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2020 used market predictions

Discussion in 'Tesla for Sale' started by Littlefinger9, Dec 28, 2019.

  1. Littlefinger9

    Littlefinger9 Member

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    When will model 3 leases start winding down? Other than the model y coming online, is there any reason to expect 2020 to be a good year to buy a used model 3 or s? Been on the sidelines a while now and I’m hoping 2020 is the right time to buy a used Tesla. Thanks
     
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  2. Ostrichsak

    Ostrichsak Active Member

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    My big picture view of the used EV market is that it will start to decrease it's rate of depreciation as newer EV buyers come to market and as the masses realize how far an EV can go in terms of miles. The idea that a 100k mile car nearing the end of it's life and therefore largely valueless will start to fade and the several hundred thousand mile used EV will become more commonplace.

    I also predict that Model 3's will come off of lease or otherwise be traded in or sold as needs change and the used Model 3 market will tank due to supply v demand being out of whack. There will be a flood of used Model 3's with relatively similar options/colors with the only slight differences being in miles and condition. It will be difficult to sell a Model 3 when there are 100's exactly like it listed all over the country and your only option will be to reduce price to compete. This will balance out somewhat but we haven't seen yet what selling 5k cars per week, especially entry-level ones, can do to a used EV market. I think that my previous overall prediction for used EVs will help this out but Model X and S will hold their value much better than Model 3 just based on numbers sold and numbers available. We've already seen how much better the Model X holds it's value and the #'s between S and X (in terms of price and production) are much closer than they are S and 3.

    Of course, nobody knows for sure but that's my guestimate based on a few decades of being into cars both as a collector and as a source of income for many of those years.
     
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  3. Uncle Paul

    Uncle Paul Well-Known Member

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    While the used market for most manufacturers is 4X the size of new car sales, for Tesla it is the other way around. They are still ramping up sales volume at a rapid rate. Doubt there will be many fire sale used cars available next year.

    With the current Tax Credits going away at EOY, used cars will become better values as we go forward. Currently buying new often makes better financial sense than used due to all the rebates and incentives for buying new ones. Next year some utilities will begin giving rebates for 2nd and even 3rd owner EV buyers.
     
  4. Ostrichsak

    Ostrichsak Active Member

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    Buying new makes better financial sense? In what world? It may help to meet your monthly budget but that doesn't mean it makes better financial sense. No way can you offset $50k vehicle depreciation with a 0% interest rate and a $3,750 tax rebate.
     
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  5. Windjunk

    Windjunk Member

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    One thing we will see is more Model 3's on the market, as some people will be changing to a Model Y. It will be interesting to see if the price for used Model 3's will this coming year start to come down. As so far they have held their value quite well. It might be another year or so when we will start to see some fire sales.
     
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  6. tyler2323

    tyler2323 Banned

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    Anytime is a good time to buy a Model 3 they will continue to plummet in value just due to the massive amount of them sold. There will always be more used model 3’s for sale than demand. The S however will continue to stay around the same price since new sales are so down. If they had sold a lot than you could expect the S to have some of it’s worse depreciation due to the huge price cut. But it won’t be something you see often, someone selling their new P100D Raven since those buyers most likely went the Porsche route
     
  7. Uncle Paul

    Uncle Paul Well-Known Member

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    Disagree. There are many more buyers for used Model 3 currently than the supply for this recently released model. Demand and supply will always adjust with pricing.

    S & X have recently been down priced, and up optioned. The new Ravens are great value. This will ultimately result in better pricing for those used in the marketplace.

    I have always found it interesting how while many only buy used cars, others only buy new ones. Seems sometimes like they are two different markets. Not much cross shopping done new vs used.
     
