Tesla Model 3 Depreciation Predicted To Be Lowest In Class

AUG 23 2017 BY DOMENICK YONEY 28

50% of original value after 100,000 miles? Sign us up!

You know the worst part about buying a brand new car? Driving it off the lot of the dealership or store. It’s at that moment when you’re newly-acquired asset loses a good chunk of its value. Luckily for most buyers, the blunt-force trauma of this truth is significantly dulled by the sheer joy of ownership and new-car smell intoxication. Still, it’s something that can come back to haunt you if, for some reason, you need to sell it shortly afterwards.

EV Buyer considerations

According to Autolist, Tesla Model 3 customers should, however, be able to blissfully enjoy the odoriferous release of volatile organic compounds with fewer depressing thoughts about depreciation. That’s because, according to the survey they carried out with 14,476 individuals, along with analysis of five years of Model S data, they expect the newest Tesla to have the slowest and lowest depreciation in its class. That’s reassuring, considering that buyers of the 3 are likely to be a little more sensitive to financial ramifications of an automobile purchase.

In numerical terms, that means your $35,000 Model 3 might still be worth $24,850 after 50,000 miles, and maybe even as much as $17,500 after 100,000 miles. That sounds like a pretty rosy forecast, but even if it’s off a bit, it probably won’t have much of an impact on sales. The same page on which we found this depreciation graph also contains a pie chart that slices up the reasons that cause consumers to hesitate to go electric, and guess what? Depreciation isn’t among the reasons listed. Range, cost and, to a lesser extent, the lack of charging networks are listed as the most noticeable stumbling blocks. Still, for some of us, knowing we might save a couple grand at trade-in time is quite reassuring.

Autolist via Teslarati

Categories: Tesla

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28 Comments on "Tesla Model 3 Depreciation Predicted To Be Lowest In Class"

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I was one of the first people to get a 1995 Sunfire GT in my city (first year of production). After 4 years and 97,000km I traded it in for >60% of what I paid for it.

Was that because it was a good car? Definitely not.

Was it because there was low supply of used? Absolutely.

Resale value is driven by supply and demand and those curves have anomalies. Nothing new to see here.

And demand is driven by how “good” a car is perceived to be by the buying public.

That can mean different things to different consumers.

Certainly the market will move depreciation rates up and down as a whole, but this was a relative measurement, meaning the depreciation was measured against other vehicles.

I probably should have stressed that more, since depreciation is rising right now because of a flood of off-lease vehicles across the industry.

There is glut and will continue for some time into the future. Also ice will continue to lose resale value and top end ev’s retain their value for longer a time.

Like the old ’96er I find that hard to swallow:
https://www.youtube.com/watch?v=V9m9cAz10jg

As long as there’s a waiting list (about 3 years), used 3 will sell even higher, maybe even close to MSRP during the wait-list catchup.

That would be the case if they had no competition.

It’s not going to sell near MSRP for a long time given it has competition.

Heck, if it were selling near MSRP after a year, then Tesla would certainly raise the MSRP.

Tesla has no competition, LOL. Call it tech advantage, or others sitting on their hands. It’s true.

We can count on a string of major auto-maker decisions, to let market share erode in exchange for short/medium term profit and labor retention. Watch.

Having 400K long wait list means pretty much no competition. And the list is probably growing, and unlikely Tesla will catch up in a year or two (or even 3).

unlucky said:

“Heck, if it were selling near MSRP after a year, then Tesla would certainly raise the MSRP.”

(A) But raising the base MSRP would have a significant negative effect on demand; it would be seen as Tesla reneging on its “promise” of a $35k car. Therefore, I think it’s unlikely that Tesla will raise the base MSRP.

(B) Have you looked at the high prices for the options on the Model 3? Perhaps — this is pure speculation on my part, but perhaps — Tesla has already raised the MSRP above what it had planned for more expensive trim levels of the car, in response to higher than expected demand.

40K is still a lot for a car. I suspect they will run into reduced demand similar to the Model S problem.

Tesla has already raised the MSRP, sort of. The $35k turned out to really be $36k or $37k if you want any other color than black.

Another thing to factor in. Gasoline is basically instantly depreciated. So spending $35k for a BEV that depreciates at 10% is cheaper per year than buying an ICE that costs $30k and depreciates at 10% but burns an extra $1000 worth of fuel.

Not to mention the potential volatility of fuel prices.

