Are used Model 3's selling at all?

[John Van S.]

Thinking of going ahead and ordering a Model 3 now so I can have it delivered before Dec. 31st. and get the tax credit. Really waiting for RWD and white seats. What's the market like for used 3's and where is the best place to sell it other than a sign in the window?

 

[MikeATL]

RWD’s seem to be in very good supply and you’d possibly get your car in a week or so, but if you’re waiting for them to expand the white seat option to the RWD, that might not happen in time for the $7500. The factory might not even be making RWD if they have inventory all over the country.

You can buy the seats aftermarket:
Tesla Model 3 Seat Upgrade Interior Kit - Factory Design

Some people are selling RWD bought earlier in the year for the AWD, so you might get one for below market then do some aftermarket changes.

 

[ewoodrick]

I'll agree, RWD this year, as orderable today, is probably very doable.
White seats RWD, sorry, that'll cost you at least $3750 in the decrease of tax credit in next year.

 

[ewoodrick]

What's the market like for used 3's and where is the best place to sell it other than a sign in the window?

Selling? First, remember that for a RWD today, you can get one in a few weeks. So if you try to sell one, it will be list minus the tax credit minus a little more. I think that you will basically just be providing a $7500 loan to someone else for free.

 

[Runt8]

No one knows what will happen to used prices when the tax credit starts to go away. I'd say you're taking a pretty big chance on being able to recover your investment, even with the tax credit. If I were you, I would either plan on installing aftermarket seats or plan on only getting half the credit.

 

[MikeATL]

So if you try to sell one, it will be list minus the tax credit minus a little more.

Good point...used cars don’t get the tax credit, so all these people selling their 7 month old RWD to get the AWD Performance are going to have to basically give the $7500 they got on the first car to the buyer as a discount (unless the buyer is just an idiot and has no idea about the tax credit.)

On the other hand, that seller who just bought the new AWD can claim the tax credit again, so it’s a wash.

 

[slickrock]

Fundamentally, do you folks feel that the price of a used Model 3 would actually gain resale value after the EV tax credits expire?

The thinking is if you buy new in, say March 31 2019, the price of used Model 3 is now basically $3500 higher? Or in August of 2019 the price of a used Model 3 is now basically $7500 higher? Would these scenarios boost Model 3 used prices in the aggregate because depreciation has effectively reduce by this much? Basically "would be" buyers would now drift to the used market because the incentives are no longer there for newer cars, thereby increasing used demand and driving up used values?

Or could there be some kind nominal price rigidity, where used prices would hold for various reasons (e.g. pricing engines basing values from past sales amounts, etc.)? Would overall used car sedan depreciation overwhelm the tax credit absence effect? Are there other historical examples of vanishing vehicle credits affecting used car prices?

I'm basically thinking of upgrading my M3 to an M3P+, but rather than trading in before year end, take delivery in December and hold my existing M3 to sell in 2019 when the tax credit tapers and eventual dissipates? Or should I not overthink and sell or trade-in my current M3 at time of new car delivery?

 

[MikeATL]

I would say generally YES - if the price of new M3 RWD LR went up (less credit) then the price of a used M3 which is in nearly like new condition should increase. On the other hand, if Elon reduces prices or increases incentives (I.e Supercharging) then that would work against you. Also, if Congress extends the tax credit, then that would be bad for you (don’t think that’s likely.)

As the availability of used Model 3’s is very low (or any Tesla with low mileage at that price point), I’d think the car could command a strong value. Of course, people looking for that vehicle is also a smaller universe. I’ve also read that Winter is not the best time for used car sales.

All that said....I would not try to overthink it. You’re going to lose some money because you always have an immediate loss of value when you drive a new car off the lot. You’re also going to get the Tax credit back on the 2nd car (assuming you don’t try to claim the credit more than twice in the same year) so you haven’t lost that money.

