Battery Day - Resale Value of current M3s?

[brian954]

Was very close to submitting my order for a Model 3 LR AWD this month but then I learned about “Battery Day” in September.

While no one knows what is being announced then do we think the announcement will have a negative impact on the values of current Tesla vehicles?

Tesla vehicles seem to hold their value relatively well right now and I’d hate to buy in only to have my depreciation expedited because my car doesn’t have the latest tech in it.

Any thoughts on this?

 

[TydalForce]

When it comes to anything related to technology: If you keep waiting for the next big thing, you'll be waiting forever. There's always something faster, stronger, shinier right around the corner.

Will battery day hit our resale value? Probably. A lot? I don't know.
Keep in mind that Battery Day might be in September, but availability of these better batteries likely won't be immediate - you might have to wait another 3, 6, more months to actually get a car with whatever they announce.

If you can wait, say, up to a year to take delivery - then go ahead and wait. For me, the 2 months I waited after placing my order was rather excruciating (c:

 

[Mattopotamus]

There is so much value in the SR+ at the current price point, that I’ve actually decided to keep buying the lower end version. I plan to do the same with the cybertruck. If you can get 95% of the car for $10k less it’s worth it IMO.

 

[TMThree]

If you can wait, then wait. Otherwise make sure the car suits your requirements.

I still think 1 million mile battery is a joke for consumers. 500k in the current vehicles is already far beyond what most will ever use. The chassis and interior will be trashed before that happens. 1 million mile battery will be useful for commercial vehicles that are driven all day long. When you gain durability, you tend to give up energy density.

 

[CapeOne]

Whether or not "Battery Day" will reveal meaningful benefits for typical consumer cars remains to be seen but in general, battery and other engineering/technology improvements, new competition, etc. are going to continue make EV pricing/values volatile. About two years ago, a new MS 100D with FSD retailed for $105,700 or $98,200 after deducting federal tax credit. Today, a new MS LR+ with FSD, more range, and quicker 0-60 time retails for $83,190. Advancements are being made and prices are coming down.

If resale value is going to be a significant concern for you, you may want to consider leasing as that would provide some protection against any potential significant value drop. Otherwise, buy when you're ready and recognize that new/better batteries and technologies. competition, etc. will continue to come.

 

[glide]

Time and new technologies are the enemies of resale value.

Is battery day in the future?
Will new technology be announced?

Then you have your answer.

 

[brian954]

I see, all the comments here make a lot of sense and are changing my perspective.

Here’s my takeaway:

EVs are a new thing, unlike traditional car manufacturers who make minor changes year after year and have relatively predictable depreciation rates. EVs are in their infancy and will continue to rapidly implement major changes and improvements for the foreseeable future. If battery day doesn’t make an impact in the consumer car space another improvement or change likely will soon anyway.

 

[stonelance]

I think the most revealing thing I have read is that new ICE vehicles only get more expensive to develop and manufacture as they try to improve power weight ratios and efficiency, where as batteries are getting cheaper over time as they improve efficiency and power weight ratios.

So... Hard to imagine resale value being great when the new ones keep getting cheaper. The thing propping up resale value right now is probably that there is a lot of demand at lower price points but no (good) new-car options in that range.

 

[jjrandorin]

I still get somewhat confused by people who base their purchase of a depreciating asset like a car, on what it will be worth when they sell it. I totally get it for a home, or a stock or anything else that is expected to appreciate in value, but cars dont (for the most part, yes I know there are outliers).

So, maybe someone could explain to me why the value of the car in 3-4-6-8 years matters so much in the purchase now, when everyone knows this is an item that loses value anyway?

Edit : NOTE -- I also get the "I want the newest technology" angle, so no need to explain that to me. Wanting the latest technology is not the same argument as 'what will this do to the depreciation".

 

[Knightshade]

This is like the 10th thread on this topic.

short answer is the 3/Y will likely be the last cars to get updated batteries.

The new/best stuff will be for the Model S Plaid out this fall- and likely shown off at Battery Day.

Then cybertruck and Semi and Plaid Model X.

3/Y maybe in a couple years after they've got enough batteries for all that OTHER stuff more in need of it.

 

[CapeOne]

I still get somewhat confused by people who base their purchase of a depreciating asset like a car, on what it will be worth when they sell it. I totally get it for a home, or a stock or anything else that is expected to appreciate in value, but cars dont (for the most part, yes I know there are outliers).

So, maybe someone could explain to me why the value of the car in 3-4-6-8 years matters so much in the purchase now, when everyone knows this is an item that loses value anyway?