So 3 year leases should be awesome right?

Haha, good luck with that 😀

You’d think so but I am sure something will make that not happen.

I can see the Model 3 keeping it’s value very well for the first year or two. But since Tesla is planning on selling 400-500k per year, I don’t see how it will hold up. Maybe the ending of the tax credit in 2018 will help.

If federal tax credits are allowed to expire as planned, used car prices may even climb as the major manufacturers hit their limits. I wouldn’t be surprised if all used EVs increase in value after Tesla, GM, and Nissan all reach their limits.

I’m planning to pick up a used ’13 Leaf sometime next year, after the new model is readily available and the first wave of tax credits expire.

I think we’ll see prices of the cars drop when the credits are gone. Because the credits disappear manufacturer-by-manufacturer. If that happens, that’ll hold down the used prices some.

When tax credits go, new becomes effectively more expensive. More will turn to used, raising demand and, therfore, used prices.

In first ~12 months, the curve is wrong. Some will sell for >MSRP, some, like Volt, only a little lower, net of tax credit that lower incomes cant use.

Exactly. That is how the incentive program is supposed to work, the government support is to allow the companies scale up production and when they make high enough volume, the economies of mass production should lower cost which the manufacturer can pass on to its customers.

You can get a used 13 for $6K. Prices have already hit rock bottom

Depreciation calculation from list price is just meaningless or misleading at best.

Most cars aren’t sold at LIST price (aka MSRP). So, a $40K car sold for $36K already had 10% reduction at sales but even if it is sold for $36K one week later, it would still have shown a 10% loss in value even though the original owner never lost anything.

For Tesla that only sells base on list price or other ultra rare cars that are sold for at or above list price, then the comparison is more meaningful.

Keep in mind, this isn’t just about Tesla. It is about using “list” price for calculation. Tesla is just an example of that.

You are right, some early Bolts got sold above msrp.

Ridiculous projection, because based on zero data.
— Noone knows how reliable the Model 3 will end up being. Remember “Production Hell” due to the ramp-up? If Tesla’s unfortunate & it turns up the first year has lots of quality issues, this will affect resale price, and may do so even after the issues are fixed.

— Right now Tesla still has serious servicing issues (insufficient service centers, lack of documentation for independent or by-owner servicing, no sales of spare parts to the public). This also seriously affects resale value if they don’t fix it in time. It wasn’t a big problem with the S/X, since people buying $100K cars tend not to care about costof servicing, but that won’t hold for the Model 3.

— Resale value isn’t determined in a vacuum, and depends a great deal on what other used BEVs will be on the market in a few years.

Bottom line, it’s stupid to attempt this before there’s 4-5 years of Model 3 production, and also silly to use ICE depreciation curves when noone knows how/if they apply.

Model 3 metal composition:

Okay, but I certainly don’t need a graph to show me that a car for which demand greatly exceeds supply will retain its resale value far better than the average car.

I fully expect Model 3’s to be resold at higher than retail price for at least a few months after the general public is allowed to buy them. At the moment, only Tesla employees and “friends” are allowed to buy them, and — as I understand it, anyway — all current buyers have to sign a contract agreeing not to resell the car for at least a certain number of months.

Some have posted comments on Tesla’s restriction, ridiculing the idea that Tesla could prevent people from reselling the cars. I’m no lawyer, but I’ve heard of contract law, which apparently is more than we can say about people posting those comments! If someone buying a Model 3 signs a contract with a penalty clause, then Tesla certainly could enforce that clause, and I’d expect them to.

I doubt the registration docs on the car have something on them that would prevent the DMV from transferring registration/title, like a lien does.
Assuming that, Tesla can’t physically prevent selling the car, it could only sue the seller for violating the provision in the sale contract.

That said, how would Tesla know about a resale? The DMV doesn’t, AFAIK, provide sales info for individual cars to 3d parties, and, at least here, ownership info is only given to a 3d party if you are lodging a criminal complaint.

“Depreciation isn’t among the reasons listed.”

That’s because non-EV owners haven’t even thought about it.

Believe me, after leasing a 12 Leaf and watching it depreciate 75% in 3 years (*after* incentives), depreciation on another EV that I actually buy is a major consideration.

Since EV depreciation is directly related to battery degradation, I suspect the Model 3 will hold up well, as has the Model S. Whether it’s ‘best in class’ is a real guess, so I wouldn’t put much stock in this graph.