  8. tyler2323

    tyler2323 Banned

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    I completely disagree with you. I hope you don’t make this assumption based off Tesla’s used inventory. Cause if you are you greatly misunderstand the actual number of model 3’s for sale now and going forward.
    Tesla inventory is 95% lease returns and 5%trade ins. No one leases a Model 3 because of several pretty obvious reasons. Demographic; the average consumer that buys a Model 3 is not like one who buys an S or X or any luxury car. Most have intentions keeping it and or understand that leasing is what rich people do not just cuz they want a new car every year but because they usually are their own boss meaning they own a business and it is a write off since they delegate it as a business expense. Than there are always the buyers who do want a new car every year and they are not the ones buying a model 3. So don’t use Tesla’s used inventory as any type of justification. Not that you did but most who don’t get it would cuz they see that there are hardly any.
    The amount of 3’s for sale now is already a lot and will grow 3x in the next year and even more the year after. With more and more EV’s coming many will be interested in trying something different especially if no significant changes have been made which there won’t be with the addition of the Y, And Truck.
    One major reason you will see a lot for sale is due to the fact that most owners never got the perks of free unlimited charging for life so keeping it for the long haul is much less likely especially when you can bet those perks will be available with the addition of more competition. So many owners will sell them just to get those perks that most manufacturers and definitely Tesla will be offering. It is one of the biggest selling points for many who buy an X or S.

    What’s going to make the value decrease even more significantly is several things. The price will continue to drop not only because it will be cheaper to make which Tesla needs to increase their margins but they won’t get the chance too. They will be competing with so many other ev’s that as the cost to make it goes down so will the price of a brand new one to stay relevant and competitive in pricing. The biggest factor is the additional market will be flooded with evs and since it’s such a newer technology the advancements will continue to get better and better making older Models almost obsolete to a certain extent. They won’t be obsolete on the level of computers, phones etc but the money that will be invested by every major auto manufacturer is going to push the limits of creating a better and better batteries etc, something that is all new to a market that never had competition before.
    Now the car itself will be similar to a Honda I personally believe as far as how long they will be able to run, but the cost of making one or buying let’s say a salvage one or one with extremely high miles won’t be a deterrent since the costs of that battery will be a fraction of the cost it once ones. Even with how impressive the 2170 cells are, they won’t be in 2 yrs as enormous amounts of money will be flooding in from all manufactures trying to keep making them better which they will. The next 2yrs it will be a joke if an ev doesn’t have a minimum of 400 miles of range and upwards of 600 easily.
    The big difference with evs is that it’s so new, or was new but those days are gone. With more restrictions on smog etc the ev industry will account for 80% of all cars on the road, much sooner than most will ever imagine or want to accept if they are some ice obsessors like too many are. And almost every manufacturer is not going to be looking to make luxury evs, they are going to go straight after the 3’s market and rightfully so, to make them as affordable as possible. There will be the Porsches and other high end evs but most will be battling to make the most cost effective ev that the most buyers can afford.
    So you can bet your life that the Model 3 will be extremely cheap, not because it’s not a great car but because it is and so many have sold and those will be expendable due to supply and being inferior in a relatively short time. Now if you think the FSD will have any advantages I can promise you it won’t have any at all. By the time, and I mean probably a decade once they will really allow FSD cars driving, every car will have the ability to be FSD at a very low price point. This is for many reasons, obviously technological advancement, but more importantly to really have safe roads with FSD cars you need to have the majority if not all be FSD. This however won’t be any reason to effect the price etc cause it’s going to be a very long time before they really allow FSD cars on streets.
    One thing Tesla has that no one can still touch is their Supercharging network. Which will make them still a priority when buying but will not keep them from deprecating a ton.
    Tesla had a huge head start but it won’t be easy for them to be anywhere near what they have been. It’s just not possible, simply because of competition and not due to being inferior or anything like that.
    I honestly cannot wait till you are able to buy different batteries and finally start being able to upgrade your battery yourself which will happen sooner than later (batteries that are compatible), and build your own custom ev. I believe most manufacturers and especially Tesla will make their evs going forward with the importance of leaving room for newer better batteries to be installed in all cars. Something they needed to have thought about when they made the X and S and they most definitely learned from that mistake.
    So to sum it up I think the Model 3 will depreciate a ton but if it does just keep it. It will still last close to 500k and even perhaps a million miles. The hard part will be when newer evs come out and offer unlimited charging
     
