UPDATE: Tesla Changes CPO Program – Cars Mechanically Inspected

APR 13 2018 BY STEVEN LOVEDAY 47

Tesla’s website now confirms previous concerns related to a major change to its CPO program.

It wasn’t long ago that it seemed Tesla’s CPO program was booming. This was especially true when some used models were aggressively priced and those awaiting their Model 3 were having second thoughts.

Related: $40,000 Used CPO Model S EVs Overwhelm Tesla’s Pre-Owned Site

***Update: It seems Tesla has now “softened” the new language related to its used cars. See the photo below stating ‘Mechanically Inspected’:

Recently, Daniel Zorrilla, a friend and contributor at InsideEVs, was on the hunt for his next used Tesla Model S. He tracked down models in several locations around the country, and it turned out that everything posted was not refurbished. Additionally, an advisor at Tesla told him that the automaker was going to a new format soon, in which Tesla would no longer list cars prior to refurbishing.

Check Tesla’s CPO Inventory Here

However, it appears now that the company has taken the change a step further. Prior to this change, the automaker listed cars before refurbishing them, then once you put your deposit down, you’d have to wait a few weeks to get the car, because the refurb process took some time.

Now, instead of refurbishing the cars first and then listing them, Tesla is not doing the work at all. The cars are listed with a disclaimer saying just that. So, you can purchase and take delivery fairly quickly, but if you want anything extra done, you have to pay for it.

Daniel elaborated:

That seems to have happened already because on my prior CPO purchase, I put a deposit down, and it wasn’t ready to pick up for weeks while Tesla reconditioned it. I put a deposit down last week on a Tesla certified Model S. A Tesla Sales Advisor called me the next day and asked me when I could pick the car up. When I asked the Sales Advisor, he said that Tesla didn’t list them prior to being reconditioned anymore, and waited until they were reconditioned to list them.

Based on what I’ve seen today, this seems like another step – Tesla selling cars that are just inspected, but not reconditioned. 

He explained a little more background for us, from his past experience and understanding of the situation:

They do a great job reconditioning the cars, they’re like new when you get them, but it seems like Tesla spend thousands reconditioning them. Even if they buy cheap and sell high, they can’t be making much off the secondhand market from what I’ve seen. Especially when they have to provide an extended warranty on top of it. Going from a 4-year/50k warranty to 2-year warranty last year further shows they’re trying to make it more profitable. 

Good for profitability, bad for CPO buyers and Tesla setting its used cars apart from the competition. 

This is not to say that the cars aren’t certified. According to Tesla, they still undergo a 70-point inspection and cleaning prior to delivery.

Following the link below will take you to a Tesla Motors Club forum thread with more information about the matter. Also, the second link is a Tesla CPO buyer’s story about his experience with the new program.

Hat tip to Daniel Zorrilla and Brian R!

Sources: TMC Forum, 2

Categories: Tesla

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47 Comments on "UPDATE: Tesla Changes CPO Program – Cars Mechanically Inspected"

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William L.

The worst part of Tesla CPO program is they show you the perfect studio pictures of the car, not the actual photo.

Tesla doesn’t disclose any interior and exterior damage of the car up front.

DJ

To be fair they used to repair cosmetic issues previously so while it would be nice to see actual pics I don’t know if it was a necessity. Now that they’re not going to be doing that anymore it would be very nice of them to provide actual pics.

I know I’m not alone in that no way am I throwing down $50k+ for a used car that doesn’t have that refurbishment guarantee sight unseen although I suspect many people still will.

williamb

Stock photo of used car? Man, sounds like the dealer union.

TedFredrick

Haven’t you ever heard of the old saying Don’t ever buy a pig in a poke. It means look the product over before you purchase it

Carl XVI Gustaf

Even when you buy a brand new Tesla. Check for panel gaps and misalignments. Put it back on them that releasing such a car is not acceptable. Same goes for any manufacturer, and you should do a test drive of any car you buy.

bro1999

Worst CPO program in the world. And I’m not even kidding. It literally is the worst. You can even inspect and take a test drive in a used car at Bob’s Sleazy Used Cars Inc!
Buy a used car sight unseen in an unknown condition that has been used and abused as a service loaners. Then get the bonus of a bill listing all the repairs that are needed. What a deal!

Lamata

Why does it take so long to moderate my Blog..?

Pushmi-Pullyu

“…I’m not even kidding.”

Nobody thinks you are, MadBro. It’s obvious you are not merely afraid, but positively terrified that Tesla will put GM out of business. Why else would a GM fanboy like you spend much more time and energy talking about — and attacking — Tesla, than you spend on talking about and/or praising GM?