I would list the older Tesla soon as you get the new one ... that might be October/November anyway. You can start out trying to get as close to new price as possible (minus the 7500) and if it sits long enough that a new one can’t be ordered in time for the 7500 then maybe you’ll get your price,

Either way, I’d think you’ll need to be aggressive selling it. Go out of your way to find and attend EV events, user group meet ups, etc

 

[trm2]

You’re also going to get the Tax credit back on the 2nd car (assuming you don’t try to claim the credit more than twice in the same year) so you haven’t lost that money.

There isn't a two car limit. You can get as many tax credits as your tax liabilities allow.

 

[ℬête Noire]

There isn't a two car limit. You can get as many tax credits as your tax liabilities allow.

Yes, IIRC the form (8936) only has room for two vehicles but you just file an additional form extras. The only rub comes if you happened for some reason to trip a trigger on your return, get audited, and then need to convince the IRS you were buying all those vehicles for your personal use rather than buying for resale (which is doable unless you were being REALLY blatant about it flipping cars, like advertising the resale before the purchase or something).

 

[MikeATL]

There isn't a two car limit. You can get as many tax credits as your tax liabilities allow.

You’re right - I saw that on another forum post, but nothing on the IRS website mentions it.

There is a prohibition on claiming the credit on a car “intended for resale” but that isn’t defined or elaborated. If the car was not “intended” to be resold, and you took the credit on your 2017 taxes, but then decided to sell the car in 2018, I’d think you’d be fine. But, what if you acquired the car in 2018 and sold it before the end of 2018, come March 2019 can you be claiming the credit still?

 

[ℬête Noire]

But, what if you acquired the car in 2018 and sold it before the end of 2018, come March 2019 can you be claiming the credit still?

Is the new car in anyway different? "Wanted AWD, wanted a different colour, this one was giving me trouble (a lemon), etc." I mean you don't tell the IRS yourself but your accountant just needs something plausible.

 

[Stirfelt]

Only a perception ..... not known to be based on facts:

I would be very weary of buying a used M3. I believe that tremendous progress has been made both mechanically, and especially in fit and finish from the earlier M3's. Recalling the post a year ago, so many were about poor joints, poor paint, misaligned interior's and etc. If quality and fit and finish are important to you, then I'd stay out of that market.

But isn't it refreshing that progress has been made and the newer M3's are superior (at least in those categories) than the earlier versions.

 

[gdouglas70]

Fundamentally, do you folks feel that the price of a used Model 3 would actually gain resale value after the EV tax credits expire?

The thinking is if you buy new in, say March 31 2019, the price of used Model 3 is now basically $3500 higher? Or in August of 2019 the price of a used Model 3 is now basically $7500 higher? Would these scenarios boost Model 3 used prices in the aggregate because depreciation has effectively reduce by this much? Basically "would be" buyers would now drift to the used market because the incentives are no longer there for newer cars, thereby increasing used demand and driving up used values?

Or could there be some kind nominal price rigidity, where used prices would hold for various reasons (e.g. pricing engines basing values from past sales amounts, etc.)? Would overall used car sedan depreciation overwhelm the tax credit absence effect? Are there other historical examples of vanishing vehicle credits affecting used car prices?

I'm basically thinking of upgrading my M3 to an M3P+, but rather than trading in before year end, take delivery in December and hold my existing M3 to sell in 2019 when the tax credit tapers and eventual dissipates? Or should I not overthink and sell or trade-in my current M3 at time of new car delivery?

My April build RWD w 1500 miles traded in w tesla at 7600 below what I paid. That is net 100 of depreciation for 4 months PLUS I was able to net the trade in for sales taxes which made my monthly cost of owning the rwd about 500/month — a good deal. I put it out broadly to private market as well and nothing came close to that on a net-true-cost-to-me-basis. Don’t assume tesla will be a low ball trade in! I was very pleasantly surprised especially since my ISA at first told me they don’t even take 3’s on trade. A little digging proved that to be wrong.