[UK] used value of their Tesla cars plummeting?

[SteveJol]

I have nearly £100K invested in a car that after 4 years is worth about £55K.

In which case you're doing very well. Most cars would be at or under 50% after only 3 years.

 

[Mikeisnomech]

In which case you're doing very well. Most cars would be at or under 50% after only 3 years.

Aren't all cars holding their value well at the moment? The 50% deprectiation in 3 years dates back to pre covid times. Used prices are really high, even with ICE at the moment.

 

[Overworked]

Buy and use whatever you want at a price that you are content with today. Be content with your bargain.

Things will always change tomorrow and as a result you may be happy or sad as you reflect on the change.

It has always been thus, documented for thousands of years. I refer you to the Parable of the Workers in the Vineyard!

 

[Ricecooker]

An M3 is too small for you, so you're gonna get a smaller car. This makes no sense.

Inflation going up, cars are not getting cheaper and petrol is only "cheap" now, it'll likely go above £2/l in the winter.

It's not about the space, but really the lowered car position, we need to kneel in and crawl out of the M3. Didn't thought it was an issue at first but it's taking its toll now. It's just that the arrival of something like the MG4 made me think more about how an EV is valued and its worth.

If you can afford the Y, and want one, why woudlnt you get one? If you are so financially stretched a change in the value of Y will give you sleepless night than you probably shouldn't waste money on one.

We are living in some crazy times at present, if you have good health and family, everything else is a bonuse right now. So enjoy the thought of owning a new Y, rather than stress about something that really isn't worth stressing over.

Good point... If I didn't now have a M3 already I wouldn't think that much, but since now I can sell it for more than I paid for maybe I should capitalise on it, and knowing the events that has happened and Tesla's margins I just can't help but to wonder. Was just trying to see if anyone is in the same position and thinking of a good strategy, I mean who doesn't want to have a good deal at the end of the day.

 

[SteveJol]

Aren't all cars holding their value well at the moment? The 50% deprectiation in 3 years dates back to pre covid times. Used prices are really high, even with ICE at the moment.

Agreed, but anything over 50% after 3 years (or 4 in the case of the post I quoted) is still doing well IMHO.

We've had 1.5 extraordinary years of used car pricing, people complaining about a return to normality I find bizarre.

 

[PITA]

Quite the opposite for me...

If the prices plummet it means I can buy it from my Company Ownership, into private ownership cheaply.

That'll be a nice win for me and a loss for HMRC

 

[Rooster6655]

It's not about the space, but really the lowered car position, we need to kneel in and crawl out of the M3. Didn't thought it was an issue at first but it's taking its toll now. It's just that the arrival of something like the MG4 made me think more about how an EV is valued and its worth.




Good point... If I didn't now have a M3 already I wouldn't think that much, but since now I can sell it for more than I paid for maybe I should capitalise on it, and knowing the events that has happened and Tesla's margins I just can't help but to wonder. Was just trying to see if anyone is in the same position and thinking of a good strategy, I mean who doesn't want to have a good deal at the end of the day.

The MG is cheaper yes, if you want more money in your bank then do it, percentage wise I’d expect the MG to depreciate more than Tesla due to dealer network pricing. However as they are in different price ranges this means actual figures will vary greatly.

 

[Jason71]

Agreed, but anything over 50% after 3 years (or 4 in the case of the post I quoted) is still doing well IMHO.

We've had 1.5 extraordinary years of used car pricing, people complaining about a return to normality I find bizarre.

There is no normal since we have never before had an outgoing tech vs a new tech in the automotive world in this way. So I think we are looking at a new normal.
I think there is going to be an extended period when EV depreciation is low. currently about 17% of new cars are EV's. It would be higher but supply is constrained. So that means in 3 years 17% of 3 year old used cars will be EV's. So the question is in 3 years time will more or less than 17% of used car buyers be looking to buy an EV? given that Autotrader is already reporting that 30% of enquires are around EV's I would say higher.
So taking this into account and the every expanding number and size of ULEV's I would say the forecast for the residuals on EV's going forward is likely to be better than ICE and better than we have traditionally seen on ICE. This of course assumes new prices don't come down drastically which thus far there has been little sign of though MG is trying.

 

[SteveJol]

In 3 years time far more than 17% of new cars will be EV. That will be the major impact to used car pricing, as we've seen currently, it's new car supply that drives used car prices more than anything else.

We're being flooded with the main stream marques releasing all sorts of EVs, from small to big. Due to all of the above, I very much see used car prices, EV or not, returning to the 50% ish 3 year depreciation.