New cars lose value but the question/variable is how much and that is why depreciation can be worth evaluating. If two otherwise similar cars each sell for $50k and car A depreciates down to $25k but car B depreciates down to $15k then car A saves you $10k in depreciation. All else constant, you'd be $10k better off financially having gone with car A.

 

[Clover]

I have decided to hold off on the purchase of a M3 until after Battery Day. While it is all speculation, I think it is logical to assume there will be numerous announcements which both lower the cost of the batteries and also increase their performance. The challenge for Tesla, is after they announce battery improvements, who will want to buy the old battery. If they don't have the new improved battery ready, their sales would likely crater as buyers delay their purchase.

I think that reasonable assumptions that they can't change over their entire production of batteries and product offerings all at once, lead people to think that the Model S and Model X will receive the updates first. While this may be the case, I am not so sure it will play out like this. Remember, cost reductions are almost certainly part of these improvements and I think this could lead Tesla to benefit more from implementing the updates to the Model 3 and Model Y ahead of the S and X.

Whenever these improvements do arrive, the vehicles without the improved battery will almost certainly depreciate. How much really depends on how big of an improvement Tesla is able to deliver. I personally think these announcements are going to be rather impressive based of Elon's comments being indicative of improvements beyond the incremental changes one would expect over time.

For me, I decided that I don't really stand to gain anything buying the M3 now instead of waiting 2.5 months. I am working from home right now and not driving much. There is no issue with me continuing to drive the vehicles I currently have for a bit longer and I might get a better car in the long run by waiting. Other people, I am sure, are in different positions. Also, I may wait until September and then find out that the new battery is not coming for the M3 until Q3 2021 or something.

 

[OCR1]

I still get somewhat confused by people who base their purchase of a depreciating asset like a car, on what it will be worth when they sell it. I totally get it for a home, or a stock or anything else that is expected to appreciate in value, but cars dont (for the most part, yes I know there are outliers).

So, maybe someone could explain to me why the value of the car in 3-4-6-8 years matters so much in the purchase now, when everyone knows this is an item that loses value anyway?

Edit : NOTE -- I also get the "I want the newest technology" angle, so no need to explain that to me. Wanting the latest technology is not the same argument as 'what will this do to the depreciation".

Because it’s easier to justify paying more for a car if you believe it will hold a higher than average residual when you decide to sell it down the road. Depreciation is a big part of the total cost of ownership of a car. So avoiding cars with historically low residuals is one way to control total cost of ownership of your vehicle.

 

[dmurphy]

For all we know, battery day may be Tesla introducing long-lasting flashlights.

I mean, really - we have no idea what's coming.

If the current-day Model 3 suits your needs, buy it. If not, pass it up. Waiting and speculating on the Next Great Thing just means chasing one's tail. Because as soon as that's announced, there's another Next Great Thing around the corner. Lather, rinse, repeat. At some point, you either fish or cut bait.

 

[pdx_m3s]

I think Model 3/Y are safe for a while. Tesla just re-confirmed their long-term relationship with Panasonic for 21700s for their existing lineup and energy storage.

Tesla cells will probably be for Cybertruck and Roadster to start with. Perhaps Semi. Tesla still doesn’t even have a production facility to build their own cells at volume, so I think it will be a while before they hit their high volume cars (3/Y).

 

[Knightshade]

I think that reasonable assumptions that they can't change over their entire production of batteries and product offerings all at once, lead people to think that the Model S and Model X will receive the updates first.

Not even "the S and X"

Just the S. And only the new Plaid P $140,000 version.

(price is somewhat speculative, the fact it'll cost a lot more is not)

Then the Plaid X some time later.


Because they simply won't have the production capacity to introduce anything else by September this year.

Regular S/X will still get the 18650 cells they signed an added 2 years with Panasonic to produce.

The ramp up of new cells beyond that will feed cybertruck and semi initially.


It'd be absolutely insane for them to rev the 3/Y battery just a few months after the Y launch. (plus as you note- they lack capacity to produce them in volume so anything other than explicitly mentioning they're NOT doing this for YEARS yet would tank current 3/Y sales which they can't afford to do).

Whenever these improvements do arrive, the vehicles without the improved battery will almost certainly depreciate. How much really depends on how big of an improvement Tesla is able to deliver.

Did the P/S85s depreciate a bunch when the 90s came out? How bout when the 100s came out?

I don't honestly know the #s, but I don't believe it was especially significant.

Last I knew the biggest depreciation difference was if it has AP1 vs AP2 since AP1 was dead going forward....the battery difference didn't figure in a ton.

