Buy a Volt until the Model 3 Comes Out

[SageBrush]

One example is in the chart posted here: Tesla Model S retains its value better than gas-powered cars in its segment, losing only 28% after 50k miles

The conclusions seem to have the right flavor, but my peek at the data made me wonder about a method flaw since they are only using percentages: more expensive cars show less depreciation from tax credits.

This would not effect their conclusions of Model S/X compared to other luxury ICE makers, but it skews the results in favor of Tesla compared to less expensive *EV models.

 

[C141medic]

I plugged in information regarding a 2017 Volt Premier. According to Edmunds, 1st year depreciation is $14,550. That seems pretty high to me but if true, one would stand to lose a good amount if vehicle was resold within the first year even after credits, deductions, etc.
2017 Chevrolet Volt 1.5L 4-cyl. Hybrid 1-speed Direct Drive True Cost to Own

 

[McRat]

I plugged in information regarding a 2017 Volt Premier. According to Edmunds, 1st year depreciation is $14,550. That seems pretty high to me but if true, one would stand to lose a good amount if vehicle was resold within the first year even after credits, deductions, etc.
2017 Chevrolet Volt 1.5L 4-cyl. Hybrid 1-speed Direct Drive True Cost to Own

So a 2017 Volt Premier bought last November is $13k?

Show me one example.

This is typically what they sell for in their largest market:

https://www.cars.com/vehicledetail/detail/703964782/overview/

Note: There are additional discounts to be found, not just the $7500 Fed. For Edmunds to say they sell for $38k True Market Value is a bit of a stretch.

 

[EinSV]

The conclusions seem to have the right flavor, but my peek at the data made me wonder about a method flaw since they are only using percentages: more expensive cars show less depreciation from tax credits.

This would not effect their conclusions of Model S/X compared to other luxury ICE makers, but it skews the results in favor of Tesla compared to less expensive *EV models.

I do think Autolist's approach is unfair to EVs generally and agree that the failure to take the tax credit into account could skew the results somewhat, at least from the perspective of owners who benefited from the tax credit. But:

(1) I don't believe this would account for the full difference between the Model S and the Volt, i3 and Leaf. The effect of the tax credit should show up in the first year, but not only is the initial depreciation higher on the Volt, i3 and Leaf but the rate of decline is faster year after year according to Autolist's report.

(2) As a side note, not factoring the tax credit into account also skews the results against the Model S compared to ICE. From the perspective of owners who benefited from the tax credit, Model S depreciation -- already best in class -- is even better.

(3) Autolist also predicts Model 3 will have best in class depreciation -- similar to what they've seen with the Model S. Tesla Model 3 to have best-in-class depreciation, report says. If that's the case that would be further confirmation that lower depreciation for Tesla compared to other EVs and comparable ICE cars has to do with supply and demand and Tesla's increasing popularity, not relative pricing/tax credits.

 

[SageBrush]

I do think Autolist's approach is unfair to EVs generally and agree that the failure to take the tax credit into account could skew the results somewhat, at least from the perspective of owners who benefited from the tax credit. But:

(1) I don't believe this would account for the full difference between the Model S and the Volt, i3 and Leaf. The effect of the tax credit should show up in the first year, but not only is the initial depreciation higher on the Volt, i3 and Leaf but the rate of decline is faster year after year according to Autolist's report.

(2) As a side note, not factoring the tax credit into account also skews the results against the Model S compared to ICE. From the perspective of owners who benefited from the tax credit, Model S depreciation -- already best in class -- is even better.

(3) Autolist also predicts Model 3 will have best in class depreciation -- similar to what they've seen with the Model S. Tesla Model 3 to have best-in-class depreciation, report says. If that's the case that would be further confirmation that lower depreciation for Tesla compared to other EVs and comparable ICE cars has to do with supply and demand and Tesla's increasing popularity, not relative pricing/tax credits.

I think the reasonable way to approach this question is to set the denominator to the MSRP less the discounts that a new car purchase will enjoy. Then the fractional depreciation is equal to 1 - (used_car_price)/the_amended_MSRP)

Example:
MSRP 50k
Tax-credits: 10k
Manufacturer Discount: 5k
Used_car value: 25K

Then the depreciation is 1 - 25/35, = to 10/35

Note that Tesla's insistence in selling cars at MSRP gives them a built-in advantage in the "how much depreciation game" compared to other EVs. The LEAF is a great example, particularly from early 2017 when 10k discounts were offered by Nissan in addition to the $7.5 federal tax credit and whatever state credits were available. In my state of Colorado it is $5k. The MSRP was about $32, but the out the door price in Colorado before taxes was (32-10-5-7.5) = $9.5k. In two years lets guess that a person can sell the car for $6.5 in Colorado and the same rebates are in effect.

• The standard way of calculating depreciation suggests that the car lost 25.5/32 = 79.7% of its value
• My way of calculating depreciation calculates out to 1 - (6.5/9.5) = 3/9.5 = 31.8%
• And of course the owner depreciation cost is $3k which is not expected at first glance from a car that drops like a rock in value.

Compare that last value of $3k depreciation loss to a Tesla Model S/X that costs about $20k depreciation after a couple of years. Each person will have to make a value judgement of how much more value a Tesla is compared to a LEAF. For me it is about double or maybe triple, so the normalized depreciation compared to a LEAF would in my mind be $6k - $9k and I would conclude that the Tesla depreciates considerably faster than a LEAF.

I have never shopped for non Japanese brands so my impression of a consumer expectation of 10-20% off MSRP may be off. If it is correct then oddly enough the EV tax credit is not too far off from the standard discounts in ICE sales and the generic depreciation fractions can be read without amendment. Each car model of course may have its own market quirks and the generic calculation may be waaay off, as the LEAF example demonstrates.