Go Tesla!

SJC

“..put GM out of business..”
You are delusional, seek help.

Miggy

GM are doing a great job of putting themselves out of business, again!
Look at their Worldwide sales which are trending down.

Dan

You are Tesla paid fanboy or Tesla marketing employee.

Pushmi-Pullyu

Gosh, I’d better e-mail Tesla, then. They seem to have forgotten to pay me, so thanks for letting me know I should bill them! 🙄

Carl XVI Gustaf

If I employed you, I would want to get paid, and not the other way around!

Bill Howland

HAHAHA! +1

zzzzzzzzzz

bro1999,

Don’t insult Bob’s Sleazy Used Cars Inc. My local used car dealers are honest guys, at least compared to Tesla. They post real pictures, show what they have on lot and let you drive around before taking any money and don’t pretend they warrant anything.

Bill Howland

Yeah zzzzzzzz, I have to agree with everyone here basically – Looney Pushi will have a bit of trouble defending this action.

There are now 2 types of “Certified” vehicles, those that are, and those that are not. Buyer Beware, as they say.

Looney Pushy will say everyone will know the difference between the 2 cars. I say not necessarily.

For example, Tesla’s AUTOPILOT $5000 option which, contractually, is no such thing – apparently some TESLA owners actually believed that “PLAIN SPEAKING TESLA” ‘s $5000 Autopilot option was just that – and then the car drives either under a while stopped Semi and decapitates the driver, or else drives straight into abutments.

Other car manufacturers, which are greatly unfairly disparaged in this venue, are offering truly ‘certified’ vehicles which are a clear improvement over just run-of-the-mill. I don’t know how much money Tesla plans on saving by implementing this policy, but is just another case of them losing a priceless intangible – that of GOODWILL.

If Tesla becomes synonymous with ‘Snake Oil Salesmen’, it will take years to get their formerly good name back.

TedFredrick

I had a S service loaner with 50K miles on it that looked like a car with 150K. I couldn’t wait to get my Model 3 back

EVShopper

So what did they actually do to refurbish the vehicles?

Lamata

Nothing ..

Pjwood1

Bumpers, fewer new tires, dents bigger than a dime, probably with pictures, where dents smaller than a dime used to be acceptable for CPO.

Demand pics, if any of above

bro1999

They Certify that it is Pre-Owned. That’s about the extent of the CPO program now.

Jason

You know, Tesla hires experts from other car companies. Eventually, once you hired enough of those people, guess what? You become like those companies because all the talent in your company has those same views as all the other companies.
I think Tesla cars are pretty cool, but every week it seems they are getting closer to being more like the other manufacturers. I won’t be surprised when they open their first dealership. It’ll be a sad day, but I think it will be inevitable once they realise they can shift a huge cost burden somewhere else.

Pushmi-Pullyu

Shifting a cost burden to independent dealers also means shifting part of their profit margin. Refusing to use stealerships dealerships is one way that Tesla has been able to compete with the “big boys”, despite the fact that it’s a much smaller company than the Detroit Big Three.

Why would Tesla shoot itself in the foot by abandoning a winning business model? Tesla is now spending money opening “delivery centers”, yet another innovation they’ve made to ensure they’ll never, ever need a traditional stealership, the sort which are motivated to scam and prey upon their own customers!

Go Tesla!

Troy

>Why would Tesla shoot itself in the foot by abandoning a winning business model?

TSLA balance sheet (2017 vs 2016)
Retained Earnings -4,974,299 -2,997,237

F
Retained Earnings 21,218,000 15,634,000

Pushmi-Pullyu

Tesla’s global automobile sales totals:
2012: 2650
2013: 22,300
2014: 31,655 (+41.95%)
2015: 50,580 (+59.8%)
2016: 76,230 (+50.7%)
2017: 101,312 (+32.9%)

I’m sorry you can’t understand why a company growing fast would be spending money faster than they’re earning it. That seems pretty straightforward, like something most reasonable people should understand without needing a detailed explanation. But for some reason, nearly all Tesla bashers appear to find that inexplicable, or a sign that something is “wrong”.

DonC

The fallacy of your argument should be apparent. If it’s axiomatic that Tesla won’t make money while it grows, the obverse is that, for Tesla to make money, it will have to stop growing. Seems like a dismal choice.

FWIW successful companies usually do both.

eject

This used to be called a pyramid scheme. Now we call it start up.