  9. tyler2323

    tyler2323 Banned

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    No it’s for sure, it’s no guesstimate the Model 3’s will see huge depreciation and the S and X will continue to hold their value better than they ever have just like the last 8 months. You could buy a P85D at auction for around $40-43k last year and that increased 5-8k due to the slow sales of the S and X over the last year. It also has to due with how Tesla goes about dumping their inventory. As soon as they have too much of any S or X (P100DL) they will drop the price every day until it sales. So partly what saved the P85D was the limited inventory they had the last year. I also believe the S will become a Collector Car and I have a feeling it will be the P85D rather than the P100DL just cause it was the first of its kind. Now all Performance Models will keep their values if the sales continue to be non exist and if they stop making it, even better. The Raven could end up being the Golden one just due to the small amount sold.
     
  10. bkp_duke

    bkp_duke Active Member

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    Having just went through this process, Uncle Paul is right here. Sorry, but your viewpoint is flawed as you are under-estimating demand.

    As it is currently, there is demand in the used market for the Model 3, and this demand is keeping prices elevated.
     
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  11. bkp_duke

    bkp_duke Active Member

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    You are predicting that luxury market cars (X and S) will hold their value better than a mass-market car (the 3)?

    In the history of all things automotive, this just has never happened. I own two S's, and they depreciate like a stone tossed into a pond. After 6 years, both are worth less than 1/3 of original sales price. The depreciation curve for the 3 is no where near that steep.

    The S and X are also plagued with "little" problems, especially the older cars. The 3s, however, appear to be much better built and this should help them in depreciation.
     
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  12. DanCar

    DanCar Active Member

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    Predict starting in Q3 Model 3 demand will subside with mass production of Model Y, thus used Model 3 prices will begin to move lower.
    My guestimated timeline for Model Y introduction (based on Model 3 timeline):
    Q1: Sales to Tesla employees
    Q2: Sales to Bay Area
    Q3: Production Ramp to 2K per week
    Q4: Production Ramp to 4K+ per week
    Q1'2021: Production of standard range Model Y begins
    Q2'2021: HW4 earliest availability. Cause further depreciation in older Model 3's.
    Most of the people I know with Model 3 plan on upgrading to Model Y when it is available. 2021 will see even lower prices for Model 3.
     
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  13. bkp_duke

    bkp_duke Active Member

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    I think you are forgetting a key component of demand:
    New markets. Tesla has only just started deliveries to China and Europe, both of which are not SUV obsessed like the USA.

    I expect Model 3 demand to level off, but I do not see it reversing.
     
  14. DanCar

    DanCar Active Member

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    #14 DanCar, Jan 7, 2020
    Last edited: Jan 7, 2020
    I think you are forgetting the context of this thread is used prices and are being defensive about new Model 3 demand. Start a new thread about new Model 3 demand, if that is what you want to discuss. I'm not interested in participating.

    The original poster (OP) doesn't care about demand outside of the U.S. The fact that there is demand elsewhere doesn't mean much unless used cars start to be shipped overseas. Which is a rumor I heard a couple years ago for Model S and X, when large numbers started disappearing from Tesla's used site. GF3 will temper overseas demand.

    Regardless of new Model 3 demand shifting to Model Y, increasing number of model 3 in the U.S. used market will affect demand vs supply and lower used prices. This is typical with any new car introduction. Look at history with Leaf. Price of used Leafs where almost the same as new with first two years, then started to drop third year. Same will happen with Model 3.
     
  15. DanCar

    DanCar Active Member

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    Bloomberg - Are you a robot?
    Model 3 production:
    2018 Q1: 10K
    2018 Q2: 30K
    2018 Q3: 53K
    2018 Q4: 61K
    2021 Q1 we should see the first of Model 3's ending typical 3 year lease.
     
