Depreciation Modeling/Guestimate price per mile

[JPUConn]

I'm actively looking to purchase my first Tesla and due to the similar nature to other technology I have trouble pulling the trigger due to wanting options that are a bit newer (Parking Sensors, Folding Mirrors, Subzero Package and now AutoPilot and Dual Motors) and thinking that new cost per mile may actually be the same as buying used cost per mile due to plummeting resale on older configurations.

I'm a big fan of purchasing cars used still under manufacturer warranty (CPO or Extended) because typically the bulk of the depreciation is taken within the first 1-2 years and then it slows down and my effective cost per mile is reduced. Because the model S has only been on the streets for ~3 years and has nothing else to benchmark I'm trying to 'guestimate' where this depreciation speeds up or slows down or just stays constant.

An example

• There's a 2013 (Jan ~4k vin) S85 fairly loaded with an extended warranty that's asking $43,5 and had an original sticker of $87,5K + extended warranty cost. It's intriguing to me purely due to the price point but I'm OK paying more for better value per mile on my end
• Factoring the $7500 tax credit this is a residual of around 54% on a pretty high mileage car (if you think of this as a typical car) and to have cost the original owner about $0.50/mile - that has to be higher than competition. While it's likely the depreciation has already slowed down and its unfair ( maybe $1/mile for the first 20k miles and less thereafter so it averages to $0.50/mile)
• I drive 20k miles/year so I'll be out of warranty on this example in 16 months and I'm trying to figure out how much the car will cost ME per mile.

- If the car is worth $30k with 100k miles just as the Model 3 is supposed to be released in early 2017 (not holding my breath) it would have effectively cost me $0.50/mile and to me that makes no sense because that's the same depreciation as the original owner and I'm not driving it from new.
- If there is some sort of price floor at $35K even with 100k miles my cost would be $0.31/mile so I'd be OK in this situation.
- I'd likely keep the car until 120-135k miles (2-3 years) and if the price truly hits a floor of $30k or so my cost per mile can be below $0.25. You're talking about a 6 year old tesla at that time that is out of warranty for several pricey components (air suspension, pano roof, etc) but still has 2 years left on the 'unlimted mileage' power train warranty so it would have to be worth something decent.
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Does 100k miles and being out of the extended warranty cause the price to plummet? If so what is the price floor? I'd have to imagine the scrap value of a tesla for parts alone is over $20k?

 

[California Roll]

This is such a different way of thinking about buying a car. It is going to be difficult to predict resale value 6 years down the road for a car that has no precedent. This is not a mainstream car and it requires an new infrastructure for energy. Too many uncertainties to make predictions. Personally, if I cared about price per mile, I would not by a Tesla - there are easily cheaper alternatives.

 

[David_Cary]

Well I doubt an 8 year, 150k car will have a scrap value of $20k. Maybe you think the battery is worth something? It will be but it is possible a comparative capacity new battery (2020) will only cost $8k. So I'm thinking the Tesla battery might be $5k. The rest of that car will likely be less than $5k.

Remember in 2020, the current Model S will be gone. It is possible a Model 3 at $40k will be better in nearly every way. Either way, predicting the future is very hard.

 

[Tedkidd]

This is such a different way of thinking about buying a car. It is going to be difficult to predict resale value 6 years down the road for a car that has no precedent. This is not a mainstream car and it requires an new infrastructure for energy. Too many uncertainties to make predictions. Personally, if I cared about price per mile, I would not by a Tesla - there are easily cheaper alternatives.

Yeah, but a Honda Accord is apples to oranges.

If this car is at 50c a mile, it's got 80k+ miles?

I think it's overpriced. Never seen depreciation even close to that low.

 

[gdrum]

There are several ways to slice the cost per mile equation. I feel this is the only car to profit from IF you purchase the car correctly.

There are a lot of good deals on the CPO. Ive seen several 70d's pop up for 69 to 74k. If you were a small business owner and did the .57 cent per mile deduction and drove a lot 20k miles per year, add in 300-500 mo fuel savings then you would make/save money even after sold the car at sub 50k mileage.

Also the cheapest cars for sale, most of the people on here would not buy simply because they are missing the features that make the car. Seats, auto pilot, dual motor for weather etc. So saying that those 'few' that are really cheap are what the others will be worth is hard to truely use as fact. The right optioned new cars should hold value extremely well for quite sometime making the above math easily doable.

 

[Johann Koeber]

My take on this:

The car is about 100,000 and is built to drive about 1,000,000 miles (maybe not at 20,000 miles per year; sure hope the interior holds up, the drive train should, probably need a battery or two depending on the time it takes you to drive these miles).

About 0.10 per mile.

The used cars are priced with much greater depreciation. This sounds logical because Tesla does update the car's software, but the hardware on new cars is improved all the time. Actually the new cars are becoming cheaper because at the same price they have more hardware features. Therefore the older cars depreciate more than the linear depreciation model would suggest.

 

[JPUConn]

Thanks for the input - I did a high mileage lease on my current car which is a Honda Accord only because its costing me $0.18/mile for 3 years / 60k miles (.25 - .3 if you include Gas) and I know I won't get near that on a Tesla but I'm getting much more of a car in the Tesla. I also did the lease on the Accord to hold me over until used Model S's dipped in price or the 3 came out.

I've priced a 15k mile lease on a 70D and it was just under $1/mile ($1,039/month + $6,734 down for 45k miles). If Tesla lets you pre-pay for miles at $0.25/mile I would do 20k miles/year and reduce the total price per mile to $0.80/mile but still too high in my book as I can't personally justify that. I am not a small business owner so I can't take advantage of that lease benefit.

I am using the car exclusively for business reimbursed travel with a few weekend family errands so the tesla would pay for itself. I'm leaning more towards waiting for the 70D with the minimal options I want to dip below $70K and drive it to 40-50k miles and sell. If I could resell it at that time for $50k I would be paying around $0.50/mile and have enjoyed the new features that I want.

 

[McHoffa]

Unfortunately I think we'll see a much higher loss with a Tesla (or any EV now) than a traditional car. A 10 year old Honda will still cost next to nothing to maintain, and the only thing "new" other than styling and a few small features is the stereo/nav unit, which can be swapped out for the latest Apple CarPlay/Android Auto unit if you wanted to. In other words, the car is still pretty much the same car in ten years that it is now.

An EV, especially right now, is more like an iPhone/Android phone, or any other tech. In 5 years, the charging speed and range will be leaps and bounds better than what we've got. In 10 years? They'll probably be 100% autonomous. What would a 2015 Tesla that ONLY gets 250 miles range and takes 45 minutes to charge on a supercharger be worth, with at best Autopilot, compared to (theoretical) 2025 Tesla Model S that gets 500 mile range, can charge in 30 minutes and can completely drive itself?

Take a Nissan Leaf. The current model is alright, and works for many people, but in a couple years, the new one will be out with 3 times the range and faster charging. The resale value is already nothing. When that new model hits, the current models will be worth peanuts. I'm actually watching them and may get one for my son when he gets his license. I could buy a 2012 right now for under $9k with fairly low (< 30k) mileage. In 3 more years, I bet that same car will only cost a couple grand.

 

[Ketchups]

Well fellas, it's now 2018. Are your sentiments still the same?