Windbourne

Take up a class on logic.
U need to learn implications.

philip d
Don’t be ridiculous. Every business model from small to large has an inflection point. To claim that because Tesla isn’t profitable at this particular point in their growth they will never be profitable as they grow is dishonest. Even Suzie’s lemonade stand business has to continue borrowing money until she gets enough stands in the neighborhood until she gets enough collective net profit from sales, even though it will still be far less than she’s borrowing, to be able to start buying her lemons and sugar in bulk allowing her to lower her costs per glass of lemonade raising her net profit. Tesla is still a low volume producer with huge capital expenditures. You have to remember that they had only begun selling their first car that wasn’t built by hand the model S 6 years ago! That’s a lot of investment in a very short period of time. They took a huge hit building the gigafactory site. There are a lot of costs up front from site improvements to infrastructure that is capital already spent that can’t be utilized until the entire factory is 100% built with the floor area maxed out with lines for auto and battery production.… Read more »
ModernMarvelFan

“Once that happens and they are producing the theoretical limit of 400k to 500k cars along with packs for their energy business for a few years and if they still aren’t turning a profit then you and everyone else can legitimately critique their business model. Until then chill out and let them do their thing.”

That sounds legit. But by then, will the excuse be that they are investing in Model Y, Model T and Semi that cost a lot of money so they won’t be making profits against for another few years?

Pushmi-Pullyu

“If it’s axiomatic that Tesla won’t make money while it grows, the obverse is that, for Tesla to make money, it will have to stop growing. Seems like a dismal choice.”

More precisely, Tesla will have to stop growing as rapidly as it is now, to become profitable. Growing rapidly to capture a new market, then scaling back growth to start making profits, is a strategy which worked brilliantly for Amazon.com. It’s amazing to look back and see that it has only been about two years since Amazon.com started showing a significant profit every quarter… and since investors stopped whining about how Amazon.com was supposedly “losing” money, despite the fact it was investing money, not losing it; just like Tesla is now.

How quickly people seem to have forgotten! Why, they knew all along that Amazon.com would be one of the most successful businesses ever; how could anyone doubt it?
😆 😆 😆

Of course, that’s by no means proof that Tesla can do the same, but it certainly does show that business strategy can pay off — can pay off big time!

Go Tesla!

Oswald

Tesla was founded 14 years ago, I’d hardly call them a startup. Facebook is the same age and they’ve managed to make a little money along the way.

Carl XVI Gustaf

Don’t forget to check revenue growth! That retained earnings is going to grow one day, and yes I mean into the positive!

Bobo

Profit margin. That’s funny. Tesla is amoung the most shorted stock. They can’t meet production goals and they are having problems with their batteries.

I considered a Tesla about a year ago, but ther we’re far more negatives than positives and went with another option.

EVShopper

Traditional dealers make large chunks of their profit from used car sales, maintenance and service, and financial services (loans and leases and extended warranties). Looks like Tesla is looking to model that.

Tom
This will work itself out. Either people are willing to do it or they are not. Tesla will keep trying new things to learn where the sweet spot is. The prices seem waaaayyyy too high for used inventory sight unseen though. You never know what will come to light. I know this is a stretch but just had a friend buy their first PHEV. They did all the research (live in cold MN) and determined the Volt was the best combination. Most days don’t drive 10 miles. And they researched the high quality of Chevy’s batter packs. Guess what? Owned it a week and the battery failed. They had bought it at a used car dealer. Chevy dealer tore it apart and discovered the battery had been flooded. Still not sure they have the issue settled. Someone somewhere lied. And it is entirely probable the shady used car dealer didn’t know the battery had gotten wet and was all corroded inside. I got it…Tesla still probably checks that out before selling but just using as an example of what can go wrong. If they back it with a decent warranty then fine.
DonC

Refurbishing vehicles is standard for used car dealers, but it is a significant expense. Seems like uncoupling the refurb from the sales price just gives consumers a choice.

However, I can see how the disclosures might have to be detailed to cover issues that a buyer might not expect.

All-Purpose Guru

Usually refurbished cars are at a much higher cost; at least the last Toyota shopping I did showed that.

1) Tesla has to disclose what you’re getting ahead of time, especially if you’re buying sight-unseen

2) Tesla should disclose what refurbishing will cost for that car so it can be “purchased” when you buy the car– this will also give you an idea of what shape the car is in

TeslaPlease

‘Tesla should disclose what refurbishing will cost for that car so it can be “purchased” when you buy the car– this will also give you an idea of what shape the car is in’

It will never happen…. Tesla does not want you to have this information spelled out in writing because it will then reveal the reliability / failure rates of their components.

