Depreciation on Model S is Horrible

[Marlin29485]

I purchased a Model S less than 8 months ago and my Model S is a 100D with about 8k miles.. I have since purchased a Model 3 as I love the Tesla product. We don't really need three sedans, so I have given consideration to the Model X. I contacted Tesla for a trade in value. Tesla quoted 15% below the average Kelly blue book value and 36% below the original MSRP. When I was purchasing the Tesla, they taught-ed that depreciation at 50k miles was roughly 28% and was number one in the industry, well that ship has sailed since the launch of the Model. It is evident that due to the Model 3 the value on the Model S is evaporating on a monthly basis. The Model 3 is going to continue to crush the value of Model S and I would anticipate a sharp drop in MSRP, probably in the neighborhood of $15k to $20k, especially considering the tax break is about to be reduced

If anyone outside of Tesla is reading. Be patient and look for the CPO cars. Purchasing a new Tesla 100D does not appear to be a wise decision at this time. The difference between AP 1.0 and AP 2.0, AP 2.5 with EAP is really not that much.

 

[RayW]

Tesla Model S & Tesla Model X Hold Their Value Better Than Gasmobile Competitors | CleanTechnica

 

[PhilDavid]

Tesla Model S & Tesla Model X Hold Their Value Better Than Gasmobile Competitors | CleanTechnica

That study is essentially bogus as they went by the asking prices of cars listed for sale. So if someone listed a RWD P85 for $75K, the study assumed that what it was worth.

As you can see from the OP's post and CPO prices, the 3 year depreciation is around 50-55% and honestly no one should be surprised with that. Premium cars depreciate about that much the first 3 years -- EV or not.

OP, The first year of depreciation is the steepest for any car so what you are finding out is nothing new. Your car probably lost $10K in value the moment you took ownership of it and drove it away in addition to the $7,500 for the rebate.

I disagree about the purchase of a 100D not being a wise decision though. It is a pronominal car with great range. The only part that is a mistake is buying one to sell the same year.

 

[Uncle Paul]

When calculating depreciation you should take into consideration the net price of your purchase. The Tax rebates do a lot to offset the lower selling price.

Also realize that your depreciation will also depend if you retail sell it yourself or decide to sell at wholesale by trading it into Tesla or a dealership.

The most highly optioned vehicles usually depreciate more than base units.

 

[mswlogo]

Kelly Blue Book is useless.

 

[Chaserr]

First new car in this category eh? Whether it's Model S or S type or 8 series or whatever, this isn't new. Model S probably does a little better than average for the high end sedan category, but it's not worth that much more than a Mercedes or BMW on the used market.

 

[nexusone]

Just about everyone at Tesla is a liar. You shouldn't believe any of that nonsense.

Sorry about your unwelcome surprise.

 

[scole04]

Kelly Blue Book is useless.

Worse than useless, shady. KBB along with most of the other big car apprasial providers have conflicts of interest between the interests of their parent companies and the interest of the vehicle owners.

 

[PhilDavid]

Worse than useless, shady. KBB along with most of the other big car apprasial providers have conflicts of interest between the interests of their parent companies and the interest of the vehicle owners.

I agree. KBB is useless. To get a real sense on values look up comparable CPO listings and sold listings on eBay. If you want pie in the sky car valuations, look up a pie in the sky "study"

 

[ewoodrick]

I purchased a Model S less than 8 months ago and my Model S is a 100D with about 8k miles.. I have since purchased a Model 3 as I love the Tesla product. We don't really need three sedans, so I have given consideration to the Model X. I contacted Tesla for a trade in value. Tesla quoted 15% below the average Kelly blue book value and 36% below the original MSRP. When I was purchasing the Tesla, they taught-ed that depreciation at 50k miles was roughly 28% and was number one in the industry, well that ship has sailed since the launch of the Model. It is evident that due to the Model 3 the value on the Model S is evaporating on a monthly basis. The Model 3 is going to continue to crush the value of Model S and I would anticipate a sharp drop in MSRP, probably in the neighborhood of $15k to $20k, especially considering the tax break is about to be reduced

If anyone outside of Tesla is reading. Be patient and look for the CPO cars. Purchasing a new Tesla 100D does not appear to be a wise decision at this time. The difference between AP 1.0 and AP 2.0, AP 2.5 with EAP is really not that much.

I'm not sure what you think that the problem is. When Tesla is talking about resale, they are talking about sales to end-users, you seem to be talking about sales to resellers. Ever wonder how they make a profit? They buy cheap and sell higher.

