Buyback Guarantee Revisited

[Vitaman]

When I first heard about the 36-39 month buyback policy if financed through a Tesla affiliated bank it seemed appealing.
After the October Upheaval I am starting to question the importance of this.
For those who financed through Tesla with the Buyback clause, would you do it again if you had a less expensive alternative, but without the guarantee?

 

[randompersonx]

Consider that 36 months from now, cars will likely have:
Larger battery (105Kwh frequently guessed around forums/reddit)
Further improvements to seats (ventilated seats?)
Further improvements to interior
LTE
Faster graphics/CPU for display

Out of all of that, the only one that I think has a risk of pushing the value down more than 50% is the larger battery.

Between the interest difference with financing elsewhere, and the cost of the maintenance you might otherwise not get, you are likely talking about a $2000 cost in the first 36 months. Figure the worst possible case scenario is 70% depreciation, which would mean a significant payout, but it also might be $2000 for nothing.

 

[Thud]

Consider that 36 months from now, cars will likely have:
Larger battery (105Kwh frequently guessed around forums/reddit)
Further improvements to seats (ventilated seats?)
Further improvements to interior
LTE
Faster graphics/CPU for display

Out of all of that, the only one that I think has a risk of pushing the value down more than 50% is the larger battery.

Between the interest difference with financing elsewhere, and the cost of the maintenance you might otherwise not get, you are likely talking about a $2000 cost in the first 36 months. Figure the worst possible case scenario is 70% depreciation, which would mean a significant payout, but it also might be $2000 for nothing.

Also consider that Tesla wouldn't be offering the plan in the first place if they weren't confident that they'd come out ahead. Same goes for extended warranties.

 

[randompersonx]

Also consider that Tesla wouldn't be offering the plan in the first place if they weren't confident that they'd come out ahead. Same goes for extended warranties.

I wouldn't put too much confidence in this. Tesla is still young enough that it could make mistakes in this type of guess -- and also might be willing to gamble a bit to try and increase sales.

 

[eco5280]

I guarantee you the car will be worth more on the used market than in any trade-in deal or buyback promise pricing. The only reason it wouldn't be is if the car becomes an orphan (i.e. Tesla goes under) but then the buyback guarantee goes away anyhow.

 

[bonaire]

If you sign up for the buy-back, you don't have to exercise it. It is just a put against the value of the car. It must be returned in months 36-39 with the loan paid off so they can do the deal. You are responsible for paying the loan off early before rolling in for the buy-back. So, it is not really a lease but more of a value promise. The real winner is the bank, Tesla and stockholders for increased sales. Plus, if you turn it in after 3 years, you probably are buying the newest vehicle - a Model X or similar.

 

[Pollux]

My understanding from Tesla staff during the purchase process in July/August 2013 is that you don't in fact have to pay the loan off early. But you must be current on your loan. You roll in with your in-decent-but-not-necessarily-perfect-condition Model S; they verify its condition and mileage; and then they cut two checks, one to the loan company and the other to you. There is a deduction for the per-mile charge for vehicles with greater than agreed upon mileage.

If you sign up for the buy-back, you don't have to exercise it. It is just a put against the value of the car. It must be returned in months 36-39 with the loan paid off so they can do the deal. You are responsible for paying the loan off early before rolling in for the buy-back. So, it is not really a lease but more of a value promise. The real winner is the bank, Tesla and stockholders for increased sales. Plus, if you turn it in after 3 years, you probably are buying the newest vehicle - a Model X or similar.

 

[eco5280]

My understanding from Tesla staff during the purchase process in July/August 2013 is that you don't in fact have to pay the loan off early. But you must be current on your loan. You roll in with your in-decent-but-not-necessarily-perfect-condition Model S; they verify its condition and mileage; and then they cut two checks, one to the loan company and the other to you. There is a deduction for the per-mile charge for vehicles with greater than agreed upon mileage.

Why would they cut two checks? They're paying off the loan and you get to walk away, no car and no loan.

 

[Ed Chan]

Why would they cut two checks? They're paying off the loan and you get to walk away, no car and no loan.

Some of us financed with large down payments (I did about 35% down) so we'd be owed money on the buyback. The buyback value is finalized on the buyback guarantee paperwork after your purchase. Of course, I already put 4000 miles on my car in 2 months so my buyback guarantee may end up being pretty worthless. But it was not that expensive due to my large down payment.

 

[Pollux]

What @Ed Chan said.

Some of us financed with large down payments (I did about 35% down) so we'd be owed money on the buyback. The buyback value is finalized on the buyback guarantee paperwork after your purchase. Of course, I already put 4000 miles on my car in 2 months so my buyback guarantee may end up being pretty worthless. But it was not that expensive due to my large down payment.