Up to this point Tesla has been very generous about addressing issues without reservation BUT this expense is probably not sustainable therefore, I suspect we will now see Tesla evolve to shifting costs to the consumer more and more.

David Cary

Refurbishment.

I have a 54k mile model S. If if were sold CPO, I would expect this piece of leather on the driver’s side door should be repaired or replaced. My tires are about 40% worn so they might be replaced. Then a good detailing.

Sold unrefurbished – I would expect detailing.

The only real difference would be the leather repair. It might be $300. So that would be on the new buyer. Big deal.

What do people really think they do to refurbish cars. It isn’t like there are all these wear items that are replaced. There are certainly cosmetic issues on some cars and now it is on the buyer to decide if they care – and presumably they get a cheaper car if they don’t.

This is not a big deal at all. The cosmetic issues are emotional ones. The CPO idea is partly catering to that emotional appeal. That is something traditional manufacturers do. So they are moving away from that model – that is actually a new idea and different than traditional ones. How is that becoming more like traditional manufacturers? That is non sensical.

bro1999
Just envision visiting a used car dealer that’s applying Tesla’s new CPO tactics: Customer: Hey, I saw a car online I’m interested in. Can I check it out for a test drive? Dealer: No. But trust us, it’s a great deal! Customer: No test drive? Umm…ok, well can I at least check the car out? Dealer: No. But seriously, trust us, you won’t regret your purchase! Customer: Wait….so you want me to drop tens of thousands of dollars on a car that I can’t see in person or test drive, or even see photos of? Dealer: Yep! Customer: ……so what can you actually tell me about the car? Dealer: Pretty sure it was at least vacuumed once when we received the trade-in. But we’ve been using it as a service loaner for 2 months, so I can’t really say what cosmetic condition it’s in. But don’t worry, it’s mechanically sound! Customer: ….are you trying NOT to sell cars? OK, I still really like the car though. Since you can’t tell me anything about the car, can we at least negotiate the price? Dealer: No. The price is the price. Oh, sorry, I forgot to mention, as a free service we’ll… Read more »
Nick

Are you trying to be sarcastic?

This is like every used car dealership ever, except too honest.

You should check out John Oliver’s sketch on used car dealerships some time.

Get Real

Since Mental MadBro probably works for a GM stealership he already knows how sleazy stealerships are.

You can see by his constant sleazy postings here on InsideEVs just how terrified he is of Tesla’s business model putting the auto stealerships business model at risk.

Of course, the other serial anti-Tesla trolls like zzzzz who come here in a shared love fest to post their fears also have their ugly reasons for hating Tesla.

realistic
Very few high-value “system-of-system” products are sold without dealer/distributor networks: off-road or agricultural equipment, building systems (e.g., HVAC, hydro, or people movers), general aviation aircraft engines, large-scale flow-control or relief valves… on it goes. The reasons are many, but in the modern world it’s largely the same general economic considerations: smooth out production planning and flow at the OEM, push down the burden of carrying assets, establish local cultural relationships and marketing, deal with local regulatory considerations, etc. These enterprises generally generate the majority of their income from the transactional chains, service, spare parts and related ventures (please know the difference between “income” and “revenue”). CPO sales based on trades are a common part of the portfolio (not just cars: off-lease golf course grounds equipment is but one example most of us don’t think of). There is really no useful argument to describe Tesla’s retailing structure as advanced or visionary. The main reason offered by advocates, once all the financial and regulatory disadvantages are admitted, is that Tesla couldn’t stomach “traditional dealer” behaviors. OK. Once the introduction of the Roadster was “successful” despite dodgy reliability and massive warranty expense, Tesla had gathered a strong and growing community of adherents. At… Read more »
Pushmi-Pullyu

Other analysts have suggested that one of the reasons Tesla — unlike various failed attempts to start a new auto manufacturing business in the USA since WW II — has been able to stay in business, despite being a “David” competing with “Goliaths” — is that it has cut out the middleman of the dealership, allowing Tesla to keep all the profits for itself, rather than splitting them with the middleman.

You are suggesting the opposite — that cutting out the middleman is actually costing Tesla more money than it saves. Apparently your argument is based on the costs of running Tesla stores and service centers, and paying hourly wages to employees at those businesses? You are claiming those cost a greater percentage of the profits than the percentage the auto makers have to give to dealerships?

I don’t know who is right, but it’s an interesting assertion!

javaid

Please, tell me weather any ways to purchase this car in pakistan ( karachi) 2. And the price ???

Dr Frank Jaehnig

Question:
The Tesla Model S has no Spare Tire.
Do you think after the warranty is exspiriert you get free service with your flat tire.
No 😡😡😡