Depreciation

[pdk42]

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

I've bought several new cars before - usually on either PCP or a straight loan. I tend to keep the car for 5 years, driven by company car allowance policy. My current car is coming up to five years.

I'm a compete virgin on leasing though. If it weren't for concerns on depreciation, I wouldn't be looking at it now TBH - it definitely smells of wasted money if I do indeed keep the Tesla for 5 years. However, I have this nagging doubt in my mind about whether the Tesla will age well given the current situation with EVs. Will a 2-3 year old Tesla look "past it" in 2021?

 

[zayn]

if you have done a PCP before then you are aware of equity being left in the vehicle after your PCP is up in 3 years and you hope it is enough for a another PCP option or deposit. Leasing is no different except you don't have any equity after the PCH period is over. You hand back the keys and walk away. No one can predict really an actual depreciation, it will be as this is all based on a calculation and as such this is a risk. what you can calculate is what does the vehicle cost now over the term on a PCH or a PCP, does it beat the depreciation figure of under 25% . That is what you should he looking at.

if your set on a term of 5 years then no PCH lease is going to extend that long nor a PCP which would he over priced. The only option you would have is finding a cheap HP loan if you don't have cash

I've bought several new cars before - usually on either PCP or a straight loan. I tend to keep the car for 5 years, driven by company car allowance policy. My current car is coming up to five years.

I'm a compete virgin on leasing though. If it weren't for concerns on depreciation, I wouldn't be looking at it now TBH - it definitely smells of wasted money if I do indeed keep the Tesla for 5 years. However, I have this nagging doubt in my mind about whether the Tesla will age well given the current situation with EVs. Will a 2-3 year old Tesla look "past it" in 2021?

 

[SimonTaylor]

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.

That's great value.

 

[DJP31]

No one can predict really an actual depreciation, it will be as this is all based on a calculation and as such this is a risk. what you can calculate is what does the vehicle cost now over the term on a PCH or a PCP, does it beat the depreciation figure of under 25% . That is what you should he looking at.

Can you expand on this 25% depreciation figure that I’ve bolded above please? Given a 50% depreciation rate over a 3 year period is not unreasonable, where and what does the 25% relate to?

I’ve PCP’d for years but never leased. A comparison between a lease and PCP over both a 2 or a 3 year period had the lease winning comfortably, and this is the route I’m considering when the time comes. I’m struggling to see where this 25% fits into the equation.

 

[gangzoom]

However, I have this nagging doubt in my mind about whether the Tesla will age well given the current situation with EVs. Will a 2-3 year old Tesla look "past it" in 2021?

It really is very simple, can you name/think of any EV been planned for mass production that will better a Model 3, on price, range, or tech???

The much hyped VW ID is looking like a very expensive Nissan Leaf and €40K price tag to match, with delivers not for another 6 months.

I cannot see Audi/Merc coming out with anything dramatically better than the eTron/ECQ, which all in effect matches the spec of our 2017 Model X and only just.

 

[zayn]

Normal method is to work out the total cost of the lease over 2 years at 10k miles per year and divided this by the car's P111D value.
This gives you a way to work out if the lease cost is less than the depreciation of the new car over the 2-year term.

Less than 25% is considered as beating depreciation.

You cannot just halve this figure for 4 years as depreciation is not linear. The lease costs remain constant over 4 years, whereas depreciation reduces.

Can you expand on this 25% depreciation figure that I’ve bolded above please? Given a 50% depreciation rate over a 3 year period is not unreasonable, where and what does the 25% relate to?

I’ve PCP’d for years but never leased. A comparison between a lease and PCP over both a 2 or a 3 year period had the lease winning comfortably, and this is the route I’m considering when the time comes. I’m struggling to see where this 25% fits into the equation.

 

[pdk42]

Normal method is to work out the total cost of the lease over 2 years at 10k miles per year and divided this by the car's P111D value.
This gives you a way to work out if the lease cost is less than the depreciation of the new car over the 2-year term.

Less than 25% is considered as beating depreciation.

You cannot just halve this figure for 4 years as depreciation is not linear. The lease costs remain constant over 4 years, whereas depreciation reduces.

I've just done that on the lease figure I have - it's 31%. So maybe not a good deal then?

OTOH, comparing depreciation to lease cost, we get this...

- Total lease cost = £15.5k.
- Projected depreciation at 17% p.a. = £15.8k

On that basis, lease is almost same as depreciation.

I used 17% because that's what my current BMW has seen based on its invoice vs value now.

 

[DJP31]

Normal method is to work out the total cost of the lease over 2 years at 10k miles per year and divided this by the car's P111D value.
This gives you a way to work out if the lease cost is less than the depreciation of the new car over the 2-year term.

Less than 25% is considered as beating depreciation.

You cannot just halve this figure for 4 years as depreciation is not linear. The lease costs remain constant over 4 years, whereas depreciation reduces.