  16. tyler2323

    tyler2323 Banned

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    I’ve owned 5 Model S’s and yes they took a huge hit a little over a year ago as they began lowering the price for the P100DL. You should realize that most likely your car has actually appreciated since than or gone down slightly. I paid $43k for a P85D exactly a year ago with 50500 miles. Not at an auction as I have purchased many cars from there as well. So the depreciation for the S has been minimal or has gone slightly up. That’s a fact and I can show you the price difference from a year ago on Manheim. The Model 3 has done nothing of the sort. Also what other countries are buying has no influence on the depreciation of your Tesla. They are not part of your market so making any comparison to them is irrelevant. Like I said before the biggest loses (Model s) are the ones that are Tesla’s and it’s based solely on how many they have. So right now all the 2016.5 P90D’s and P100D’s will see the most depreciation simply due to how Tesla goes about dumping their inventory. If they have too many of any Model S they will drop the price until the car sales, literally. They will not stop lowering the price until it’s gone.
    And even those cars based on the value of a brand new P100DL have held their values better than any other Model S’s in the past. The fact that theses cars are 3 yrs old and only $20k-$30k less than a new one is quite remarkable. If they lowered the price of the Model 3 by 1/3 you can bet that they would drop in value faster than any other Tesla guaranteed. I don’t pay much attention to the Model 3 but I know there are a hell lot more of them for sale by dealers and private sellers other than Tesla than any Model S or X which has been around since 2012. So take that thought and just imagine as another year passes how many Nodel 3’s there will be. I know friends who have them can’t give them away. Why? Cuz most buyers will just buy a new one. So has people start needing to actually sale them (the price doesn’t make owners as desperate or a necessity to move them like a high end car that can cost 3x the monthly payment. Since we are most certainly leaning towards a slow recession you will start finding owners who must sell them rather than waiting months or yrs too and that will also cause a huge drop in price.
    But what’s really going too hurt their values is when there are 3-4 different evs not from Tesla selling at the same price point cuz that is inevitable. The higher end evs won’t see that competition besides a few while the mid level evs will soon be flooded with lots of options.
    But like I said it by no means needs to be necessary to sale them when it happens cuz they will continue to be reliable cars and I think most owners that don’t have the financial burden, which is most owners of a 3. Will be content to keep them rather than get what they will be worth when selling them. The biggest reason owners may move on will be because of certain perks like FUSC. Most people own their car for 5 yrs and usually that’s how we come up with most depreciations of vehicles, based on a 5yr depreciation. The 3 hasn’t even been around long enough for people/owners to fully understand the amount of over supply there will be by the 5 yr mark. So realistically the 3 can’t even have a true depreciation when it’s still so new compared to every other car.
     
  17. bkp_duke

    bkp_duke Active Member

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    I view that your error is that you are comparing current S/X used value to a different, new S/X, not what the price of those actual S/X cars were when sold new. That's an erroneous comparison, although I understand why you made it.

    My 2013 P85s were both 110k or higher when sold new. Now, both are worth high 20s (salvage title) or mid 30s (clean title).

    Right now, I don't see other EVs as a big threat to Tesla's resale value. Why? Other EVs have much higher batter degradation compared to Tesla. Our two Model S's have 7-8% degradation, which trends right along where Tesla said they would (just over 1% per year). Other EVs don't come close to that.

    Model 3 - of course you will see more of them on dealer lots, we are at a point now where there have been multiples of the 3 made compared to the S+X. I don't, however, see Tesla lowering the price of the 3 significantly. We've already been down that route (P3D) and prices look to have stabilized nicely with no need for Tesla to pull that lever to stoke demand.


    Basically, in the past Tesla had to drop prices to stimulate demand. I think the Q4 numbers show that they don't have to do that any more.


    But, time will settle this debate.
     
  18. tyler2323

    tyler2323 Banned

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    You have to compare them to that cause realistically they should be worth even less. That’s why no one does what Tesla did. You have to realize that a buyer of a $100k car has no problem losing $20k/year and selling it for $80k. That would only make it more likely fit those models to be worth even less. Which is exactly what happened when they did the first major price drop for the P100DL. It destroyed the value of all the other cars prior cuz it set a new benchmark for what its worth new and most high end cars will be worth 50% less in 3-5 yrs depending on the car. Porsche maintains its value better than any other high end car so they are the one that can still be worth $50% after 5 yrs
     

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