Depreciation

[pdk42]

I'm still undecided whether to lease or buy. Of course it's all down to depreciation. There seem to be two schools of thought:

1) Tesla are so far ahead, with potential rivals at least 1-2 years away from volume production of comparable vehicles. With rising acceptance and demand for EVs, that means residuals will be strong.

2) There are lots of new EVs just around the corner and the tech overall is still in its infancy. Today's Teslas will look out of date in 2-3 years, and their poor record on customer service and lack of repair facilities will drag them down once the traditional players get their EVs to market. This will mean that depreciation will be heavy.

Discuss!

 

[pgkevet]

Depreciation on new cars is terrible anyway and worse the more expensive they get..and worse still when it's 'different' and Tesla are slow to deal with change of ownership, fewer dealers interested in taking it on and tesla trade in prices are poor. If depreciation is you main concern then wait a year and buy a used 3 or whatever else it out there.

 

[interbear]

I’m glass half full and thinking residuals will be OK, your option 1, certainly no worse than other new car purchases. Tesla design will not look dated. Externally, they look sleek and sporty (not the X obviously) which will age well. Internally, I think that the uncluttered, simple approach to design will remain quite futuristic and ahead of the competition for some time yet. I’ve a suspicion that traditional ICE manufacturers will continue their obsession of switches and buttons galore which will over complicate things and date their design. I also think the supercharger network is a massive differentiator for Tesla that helps in the retention of value, as are the regular software updates which means the car will improve with age. I also think Tesla will stay ahead given their 100% focus on EV rather than trying to balance the demands of running EV, hybrid and ICE production lines and service capabilities.

I decided to buy my Model 3 as I intend to keep it for at least 5 years.

 

[GreenT]

With Tesla's woes with communications, service, software problems and sales delivery snafus, I would expect depreciation to soar.

 

[Rooster6655]

Depreciation based on the actual RRP will not be as much compared to traditional ICE cars RRP due to the fact that Teslas margins compared to RRP are a lot lower so less people taking a cut out of your money.

So far people are seeing a crap sales & delivery system but considering they delivered 2000+ vehicles last month in the UK alone compared to the previous year of probably more like 400 they are getting things done, once the next 3 months are over hopefully things improve more.

 

[gangzoom]

There are lots of new EVs just around the corner and the tech overall is still in its infancy. Today's Teslas will look out of date in 2-3 years, and their poor record on customer service and lack of repair facilities will drag them down once the traditional players get their EVs to market. This will mean that depreciation will be heavy.

People keep on bring this up, but its just utter rubbish.

A 2014 Model S is still on par with a brand new iPace/eTron etc none of which are hardly flying out of showrooms.

The Taycan, yeah its great, but £120k price tag, and on public roads likely similar performance/range to a £55k P Model 3.

The VW ID, €40k for the base version at launch apparently, range is no better than a 2019 Nissan Leaf.

Our 2017 Model X is still getting updates from Tesla, can charge at CCS and CHADEMO rapid chargers, as well as 18KW at fast AC - iPace/eTron/EQC cannot do that. Same EPA range as all the main rival's but using a much smaller battery, which means better efficiency and faster charging. Soon it'll also get an AP CPU to utilize hopefully better Autopilot software.

I challenge anyone to name a single EV, pre production or concept car that will get close to a £55k P Model 3 for range, speed, tech.

EVs are not like mobile phones, things are getting better but very slowly. DO NOT assume manufactures will make their next EV better than the one before, Nissan had Rapidgate with the Leaf, Hyundai appears to have botched the new Ioniq update.

Finally whats the obession with depreciation, its a car, all cars depreciate. My view is very simple, all cars beside a Dacia is a waste of money, in which case how much you enjoy the car is what matters not the cost. If you cannot afford the car don't buy it, otherwise buy and enjoy it. Been the richest person to be cremated that day not a life goal of mine .

 

[LEE3]

Agreed with this above. I’ve had mine for a month and the fascination from people is off the charts. It actually makes strangers in the street stop stare and then walk over and ask you about it. Boy racers, 911 owners and classic car drivers forget to pull away at lights due to staring at it.

For these reasons I believe there will always be someone who wants a Tesla. Regardless of age range colour model etc.

Plus they are quite expensive as new so the second hand market will be strong as there are lots of people who just cannot stretch to buy a new one now.