 

[2020M3SR]

You can get the My RWD for 49990 euros or sub £43k in Spain so will UK get these prices when Berlin ramps up? Or somewhere in between

It's given residuals a huge hit, that's for sure. I think this price is ex Vat but even still, 2022 My with only 18k km

 

[Kenners]

I am pretty sure my Y will rattle itself to pieces well before any warranty dates are hit thanks to the tractor like suspension, expect the depreciation to pick up significantly once everyone becomes aware of this.

 

[Spid]

An M3 is too small for you, so you're gonna get a smaller car. This makes no sense.

Inflation going up, cars are not getting cheaper and petrol is only "cheap" now, it'll likely go above £2/l in the winter.

Not sure what makes you think that since it's been falling pretty steadily for the last couple of months

 

[Nujec]

I read that most car dealers are not concerned and are expecting a *slow* return to more traditional residual values. However they're not the ones paying the depreciation of course unless they're stupid enough to hold stock for much too long.

I expect that on average depreciation will be lower on EVs and Tesla in particular due to much more demand than supply for many years ahead.

Tesla have no reason to cut margins and prices unless they ramp production much more quickly than their stated plans.

The cheaper EV competition from GM Nissan and MG were surprisingly poor in comparison to Tesla in my recent test drives. I expect they'll continue to depreciate faster than Tesla.

The main question mark for me is whether the M3 batteries will outlive the 8 year warranties when most cars would have very little residual value. To early to tell at the moment. And also will the cost of batteries really come down a lot or just moderately. I don't see any big breakthroughs yet, just potentially promising tech looking for investors.

ICE depreciation is likely to be terrible at some point. Be glad you're not exposed to it.

 

[2020M3SR]

I read that most car dealers are not concerned and are expecting a *slow* return to more traditional residual values. However they're not the ones paying the depreciation of course unless they're stupid enough to hold stock for much too long.

I expect that on average depreciation will be lower on EVs and Tesla in particular due to much more demand than supply for many years ahead.

Tesla have no reason to cut margins and prices unless they ramp production much more quickly than their stated plans.

The cheaper EV competition from GM Nissan and MG were surprisingly poor in comparison to Tesla in my recent test drives. I expect they'll continue to depreciate faster than Tesla.

The main question mark for me is whether the M3 batteries will outlive the 8 year warranties when most cars would have very little residual value. To early to tell at the moment. And also will the cost of batteries really come down a lot or just moderately. I don't see any big breakthroughs yet, just potentially promising tech looking for investors.

ICE depreciation is likely to be terrible at some point. Be glad you're not exposed to it.

ICE depreciation could go the other way too. There is a big inflection point looming, namely road tax, fuel duty for EVs

None of us can predict this, but one thing we can predict is that running costs of a car will remain hugely important for large numbers of people

There are scenarios where ICE cars will be massively sought after vehicles. Will those scenarios play out? Well, we're taking about Forecasting govt action, so it's too hard to predict

 

[Ricecooker]

I read that most car dealers are not concerned and are expecting a *slow* return to more traditional residual values. However they're not the ones paying the depreciation of course unless they're stupid enough to hold stock for much too long.

I expect that on average depreciation will be lower on EVs and Tesla in particular due to much more demand than supply for many years ahead.

Tesla have no reason to cut margins and prices unless they ramp production much more quickly than their stated plans.

The cheaper EV competition from GM Nissan and MG were surprisingly poor in comparison to Tesla in my recent test drives. I expect they'll continue to depreciate faster than Tesla.

Demand is slowing down in China, and/or supply ramping, whichever it is wait time for a MY is now as little as a week! And Tesla is now offering subsides of around £1k towards insurance for new buyers, which is effectively a price cut. It is my thought that they may be forced to drop their price sooner rather than later, to kick back up demand and fight off competition.

In a recession I would imagine that lower ranged cars will hold their values more as they will be more sought after, and "luxury" cars will drop significantly.

 

[Rooster6655]

Demand is slowing down in China, and/or supply ramping, whichever it is wait time for a MY is now as little as a week! And Tesla is now offering subsides of around £1k towards insurance for new buyers, which is effectively a price cut. It is my thought that they may be forced to drop their price sooner rather than later, to kick back up demand and fight off competition.

In a recession I would imagine that lower ranged cars will hold their values more as they will be more sought after, and "luxury" cars will drop significantly.

I don't see how you can make assumptions about sales demand in China based on their delivery schedule, there are many factors, the whole I can get the car in a week or they are sold out for months comparison means nothing which people have literally been saying for years and years depending on what narrative they believed.