The S100 already has over 400 miles.... do you really think it's gonna hurt resale of that car if suddenly there's a new 500 mile one?

How many folks routinely drive over 400 miles a day?

For me, I decided that I don't really stand to gain anything buying the M3 now instead of waiting 2.5 months. I am working from home right now and not driving much. There is no issue with me continuing to drive the vehicles I currently have for a bit longer and I might get a better car in the long run by waiting. Other people, I am sure, are in different positions. Also, I may wait until September and then find out that the new battery is not coming for the M3 until Q3 2021 or something.

I mean- if it doesn't matter to you to wait (other than you're gonna pay a bit more for FSD if you planned to buy it) go ahead and wait... but I think you'll be disappointed at having done so.

 

[dmurphy]

The S100 already has over 400 miles.... do you really think it's gonna hurt resale of that car if suddenly there's a new 500 mile one?

How many folks routinely drive over 400 miles a day?

That's what we call ... moving the goalposts.

First, 200 miles was impossible. So Tesla delivered it.
Then, 300 would solve world hunger. So they did that too.
Then it was 400 that was the golden number - so they hit that as well.

Can count on one hand the number of times in the last 10 years I've done more than 400 miles in one drive without a layover somewhere.

I had occasion to use a V3 Supercharger today for the first time. 150 miles in less than 10 minutes. Wildly impressed. So even if 400 isn't enough for some ridiculous reason, 550 is only an extra 10 minutes away.

So all this "it needs 500 miles of range to be practical" BS is just that ... BS.

 

[Knightshade]

That's what we call ... moving the goalposts.

...how?

The discussion was if yet-again-improved-batteries would hurt resale of the previous batteries.

So I asked if he thought even-longer-range batteries would hurt resale of the now shorter-range ones, given those are already WAY more than people typically drive on any given day.

Can count on one hand the number of times in the last 10 years I've done more than 400 miles in one drive without a layover somewhere.

I had occasion to use a V3 Supercharger today for the first time. 150 miles in less than 10 minutes. Wildly impressed. So even if 400 isn't enough for some ridiculous reason, 550 is only an extra 10 minutes away.

So all this "it needs 500 miles of range to be practical" BS is just that ... BS.

That was literally the point of my post.

That more range at this point adds very little value to the car... (and thus would do very little to reduce the residual value of existing-range ones since they're already 'good enough')


It's yet another reason you're not likely to see such things in the current real mass-production vehicles (regular S/3/X/Y) anytime soon.... they'll instead be needed for Plaid powertrain S/X (for greater output)... and then Semi and CT (where 500 miles is actually a listed spec already).

 

[dmurphy]

...how?

The discussion was if yet-again-improved-batteries would hurt resale of the previous batteries.

I believe we're at an inflection point where range is no longer an actual concern. It's bunk. FUD. Junk thrown by people who aren't being rational.

That was literally the point of my post.

That more range at this point adds very little value to the car... (and thus would do very little to reduce the residual value of existing-range ones since they're already 'good enough')

It's yet another reason you're not likely to see such things in the current real mass-production vehicles (regular S/3/X/Y) anytime soon.... they'll instead be needed for Plaid powertrain S/X (for greater output)... and then Semi and CT (where 500 miles is actually a listed spec already).

If I wasn't being clear, sorry. I agree with you 1000%. We're on exactly the same page - more range doesn't add value at this point. The only people it would matter to are people who keep moving the goalposts as an excuse for "why EVs will never work" ... They're not the ones who are going to be buying under any circumstances.

When you hear someone say "but I'd totally buy one if it could only do 450 miles!" - they're full of it. They're not a buyer at 300, 400, 500 or 1000 miles of range. So I don't think any additional range really will sink used values anyway, since those folks aren't "in market", so to speak.

 

[pdx_m3s]

When you hear someone say "but I'd totally buy one if it could only do 450 miles!" - they're full of it. They're not a buyer at 300, 400, 500 or 1000 miles of range. So I don't think any additional range really will sink used values anyway, since those folks aren't "in market", so to speak.

Totally agreed. Buyers, at the end of the day, want to feel excited and comfortable with the purchase of an EV. Range is only one part of that equation. Having a robust charging network and a brand that is dedicated to EVs plays a much bigger role, as does the technology and design of the car.

A main reason other legacy automakers are struggling with EVs is that (1) current offerings are not very exciting (they do not exactly "spark joy") and (2) buyers don't get the idea that legacy is dedicated and committed to EVs, which is extremely important.