The biggest threat of depreciation for me will be the robotaxi era cheapening the brand but I believe legislation will prevent / hinder this era in everywhere but the US.

 

[Rooster6655]

The biggest threat of depreciation for me will be the robotaxi era cheapening the brand but I believe legislation will prevent / hinder this era in everywhere but the US.

In the case of robotaxi I’d expect demand for the car especially used to soar, don’t underestimate people’s willingness to make a profit

 

[tonyj01]

I agree with the two colleagues above.

My MS90D is now 42 months old, 40k miles and depreciation has been adequately low, definitely less than the depreciation if I had bought a large diesel vehicle in 2016.

I decided to buy outright (using a bank loan) through my business so I reduced my corporation tax that year by £20k.

However, when selling, I will have to pay tax on the “profit” made on the written down value of the car to the company.

But ... back to depreciation. One of my theories is that there is a very large pool of people who are ready to buy and look for 2-4 year old EVs, they might be high mileage commuters, who, if they spend £200 a month on fuel, suddenly save 80% of that figure. These are the people presently buy the end of lease cars that constantly flow ontothe market - those cars do not sit on dealer’s forecourts forever. Anyway the fuel saving alone (ignoring the tech, novelty and speed of the Tesla) makes the secondhand EV worth more than a comparable used luxury ICE car.

Other points:
Future expected low depreciation
No congestion charge tax
Possible use of bus lanes or dedicated motorway lanes in the future

Potential negatives:
What if Tesla stops firmware updates?
Will values drop when car reaches end of 8 year battery guarantee?

Tony

 

[Drmouse]

Personally, unless residuals are around £10k better than predicted, I found leasing to be the better option. However, that was also factoring in that I was buying through my company so half the VAT on lease payments was deductible.

I doubt it makes much difference in terms of depreciation. I'd say take it from a different angle: if you are planning to get rid at the end of the lease or finance period, leasing is probably a better option. If you expect to keep it for longer than that, buying is probably better.

 

[tess19]

I would not be too worried about depreciation as all car depreciate. As long as Tesla dont go slashing their prices by £1000s like they did with MS and MS. Lots got burnt. However with the recent price increase of the M3, we are heading in the right direction. Not surprised since the MX and MS can go up to £100k+ so have plenty of margin to cut. Where as the margin on the M3 is slim and much cheaper compared to its competition when you take into account the spec sheet.

 

[Rooster6655]

But ... back to depreciation. One of my theories is that there is a very large pool of people who are ready to buy and look for 2-4 year old EVs, they might be high mileage commuters, who, if they spend £200 a month on fuel, suddenly save 80% of that figure. These are the people presently buy the end of lease cars that constantly flow ontothe market - those cars do not sit on dealer’s forecourts forever. Anyway the fuel saving alone (ignoring the tech, novelty and speed of the Tesla) makes the secondhand EV worth more than a comparable used luxury ICE car.

The savings on fuel and by buying a 2-4 year old car make these highly sort after, when comparing to ICE cars you have to consider the total cost over the periods.

 

[rhap]

I've wrestled with PCP and lease.
I originally took the PCP.
I'm only keeping this model 3 for 3 years. We're after a Y.
For a SR+, white with hitch.
Total cost I had with the BH PCP apx 21,500
Lease = apx 17,500

I'd 'hope' the model.3 would fetch 25k after 3 years and we would use the equity built on a Y. But currently I've been told it's not tesla who buys the car. It's the same auction house who does the trade ins. So IMO the chance of getting a good book price is Zero.
Therefore I've gone with the safe play and leased.
I'm guaranteed a saving with a lease over the PCP and chose not to gamble on the PCP.
Even with the current price hike, I'm still happy I switched form PCP to lease.
If I was keeping the car longer term, it might of been different.

 

[gangzoom]

I'm only keeping this model 3 for 3 years. We're after a Y.
For a SR+, white with hitch.
Total cost I had with the BH PCP apx 21,500
Lease = apx 17,500

This calculation shows you just how expensive leasing is, even for a SR+.

So your happy to drop £17.5k in exchange for renting a car for 3 years than change to a Y.

Lets assume base Y costs are 10% higher, so £20k for same lease for 3 years.

In 6 years leasing you will have spent £38k renting something you don't own, so essentially the same amount a Model 3 SR+ would have cost to buy out right.

