Biggest driver of Model S depreciation?

[SebastianR]

I think the Roaster 3.0 is a result of Tesla wanting to do something nice for its earliest supporters. I wouldn't expect similar things for MS, MX, 3, etc. Other than batteries, indications are that MS won't receive significant hardware retrofits. Tesla has refused them for autopilot, and their design lead said in a presentation that changing consumer behavior to keep cars longer is not a priority right now.

... and yet the Roadsters are selling at stubbornly high prices. If I compare them to similarly priced ICE roadsters they keep their value amazingly. And even though Roadster don't come supercharging enabled, don't have the full range of the Model S etc. I don't see how the Model S would be fundamentally different from Roadsters - in fact, you could argue that a more "daily driver suitable Model S" should keep its value based on low maintenance requirements better than a Roadster that's more a "fun car"...

 

[robby]

... and yet the Roadsters are selling at stubbornly high prices. If I compare them to similarly priced ICE roadsters they keep their value amazingly. And even though Roadster don't come supercharging enabled, don't have the full range of the Model S etc. I don't see how the Model S would be fundamentally different from Roadsters - in fact, you could argue that a more "daily driver suitable Model S" should keep its value based on low maintenance requirements better than a Roadster that's more a "fun car"...

I think they are fundamentally different. The Roadster is existentially a more niche, collectable car than the S. The supply of Roadsters is very small. Tesla makes more Model S in a month than there are Roadsters in the entire world.

 

[ecarfan]

The S has already depreciated dramatically in just two years largely because Tesla has introduced major new hardware features that cannot be retrofitted. Nothing wrong with that, and Tesla will certainly continue to do that in the future. In 2013 the P85+ was the latest and greatest: in 2015 the P85D is. No doubt by 2017 there will be a revised Model S version that will eclipse the P85D. That is the nature of technological progress applied to automobiles.

The Roadster is quite different because it was produced in very limited numbers and then discontinued. Regardless, there are many Roadsters that have sold in the past year for half their original selling price, and when Tesla eventually builds an all new Roadster I suspect used values will decline much further.

 

[HankLloydRight]

Dont' worry about all that small $hit, put the kids thru college, then get on with your life. The rest will fall in place.
old geezer

I was thinking this the entire time reading the OP. And I'm not even an "old geezer".

It's good to think about buying a good used MS in the future, but then there's *over thinking* it. When your kid starts to drive, just buy a good used Model S and start driving it as soon as possible.

That time owning and driving the car is worth much more than any additional depreciation the market might experience in the interim if you try to wait and time the market. Because timing the market never works.

Just get a car and enjoy it as soon and as much as possible. And as my father would say, don't sweat the small stuff.

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The OP also asked what I would do. I have a "classic" P85+, no autopilot, no TACC, no parking sensors, no "D". But I bought the car (as a Tesla Inventory car) as a really great deal, and love having it. I've already put on more than 15,000 miles in less than one year. Just did a r/t drive to Florida and back. I plan to keep it and drive it for as long and as much as possible. Maybe 5 or 7 years down the road I might consider upgrading to who-knows-what Tesla will come up with, at least a bigger battery. Or I'll upgrade the battery in-place if an available option. Do I regret buying early and missing out on the newest features? Sure, a little bit.. but it's still the most awesome car on the road which I wouldn't give up for anything.

 

[v12 to 12v]

The S has already depreciated dramatically in just two years largely because Tesla has introduced major new hardware features that cannot be retrofitted. Nothing wrong with that, and Tesla will certainly continue to do that in the future. In 2013 the P85+ was the latest and greatest: in 2015 the P85D is. No doubt by 2017 there will be a revised Model S version that will eclipse the P85D. That is the nature of technological progress applied to automobiles.

The Roadster is quite different because it was produced in very limited numbers and then discontinued. Regardless, there are many Roadsters that have sold in the past year for half their original selling price, and when Tesla eventually builds an all new Roadster I suspect used values will decline much further.

I ordered my model S while shopping Roadsters. The Roadster's stubbornly high price made me move to the Model S. I got tired of waiting it out. The price of Roadsters temporarily went soft when several people were trying to sell Roadsters to buy the Model S, but that trend didn't continue. After the last Roadsters sold, the price has remained pretty solid.

That brings us back to supply and demand being the biggest driver.