If you want to move a car easily and lose some money, you sale it to a reseller. If you want to make money, you sell it privately.

BTW, a CPO car is one in which Tesla bought for less than they are selling it for. If you want a cheaper car, you buy directly from the seller.

 

[Marlin29485]

I'm not sure what you think that the problem is. When Tesla is talking about resale, they are talking about sales to end-users, you seem to be talking about sales to resellers. Ever wonder how they make a profit? They buy cheap and sell higher.

If you want to move a car easily and lose some money, you sale it to a reseller. If you want to make money, you sell it privately.

BTW, a CPO car is one in which Tesla bought for less than they are selling it for. If you want a cheaper car, you buy directly from the seller.

The intent of my post is to help would be buyers. I made my choice when I purchased the car and can live with it. The reality is the bottom is dropping out of the value of the Model S. You can purchase a CPO S90D for $60k that has a 294 mile range with the new hood design. Why spend $47k more for EAP and 40 more miles of range? I love my 100D.

Tesla’s mfg cost on a Model S 100D is estimated to be around $70k. That will be dropping by at least $10k when the gigs factory is opened.

Bottom line is a would be buyer of a model s should wait to buy new.

 

[Marlin29485]

That study is essentially bogus as they went by the asking prices of cars listed for sale. So if someone listed a RWD P85 for $75K, the study assumed that what it was worth.

As you can see from the OP's post and CPO prices, the 3 year depreciation is around 50-55% and honestly no one should be surprised with that. Premium cars depreciate about that much the first 3 years -- EV or not.

OP, The first year of depreciation is the steepest for any car so what you are finding out is nothing new. Your car probably lost $10K in value the moment you took ownership of it and drove it away in addition to the $7,500 for the rebate.

I disagree about the purchase of a 100D not being a wise decision though. It is a pronominal car with great range. The only part that is a mistake is buying one to sell the same year.

I made the purchase and can live with it! Potential new buyers should wait in my opinion as Tesla will be dropping the price like a rock on the Model S.

A 305 mile range Model 3 is $52k less than a 335 mile range 100D Model S. The reality is the S is still an awesome design but an old one and just doesn’t command the price difference as compared to the 3.

 

[IchDochNicht]

In my observation, the higher level a Tesla is, the faster it depreciates. The Model S 75 / 75D doesn't depreciate very rapidly, the 100D depreciates significantly more rapidly, and the P100D has a very steep depreciation curve. That is consistent with higher end luxury cars, in my observation. A Panamera, for example, depreciates comparably to a higher end Model S. Rightfully so, given the Pano's complexity (approx. 10k more moving parts) creates much higher risk for costly repairs.

 

[Marlin29485]

I'm not sure what you think that the problem is. When Tesla is talking about resale, they are talking about sales to end-users, you seem to be talking about sales to resellers. Ever wonder how they make a profit? They buy cheap and sell higher.

If you want to move a car easily and lose some money, you sale it to a reseller. If you want to make money, you sell it privately.

BTW, a CPO car is one in which Tesla bought for less than they are selling it for. If you want a cheaper car, you buy directly from the seller.

No problem just trying to help potential new buyers. Wait for Tesla to drop the price on the Model S. My prediction is the S will become standard with the 100 battery and the MSRP will drop by $10 to $15k and be priced were the 75D is now. I say no late4 than the end of Q1 2019.

 

[Uncle Paul]

Model S is the Halo vehicle for the EV industry. Imagine that rather than lower the selling prices that Tesla will increase the capabilities of these cars with Full Self Driving, a much faster computer and easy access to the Tesla Neural Net.

Believe that the S and X will continue to be aspirational cars, while the Model 3 and Y will become the price conscious volume leaders.

Have a friend that has a couple year old Mercedes S Class AMG. Now that car is a poster child for depreciation! When they go out of warranty their market value plummets even more.

 

[whitex]

I purchased a Model S less than 8 months ago and my Model S is a 100D with about 8k miles.. I have since purchased a Model 3 as I love the Tesla product. We don't really need three sedans, so I have given consideration to the Model X. I contacted Tesla for a trade in value. Tesla quoted 15% below the average Kelly blue book value and 36% below the original MSRP. When I was purchasing the Tesla, they taught-ed that depreciation at 50k miles was roughly 28% and was number one in the industry, well that ship has sailed since the launch of the Model. It is evident that due to the Model 3 the value on the Model S is evaporating on a monthly basis. The Model 3 is going to continue to crush the value of Model S and I would anticipate a sharp drop in MSRP, probably in the neighborhood of $15k to $20k, especially considering the tax break is about to be reduced

If anyone outside of Tesla is reading. Be patient and look for the CPO cars. Purchasing a new Tesla 100D does not appear to be a wise decision at this time. The difference between AP 1.0 and AP 2.0, AP 2.5 with EAP is really not that much.

