Crazy low residuals?

[Jason71]

I don't disagree with you in principle. although we could also look back on here to a year ago where a lot of people were talking about how little their car had depreciated and the fantastic residuals which set an expectation, even if it was uniwise to think it would continue. So I kind of think we're all correct:

- depreciation should be expected if we think rationally about it, Teslas are not some magical depreciation defying item
- depreciation has been much more than the previous trend and more than many peoples expectation
- Tesla haven't helped the residuals. not that it's their job to, although it does hurt themselves in the long run.

So if you stretched yourself to get into a Tesla on the belief/expectation/hope that depreciation would be relatively low, however wise or not that was, you'll be hurting right now, and like most things in life, its the comparison to expectation that decides whether we're happy or sad about something, rather than the absolute measurement.

I still think that the general population will at some point decide to move to EV's in higher numbers than is happening now. When that happens there will be chronic under supply in the used market and that may push up EV residuals at the expense of ICE residuals. Currently BEVs make up only 5% of the vehicles available on Autotrader so if more than 5% of used buyers want an EV then the prices will go up.
A year or so ago it was reported that 30% of views on auto trader were for EV's, bad publicity, energy crisis etc has no doubt changed that but 5% is not a lot. it is not going to take a big swing in public opinion to make that 5% quite in demand and lets face it its not like they are obsolete. 90%+ of those cars will be post 2018 and, despite what the internet promised, solid state batteries with 600mile range, not much has really changed since 2019, an early M3 or Kona are still decent cars.

 

[Zilla91]

Isn't the plunge in values down to the fact Tesla decided, on a whim, to drop prices overnight? It's entirely of their own doing

 

[GeorgeSymonds]

Isn't the plunge in values down to the fact Tesla decided, on a whim, to drop prices overnight? It's entirely of their own doing

I think its more complex than that.

I think prices started goiung south before then, electricity prices started going up which both made them less attracftive and started a squeeze on wallets, Tesla then had to react to retain the sales number they wanted and so started discounting, so it was a kind of double hit thats continued.

I think @Jason71 has a point that things may well improve, I'm not so hopeful that prices will go up, but things could certainly plateau and not drop amuch further for a while.

They are a strange thing these electric cars, there's fairly clear evidence that mileage plays a significant part in the depreciation even though they're supposed to not have the engine, clutch and arguably brake issues an ICE does. Maybe thats a reflrection on how much warranty is left rather than the feeling the cars are getting more unreliable, or maybe its old school thinking that hasn't changed. Which would you take? A 2021 heat pump facelift M3 with 25k miles or a 2020 pre facelift car with 20k for the same sort of money? I'd take the 2021 car.

 

[Kithran]

I think its more complex than that.

I think prices started goiung south before then, electricity prices started going up which both made them less attracftive and started a squeeze on wallets, Tesla then had to react to retain the sales number they wanted and so started discounting, so it was a kind of double hit thats continued.

I think @Jason71 has a point that things may well improve, I'm not si hopeful that prices will go up, but things could certainly plateau and not drop amuch further for a while.

They are a strange thing these electric cars, there's fairly clear evidence that mileage plays a significant part in the depreciation even though they're supposed to not have the engine, clutch and arguably brake issues an ICE does. Maybe thats a reflrection on how much warranty is left rather than the feeling the cars are getting more unreliable, or maybe its old school thinking that hasn't changed. Which would you take? A 2021 heat pump facelift M3 with 25k miles or a 2020 pre facelift car with 20k for the same sort of money? I'd take the 2021 car.

Also the thing that everyone seems to forget with regards to Tesla price drops - when Tesla were raising prices during the times of component shortages and the like they specifically said they would be bringing them back down when they could - yet when they did bring them down everyone acted surprised.

 

[The_Cable_Guy]

Also the thing that everyone seems to forget with regards to Tesla price drops - when Tesla were raising prices during the times of component shortages and the like they specifically said they would be bringing them back down when they could - yet when they did bring them down everyone acted surprised.

Of course everything they say they will do they actually do...........hmmmm hang on a minute..........

 

[Jason71]

Of course everything they say they will do they actually do...........hmmmm hang on a minute..........

They have all the credibility of a "This way up label" on an Evri parcel.

 

[qwickshot]

Perhaps the issue is Tesla themselves. They won’t think twice about lowering list prices significantly (and increasing them of course). No other manufacturers seem to be so ‘knee jerk’. That volatility is scaring the market for used Teslas.

Except other manufacturers alter their pricing significantly all the time. The difference is that it’s obscured by the dealer network and a complete lack of transparency on pricing.

For example, it’s normal to see something along the lines of a list price of £lol with a £4000 deposit contribution if you take finance at an obscene APR, £2000 if you trade in a banger and £1,500 dealer mark down to get enough sales by the end of the quarter.