Yes you get to change cars after 3 years but leasing is a very expensive way to access a Model 3. I can understand people doing if they want to swap cars, but your only fooling your self if the reason to go down the leasing route is to save money.

Some lease deals are amazing, eg iPace/eTron etc, but those deals are 'supported' by hidden manfacture discounts, which Tesla don't do, and the Model 3 leasing costs reflect that.

 

[rhap]

If I was keeping the car longer term, it might of been different.

I'm happy taking a hit to test out having a EV and a tesla over a 3 year test period.
3 years is all I want. My family will be bigger little people by then. And we'll see what our circumstances are like and make a decision if the Y is a long term asset or not and see what the best way of financing it is then based upon any new criteria.

Back on topic, I 'hoped' and expect the model 3 to hold its value, but I dont trust the PCP trade in price.

 

[arg]

If you are considering leasing purely because you believe the depreciation will be too high, then you are saying that you believe your ability to predict the depreciation is better than those who do it for a living working for the leasing companies. Unless you have reason to believe that's actually true, you should expect to pay slightly more via leasing than in the "expected" case of depreciation.

However, the extra cost of leasing can be viewed like an insurance premium - while the expected cost is more, it fixes the cost and takes away risk. This has more value the shorter time you plan to keep the car: keep it long enough and you aren't expecting to get much back anyhow so even selling it for half what you thought isn't a big deal, while 20% uncertainty on the price you were hoping to get after a year or two could be a lot of money.

Of course other things might not be equal - tax treatment is very different, and your source of money to finance the purchase if you don't lease may be higher or lower cost than the leasing company.

As @gangzoom pointed out above, the Tesla situation is more transparent and so closer to this kind of theoretical analysis than with many other brands where there's hidden discounts rolled into leasing figures (though not totally absent in the Tesla case with residual values being sometimes guaranteed by Tesla in the past).

 

[vitesse]

I'm still undecided whether to lease or buy. Of course it's all down to depreciation. There seem to be two schools of thought:

1) Tesla are so far ahead, with potential rivals at least 1-2 years away from volume production of comparable vehicles. With rising acceptance and demand for EVs, that means residuals will be strong.

2) There are lots of new EVs just around the corner and the tech overall is still in its infancy. Today's Teslas will look out of date in 2-3 years, and their poor record on customer service and lack of repair facilities will drag them down once the traditional players get their EVs to market. This will mean that depreciation will be heavy.

Discuss!

I recognise that handle (I'll PM you...)

I can't really help with your question as after we inherited some money (well, my wife did - it's HER car - but I get to drive and clean and look after it...) and we purchased ours as an approved used car direct from Tesla; leasing was not considered or researched.

What are you looking to get?

 

[zayn]

seem's to be like the op has never leased or purchased a new car before but needs to consider 1) what he can realistically afford and still enjoy other things in life 2) long term aim, new car every few years or stick with the same for the next 5-10 years

I would suggest if going down the PCH route you look at this forum first Best Lease Car Deals Available? (Vol 7) - Page 342 - Car Buying - PistonHeads

 

[dayone]

I'm not sure that used Tesla cars in the UK seem to be as sought after as some people are suggesting.

I was tracking prices of used Model S cars on the Tesla UK website a few weeks ago and couldn't believe that the prices were being discounted on a daily basis, some cars were being reduced by £100 a day (2015 Model S 85 with 56k was reduced down to £32,900), and some were going down by £500 a day.

There was a 2017 Model S P100D with Ludicrous (26k miles) that was reduced by £2,400 over the course of a week and was showing as £63,900 for a car that someone bought for around £120k just two years ago.

 

[vitesse]

I'm not sure that used Tesla cars in the UK seem to be as sought after as some people are suggesting.

I was tracking prices of used Model S cars on the Tesla UK website a few weeks ago and couldn't believe that the prices were being discounted on a daily basis, some cars were being reduced by £100 a day (2015 Model S 85 with 56k was reduced down to £32,900), and some were going down by £500 a day.

There was a 2017 Model S P100D with Ludicrous (26k miles) that was reduced by £2,400 over the course of a week and was showing as £63,900 for a car that someone bought for around £120k just two years ago.

I only discovered this AFTER purchasing our CPO car from Tesla, buy thankfully it had reduced by over £5K since it had been first listed according to teslainfo.com. We got our car for about the same as an older higher mileage example advertised by an independent and of course we got the warranty reboot.