about you create a LLC or Corporation in your name, and then after you get the car registered to your corporation, you sell the corporation for the value of the car to someone else, and transfer the corporation to them?

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