The simple answer is nobody know what the future resale prices will be, I will stick to my 2019 prediction, of around 20-30% over 3 years for Tesla due to their non dealership model, probably 30-50% for non Tesla with exception to those that don't do discounts of any kind through dealerships.

 

[DaveGoesEV]

I know there are some analysts saying that Tesla will decline because of the competition but Tesla has three things the other companies don't and the other competitors may not even care: a great charging user experience, and a well placed super charger network. IMHO, the supercharger network is the icing on the cake. When I look at my area, the non-Tesla super chargers are off the highway and broken. All Electrify America had to do was to build super chargers in the next parking lot over from Tesla super chargers. Knowing where and when to stop for the charge is critical and Tesla builds that into the maps. Plus, someone else mentioned this too, EVs are still only 1% of the market. There is a lot of room for growth for everyone.

 

[Jason71]

I know there are some analysts saying that Tesla will decline because of the competition but Tesla has three things the other companies don't and the other competitors may not even care: a great charging user experience, and a well placed super charger network. IMHO, the supercharger network is the icing on the cake. When I look at my area, the non-Tesla super chargers are off the highway and broken. All Electrify America had to do was to build super chargers in the next parking lot over from Tesla super chargers. Knowing where and when to stop for the charge is critical and Tesla builds that into the maps. Plus, someone else mentioned this too, EVs are still only 1% of the market. There is a lot of room for growth for everyone.

You know you are on the UK forum right?
I am not sure the governing factors are the same here. For instance EV's at at about 17% market share here now rather than 1%
Charging is important here too and Tesla stands out but it may be less of a factor for people since the country is so much smaller. the need to charge on the road is less.

 

[Durzel]

We can only speculate. Tesla have dropped some prices big time, I bought a MS P90D just after Tesla dropped the P100D by 35-40k over night, the used car I bought changed by 20k the week before I bought it, I got lucky.

I sold it though as it approached 4years old because at the time the MCU1 was a real problem with few options, headlights were failing at £1k a time, the heater matrix the same. The MCU now has options but it’s far from unheard of to get a £1k bill.

Teslas depreciation is currently low partly because they keep putting prices up. The cost to change, like for like, isn’t pretty. Even gangzoom quoting 100k cars if he ever gave a balanced view will say his MX has been the most unreliable car he’s ever owned and only cost about £65k to buy. If you could drive away in a new MX today it would be nearly double that price, albeit a car with more range and performance.

Most manufacturers are resource constrained, if those constraints lift we’ve no idea how the market will shake down, add in the closing of the gap between petrol and electricity prices, tax benefits will be looked into I imagine and the financial benefits of running an EV aren’t going to get better, I can only see them being eroded.

We’ve also got the risk that Tesla/Musk will do a Ratner and the sentiment just turns against the brand. Musk keels over with a heart attack might do that without him opening his mouth and saying something stupid.

But I also look at it from the perspective that in the last 18 months I’ve lost nothing on the cars, if anything I’m in profit, and I historically I’d have assumed it would have cost me maybe 8-9k over that time, so if I do get a shock change, I’m unlikely to be worse off than I expected. Of course that doesn’t help new buyers, but I expect things to continue like they are for a while

This is often overlooked.

Residuals are decent but only in the context of going to live in a hut in the forest, or something. Everything has gone up, including Teslas. Especially Teslas, in fact, since they've just been progressively going up and up in price. I've only "lost" £10k on my M3P in 2.5 years, which is incredible, but it would still cost me nearly another £20k to get into the same car.

Few people comparitively lucked out by buying their car at the right time before the whole world melted, to the point where the trade-in offers they were getting were more than they paid originally, so could get into a new 3 (or Y) at effectively zero cost. This of course assumes you completely disregard the fact that you're also signing up for a new finance agreement, etc so it's not exactly like-for-like in comparison terms.

I'm not as optimistic about Tesla as others. I kinda feel like its in a bit of an Emperor's New Clothes situation at the moment. Excluding the States, where FSD beta is at least compelling, everywhere else the autonomous side of Tesla has stood still, while Elon keeps making promises and underdelivering. That might have flown while it was a techie person's car, but regular folk are getting into these cars now and are going to be less tolerant. Other manufacturers are doing autonomy at least as good if not better, and are considerably better at the building cars side of things. Where those manufacturers are fumbling it, still, is sticking to the whole "you need to service these things every X years even though there's basically nothing to service, because we've got big glass buildings to justify".

ps. I chuckled quite a bit at "if he ever gave a balanced view". Sorry @gangzoom but he's not wrong there

 

[Olle]

No, I am not worried that it will go down in value.
But I am worried that it will go up in value, which would mean that there aren't enough EVs made and we keep lining the pockets of oil dictators.