Oh dear I fear the Octopus quote doesn’t meet the target. 40.39% . There can’t be many cars that achieve the 25% especially when the lease provider has to earn a crust.

 

[zayn]

actually there are and have been many ice vehicles and the Tesla on OctopusEV and Pink

when the original golf R came out that deal was around 7k total in 2 years most recently I had a 2018 Audi S4 which came in at 7.5k over 2 years total which is also super cheap. so deals are there just not for the Tesla now. OctopusEV previous deals before the Tesla changes the first time were around 20-21%

Oh dear I fear the Octopus quote doesn’t meet the target. 40.39% . There can’t be many cars that achieve the 25% especially when the lease provider has to earn a crust.

 

[DJP31]

actually there are and have been many ice vehicles and the Tesla on OctopusEV and Pink

when the original golf R came out that deal was around 7k total in 2 years around 16% most recently I had a 2018 Audi S4 which came in at 7.5k over 2 years which is around 19% so deals are there just not for the Tesla now. OctopusEV previous deals before the Tesla changes the first time were around 20-21%

Interesting figures. I imagine the spec has something to do with it - adding FSD and an expensive colour won’t help I don’t suppose.

 

[zayn]

Interesting figures. I imagine the spec has something to do with it - adding FSD and an expensive colour won’t help I don’t suppose.

the whole idea of leasing is you never add options, you take the vehicle as it is. With a tesla it is very easy as there are no options except paint and FSD.

 

[DJP31]

the whole idea of leasing is you never add options, you take the vehicle as it is. With a tesla it is very easy as there are no options except paint and FSD.

That wouldn’t suit me as I like to spec a car, and in the case of a M3P would want to go red and have FSD. In my case the comparison will be lease v PCP over the term, and with the poor GFV lease is a clear winner - even if it misses the 25% by a wide margin.

 

[Durzel]

FSD is a straight cost option, every lease company I've spoken to has said that it makes no difference to GFV.

 

[Yev000]

Will a 2-3 year old Tesla look "past it" in 2021?

Anything would, but I still think they will be worth 20k for an SR+ with no extras for a 3yr old. Planning to keep mine for 5+ and my bet is that it will have around 12k re-sale.

So i guess financing would be 35-12 = 23k for 5 years

35-20 = 15k for 3 years

Question is how many people would buy a 20k used Tesla in 3 years rather than spending 35-40 on a new one? Will there be a grant in 3 years?

I think the answer will be: Everyone and their dog.

 

[Rooster6655]

Anything would, but I still think they will be worth 20k for an SR+ with no extras for a 3yr old. Planning to keep mine for 5+ and my bet is that it will have around 12k re-sale.

So i guess financing would be 35-12 = 23k for 5 years

35-20 = 15k for 3 years

Question is how many people would buy a 20k used Tesla in 3 years rather than spending 35-40 on a new one? Will there be a grant in 3 years?

I think the answer will be: Everyone and their dog.

I assume you got the years mixed up in your above post.

Here is what I would expect to pay around for the SR+ in 3 and 5 years based on the cheapest model at now £43 ex grant and 10k per year
3 years - £26k
5 years - £20k

 

[Yev000]

I assume you got the years mixed up in your above post.

Here is what I would expect to pay around for the SR+ in 3 and 5 years based on the cheapest model at now £43 ex grant and 10k per year
3 years - £26k
5 years - £20k

I'm buying cash from the price before, so ~35k total

I'm just saying how much depreciation will cost me over 3 and then over 5 years - assuming I sell the car.

 

[gangzoom]

That wouldn’t suit me as I like to spec a car, and in the case of a M3P would want to go red and have FSD.

You can see why some people call Musk a 'Con man'. The Model 3 was suppose to be the 'affordable' EV, and allow more owners to enjoy the Tesla brand.

Based on that spec a P Model 3 is coming in at £61k, even a half decent spec LR AWD is nearly £50k.

In effect lots of people waited years and yeads for no reason, as they could have got into a Model S for similar price back in 2015/16!!

The best way to avoid depreciation is a used Model S, at £30k ish its an absolute bargain compared to a new 3.

 

[tess19]

The selling prices are for all to see and decide if you want to buy or not. There is no conning. The only con happening is from salesmen from other manufacturers telling you ICE is better and then take as much as they can from you (no fixed selling price for the same car).

 

[gangzoom]

The selling prices are for all to see and decide if you want to buy or not. There is no conning.

Haha don't make me laugh, half of what Musk says is a con.

The fact a Model 3 costs nearly as much as a Model S is a perfect example. I wonder why Tesla stopped offering the 'cheaper' Model S, could it to create the illusion that the Model 3 is actually good value, when the reality is far from that!

 

[Rooster6655]

I'm buying cash from the price before, so ~35k total

I'm just saying how much depreciation will cost me over 3 and then over 5 years - assuming I sell the car.

The SR+ was £ 37k inc grant before the price increase so £41k before the grant.

As a cash buyer you also are effectively saving the cost of financing say around 5% a year which lease companies would be factoring into their prices.