 

[Canuck]

One word: Time. The longer you wait, the more prices will fall. You'll also be closer to the grave, with less time to enjoy driving the car, which really is a joy, so you also need to take that into consideration.

 

[EXOTIC1]

current prices low mile P85'S are still selling in the 71-74k range
i don't think in the next 7 months you'll see 50's on lower mile cars even with the 70D announcement
i'm think more in the 60-63k range by end of 2015
thoughts?

 

[Lex]

I agree.. the resale prices seem to be holding firm. Not every buyer needs the latest and greatest tech... EVERY Model S is a highly advanced, highly desirable car with a modular drivetrain and replaceable battery pack. Heck even the user interface guts could be board-level upgraded one day, if needed, for more CPU power etc.

I for one am not worried about the next release reducing the value of my car because it is still so much more of a car than any other car on the road, for a while to come. The new iPhone models changed the game -- they were such good computing platforms we stopped making phone calls ! In the Model S we still "just" use it to travel via roadways, and that's not gonna change anytime soon :smile: Until it does, a comfortable, safe, (mostly) reliable way of getting around in style is going to hold a certain value.

 

[neroden]

The key drivers in my eyes are a) insurance and b) service & repair costs.

The older a Model S gets the more it will be compared to any other (similarly old) car. The cheaper the upkeep of the Model S, the higher will be its value.

If you think about a comparison with a Mercedes S-Class and a Model S. When they are both new, owners likely don't care so much about these costs as other factors (prestige, image, technology, speed, acceleration, comfort, convenience etc.) are the predominant factors. Many of these factors don't really play a big role for the used car market - which is the reason why a Toyota Camry keeps its value better than a S-Class. A 4 year old S-Class just "won't cut it any longer" following arguments similarly to yours above: technology, make, model etc. have moved on. A 4 year old Camry is likely to drive just as good as a new one and running costs like fuel, service costs and insurance all of a sudden emerge as relevant

What I'm trying to say is that a Model S at point of purchase new is a bit like an S-Class. Tesla has no problem with fuel costs, so if Tesla manages to keep insurances and service & repairs low, I believe a 4 year old Model S will perform more like a Toyota Camry and less like a Mercedes S-Class which would be a good thing.
Having said this, a top of the line performance car will always lose value (sometimes dramatically) if a new top of the line generation emerges. So what I said applies to S60/S85 not the fully loaded P85+ (or now a P85D).

That's my analysis too. I expect we'll continue to see sharp depreciation in the first few years, but starting at the 5-year mark or so, I think we'll start to see the Model S residual price holding up a lot better than "similar" gasoline cars, and that could go on for a long time.

Repair costs have, so far, been front-loaded due to early design and construction mistakes. (Yes, it's mostly warrantied, but there's still transportation and whatnot.) I still think there will be low repair costs later on. If Tesla can avoid charging exorbitant amounts for the routine maintenance in the out years, I think the fuel savings and excellent safety ratings will help keep the resale value up in the out years. The bells and whistles ("P", "+") will probably have depreciated to zero by then, though.

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If I were looking to buy a used S and had flexibility with timing, I'd look to pick up one off the guaranteed resale program, assuming Tesla certifies and guarantees it. I would be very leery about owning an early VIN Model S without a warranty, as there were more component quality issues in those older vehicles.

Depends on whether all that warranty work had been *done* already. I'd buy it from an owner who kept the sheaf of papers documenting the work done...

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Used prices might go up a bit when all the Federal Tax Credits are gone.

This is definitely true. It changes the new v. used calculation by $7500.

 

[SebastianR]

That's my analysis too.

Thanks

I expect we'll continue to see sharp depreciation in the first few years, but starting at the 5-year mark or so, I think we'll start to see the Model S residual price holding up a lot better than "similar" gasoline cars, and that could go on for a long time.

Repair costs have, so far, been front-loaded due to early design and construction mistakes. (Yes, it's mostly warrantied, but there's still transportation and whatnot.) I still think there will be low repair costs later on. If Tesla can avoid charging exorbitant amounts for the routine maintenance in the out years, I think the fuel savings and excellent safety ratings will help keep the resale value up in the out years. The bells and whistles ("P", "+") will probably have depreciated to zero by then, though.

One key driver of depreciation in my eyes will be how insurances look at the Model S. Of course repair costs have something to do with that; if Tesla is regarded as exotic car it may get more expensive vis-a-vis an ICE car.