The big difference is that Tesla publishes their prices and you pay the price on the day. Some days it goes up, others it goes down. You have no idea if Jeff in Wakefield or Jess in South End paid more or less than you did for the same car purchased on the same day because of the dealer network and individual price negotiations with every single customer.

Isn't the plunge in values down to the fact Tesla decided, on a whim, to drop prices overnight? It's entirely of their own doing

Sure, it’s Tesla’s fault if you ignore the sudden depreciation of pretty much every other EV on the used market which is similar or in many cases, materially higher than a Tesla.

I’ve already posted a bunch of examples in this thread today of some popular cars at a range of price points like the Kona, fat eTron, iPace, ID.3.

Once you ignore all that, then yes it’s all the price reductions fault….

 

[Rooster6655]

Isn't the plunge in values down to the fact Tesla decided, on a whim, to drop prices overnight? It's entirely of their own doing

Before the price drops, dealers were already worried and expecting some price drops of sort so have been hesitant to make good offers for a few months, before the price drops the cheapest Model Ys were around 44-45 by dealers and now they are trending at 41-42, more notably is the increase of inventory by about 40%+ compared to 2 months ago.

 

[UrbanSplash]

Fiat offered me £37k for my MY LR, 14 months old, 14k miles. That was against a 500e for the mrs. He said he ‘doing me a favour’ with that offer.

 

[ACarneiro]

They are a strange thing these electric cars, there's fairly clear evidence that mileage plays a significant part in the depreciation even though they're supposed to not have the engine, clutch and arguably brake issues an ICE does.

They are also largely an unknown. We don’t really know how long they last and how they compare to modern ICEs. They do also have mechanical parts that will degrade with with time.
And there’s the Big Battery Boogeyman so I would actually be fairly uncomfortable buying a used EV.

Time will help.

 

[Jason71]

They are also largely an unknown. We don’t really know how long they last and how they compare to modern ICEs. They do also have mechanical parts that will degrade with with time.
And there’s the Big Battery Boogeyman so I would actually be fairly uncomfortable buying a used EV.

Time will help.

I have no problem buying a used EV but ideally one with a known history and still some manufacturers warranty.
I only bought new EV's because there were not really any used ones at sensible prices available. I have only ever bought used cars before the Tesla and now used prices are sensible I can't see me putting myself through the traditionally savage first two years depreciation again without a very good reason

 

[ACarneiro]

I have no problem buying a used EV but ideally one with a known history and still some manufacturers warranty.
I only bought new EV's because there were not really any used ones at sensible prices available. I have only ever bought used cars before the Tesla and now used prices are sensible I can't see me putting myself through the traditionally savage first two years depreciation again without a very good reason

Yes, I suppose a reasonable used battery warranty would waylay many fears….

 

[Doudeau]

Looks like the demand for EVs is slowing faster than predictions from the traditional manufacturers.

VW EV production

It does seem like there’s atill a limited audience and hence demand for EVs - whether new or secondhand.

 

[GeorgeSymonds]

They are also largely an unknown. We don’t really know how long they last and how they compare to modern ICEs. They do also have mechanical parts that will degrade with with time.
And there’s the Big Battery Boogeyman so I would actually be fairly uncomfortable buying a used EV.

Time will help.

I agree - I sold my MS when the 4 year warranty was nearly up as the MCU1 it had was playing up and Tesla were messing around at the time. If my car had been 6 months younger I think I'd have kept it another couple of years.

I also think Musk hasn't actually helped by talkiing about the "million mile battery" (or was it car?). There's a credibility question and I think people just don;t believe it (even if it turns out to be true). He also shot himself in the foot by saying it around the same time they removed the unlimited mileage warranty and replaced it with a 100-150k mile one, depending on model. It's a bit more complicated than that as they added performance guarantees but "judge me by my actions, not my words" comes to mind and he said one thing while protecting himself from the complete opposite.

 

[MrT3]

Yes, I suppose a reasonable used battery warranty would waylay many fears….

I’d be happy to buy a 3 year old Tesla, not sure about an 8 year old one though.

 

[PITA]

I’d be happy to buy a 3 year old Tesla, not sure about an 8 year old one though.

But would you be happy to continue running an 8 year old Tesla, if you'd owned it from new?

 

[Zilla91]

Surely that depends on how reliable it's been since you've owned it

 

[ACarneiro]

I’m getting increasingly more uncomfortable as I get closer to the 120.000 mile battery warranty.
But my plan is to run it to the ground so I’ll stick with it.

 

[PITA]

I’m getting increasingly more uncomfortable as I get closer to the 120.000 mile battery warranty.
But my plan is to run it to the ground so I’ll stick with it.

Just imagine if you're still thinking that at 500,000 miles

 

[doats1]

But would you be happy to continue running an 8 year old Tesla, if you'd owned it from new?

If it’s still moving and has reasonable battery capacity, why not?

I’d do the same with an ICE with many more serviceable parts.