Phew. If anybody reads even half of this post I'll be amazed.

 

[Emmies]

dude, buy a used vehicle, EV or otherwise. It's really dumb to buy a new car if you're only going to have it for a year or two

 

[SageBrush]

dude, buy a used vehicle, EV or otherwise. It's really dumb to buy a new car if you're only going to have it for a year or two

Probably, but smart used car buyers realize that there are often issues in the used car that are not apparent at sale and require addressing. It can be maintenance, or unrecognized problems. I always figure on $1 - $2k of extra charges. Not a big deal if the car is kept until end of life, but expensive in a car kept a year.

Keeping a car for a year is a headache. I would be inclined to buy out a lease from somebody.

 

[Nikxice]

Unless the OP is hung up on buying a new Volt or Bolt and then transitioning to a Model 3, just fuhgeddaboutit. All the tax credits or rationalizing in the world will not make up for the resale hit. My wife signed up for a similar plan 18 months ago, but a lot smarter. Dealer CPO 2011 Volt with 70,000 miles for 10K. Since then, 13,000 additional miles, one minor issue covered by warranty, and three gas fillups. She loves the car, even pokes fun at the newer generation Volts. Visibility is better in hers, likely to cut costs GM removed the extra triangular window by the A-pillars. Our son wants the Volt when he gets his license.

 

[bro1999]

Unless the OP is hung up on buying a new Volt or Bolt and then transitioning to a Model 3, just fuhgeddaboutit. All the tax credits or rationalizing in the world will not make up for the resale hit. My wife signed up for a similar plan 18 months ago, but a lot smarter. Dealer CPO 2011 Volt with 70,000 miles for 10K. Since then, 13,000 additional miles, one minor issue covered by warranty, and three gas fillups. She loves the car, even pokes fun at the newer generation Volts. Visibility is better in hers, likely to cut costs GM removed the extra triangular window by the A-pillars. Our son wants the Volt when he gets his license.

That's why I said if OP is TRULY intent on a new Volt acquisition, lease and transfer would be the best option to avoid resale headaches. Though that has its own pitfalls.

 

[Edward Reading]

I got the i3 from Pacific BMW. I got like $12,500 in incentives off ($9500 from BMW, $2k Loyalty, $1K grad discount) which got to my ultra low price along with a dealer discount of $5k off $49k MSRP car. You might qualify for other incentives like fleet etc that could get you to similar price. Greg Poland is the rep I worked with at Pacific BMW, try to reach him and he made the buying process super simple and straight forward, price better then anywhere else I looked and I didn't have to haggle. I will get HOV access sooner and don't have to worry about any delays in the Model 3. The lease is cheaper then I spend on gas per month.

Thanks for the info. I have family right near there, will definitely check it out. That is a super good deal.

 

[EinSV]

I think the reasonable way to approach this question is to set the denominator to the MSRP less the discounts that a new car purchase will enjoy. Then the fractional depreciation is equal to 1 - (used_car_price)/the_amended_MSRP)

Example:
MSRP 50k
Tax-credits: 10k
Manufacturer Discount: 5k
Used_car value: 25K

Then the depreciation is 1 - 25/35, = to 10/35

Note that Tesla's insistence in selling cars at MSRP gives them a built-in advantage in the "how much depreciation game" compared to other EVs. The LEAF is a great example, particularly from early 2017 when 10k discounts were offered by Nissan in addition to the $7.5 federal tax credit and whatever state credits were available. In my state of Colorado it is $5k. The MSRP was about $32, but the out the door price in Colorado before taxes was (32-10-5-7.5) = $9.5k. In two years lets guess that a person can sell the car for $6.5 in Colorado and the same rebates are in effect.

• The standard way of calculating depreciation suggests that the car lost 25.5/32 = 79.7% of its value
• My way of calculating depreciation calculates out to 1 - (6.5/9.5) = 3/9.5 = 31.8%
• And of course the owner depreciation cost is $3k which is not expected at first glance from a car that drops like a rock in value.

Compare that last value of $3k depreciation loss to a Tesla Model S/X that costs about $20k depreciation after a couple of years. Each person will have to make a value judgement of how much more value a Tesla is compared to a LEAF. For me it is about double or maybe triple, so the normalized depreciation compared to a LEAF would in my mind be $6k - $9k and I would conclude that the Tesla depreciates considerably faster than a LEAF.

I have never shopped for non Japanese brands so my impression of a consumer expectation of 10-20% off MSRP may be off. If it is correct then oddly enough the EV tax credit is not too far off from the standard discounts in ICE sales and the generic depreciation fractions can be read without amendment. Each car model of course may have its own market quirks and the generic calculation may be waaay off, as the LEAF example demonstrates.

Phew. If anybody reads even half of this post I'll be amazed.

We're getting pretty far OT so I will bow out after this post, but just to quickly note that while there may be some difference between MSRP and sale price net of discounts and tax breaks, any effect from that does not really explain the data.

For example, using your Leaf example, Autolist's data showed a 17% depreciation after 10K miles versus 6% for the Model S. In theory, some of that could potentially be due to effects of discounting or tax breaks as you suggest (although it could also be due to other factors).

But by 100K miles, the Leaf had depreciated 81% -- far more than comparable ICE vehicles and far more than the Model S (48%). So clearly any list price/tax credit issues were only a small part of the story. Tesla Model S retains its value better than gas-powered cars in its segment, losing only 28% after 50k miles (To be clear, Leaf still may have a lower overall cost to own than comparable ICE vehicles due to lower fuel costs, maintenance, tax credits, etc.)

 

[McRat]

Never measure depreciation as a percentage. It's cash. Percentage is a way to deflect true cost of ownership on an expensive car.
Dollars per mile is better. How much do you lose every mile you drive?