I am not sure why you are surprised.

First, you are comparing MSRP to trade-in value after 8 months. First, the car was NEVER worth the MSRP since anyone could buy at at MSRP and receive the $7.5K rebate, so immediately you get a 8% "depreciation". If there wasn't one, you could buy a 1000 of them, sell them at MSRP and collect $750,000 in profit - you could buy the entire production capacity of Tesla if you could find people actually willing to buy a 0 miles used Tesla at MSRP - if you can, you can make up your depreciation in no time just selling brand new, 0 miles, Teslas.

Second, no matter what car you buy, you generally lose 2 years worth of depreciation within a days. The more expensive the car, the more that depreciation is. The reason is simple. The cost of the car to the seller is X. Then there is markup, which is the profit, say 25% for a S100D, so you pay X+25%. So that means that Tesla can simply produce a brand new new car for 25% cheaper than what you paid for it, so it makes no business sense for them to buy it from you after 8 months of use unless it is sufficiently cheaper than manufacturing a new one.

So, combining 8% rebate and 25% profit margin, as soon as you took ownership of the car, you lost 33% of MSRP. 8 months later, another 5% is not bad at all. Good news is that if you drive it another 28 months with reasonable/typical wear, the car will likely only lose another 15-20% of MSRP.

This is not unique to Tesla, go check out any other car in that price range.

 

[Lasttoy]

Never buy a new car.
U could have bought a one yr old S, let the owner take that depreciation.

 

[whitex]

Never buy a new car.
U could have bought a one yr old S, let the owner take that depreciation.

You are right - however the problem is there are not many 1 year old cars on the market. When my wife's one year old Model S was totaled February 2018, the insurance company hired a third party to find "comparables" and they couldn't find any within 100 miles of Seattle, an area with has one of the largest Tesla populations in the USA. The closest one found was in Nevada and only one, of course not matching the options (no leather, no winter package, but had pano IIRC, different color, etc).

So, while it's definitely great if you can find a 1 year old Tesla with 2 year depreciation (typical rule of thumb, when driving off the lot you lose 2 years worth of depreciation), the problem is that the sellers don't want to part with a car they could drive another year without losing much money. You can occasionally find one, but usually the ones which you'll find are the ones which are overpriced (I've seen 6 month old Teslas listed at above MSRP because the seller says they paid MSRP+tax+registration and they subtract from that number to arrive at or even above MSRP for a 6 month old car).

@Marlin29485 - given that there are not many 1 year or newer Model S's are on the market, something tells me that you can probably sell your S100D privately at $5K-$10K above what Tesla offered you for a trade-in without a whole lot of effort, providing of course the car is in good shape. Also, check with vroom too, they know what it takes to move used Teslas. That is of course assuming you want to part with it at that price.

 

[wdolson]

Tesla always low balls trade in offers. You're much better off selling it yourself. All cars depreciate a fair bit in the first year, and $100K cars depreciate more than average. Look at the $100K cars from Mercedes and BMW, unless it's something special that collectors want, it's going to depreciate by around 1/3 in the first year. Compared to other cars in their price class, the Model S depreciates less than average, but it still depreciates.

The Model S tends to hold its value once it hits about $40K. There are very few Model Ss, even 2014s, in decent condition out there going for less than $40K.

 

[David_Cary]

"there are not that many 1 year old cars on the market" - exactly right.
Supply and Demand.
You can sell a 1 year old 100D for a nice price on the market because there isn't that many of them. Tesla has not felt the need to drop the price on a S or X yet. Sales have been pretty good. They have offered you a low trade-in price and that has nothing to do with future price changes.
There will be likely a refresh or a change in prices for the new year - so I don't disagree there.
The market for cars is not very rational so the argument that a 3 is a much better value is true but almost irrelevant.

Your car was $100k presumably. You got it for $92,500 net. They are offering you 70%. That is bad and a lowball but lots of people who sell cars that quickly don't care and do it. So then they make some $10k on a quick sale - good for them, bad for you.