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Estimated Depreciation after 3 Years

I'm trying to do the math on the cost of ownership of the Tesla Model 3. I'm factoring a 10% depreciation per year from the price I paid for it if I put on ~7k miles per year. I plan to keep the car for about three years, according to my math it will be worth $36k around that time. I'd really like to hold out for the dual motors/white interior but I really want the $7500 tax credit, my delivery window is April-June and I don't want to risk losing the full credit.

What are your thoughts, am I too conservative or optimistic with the depreciation amount?

Screen Shot 2018-04-08 at 10.26.13 AM.png
 
I've followed the depreciation of model S and X and from that evidence I think your first and second year numbers are pretty optimistic. I'd count on -25% over these first two years combined. Your low mileage may work in your favor, but $37.000 seems a more reasonable price after two years. Of course the hype of the model 3 is an uncertain factor. If the present popularity continues for the next three years, you might end up losing less than these numbers.
 
Interesting stats. However, linking depreciation to mileage only is a bit of an oversimplification. F.e. the price of a car depreciates directly considerably after having taken delivery without even having driven one mile.

Looking at the data for NL (Europe) at this site combined with this registry I found the following numbers for a three years old (2015) model S:
Mileage 43546 Price new € 95,200 --> price €80.000 or 84% (-16%)
Mileage 39540 Price new €113,000 --> price €90,000 or 80% (-20%)
Mileage 32814 Price new €109,550 --> price €77,500 or 71% (-29%)

Keep in mind these are selling prices. Trade-in prices will be lower. So I guess depreciation should be somewhere between 25-35%.
 
I purchased a Model 3 in June, kept it for 3 years, likely there will be high demand for the Model 3 on the used market at that point. Hopefully the depreciation curve of the Model 3 isn't as steep as the Model S (~50% after 3 years) and maybe a little less. Additionally, the ones who receive the full $7500 tax credit have more "free equity" than others who won't receive the full amount.
 
I purchased a Model 3 in June, kept it for 3 years, likely there will be high demand for the Model 3 on the used market at that point. Hopefully the depreciation curve of the Model 3 isn't as steep as the Model S (~50% after 3 years) and maybe a little less. Additionally, the ones who receive the full $7500 tax credit have more "free equity" than others who won't receive the full amount.

The other wildcard is if Tesla will still be in operation in 3 years. There could be a purchase and/or bankruptcy in the future that would totally destroy resale values.
 
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Lets assume that Tesla stays in business for the foreseeable future to simplify things.

The biggest risk us early purchasers have with resale value is that we're buying a single motor, forced to buy the long range battery, black interior, and generally less options than Model 3's offered in the future.

I really don't NEED the Model 3, but want the Model 3. I figured it would depreciate less than my 2013 Audi Q5 3.0 but after doing more homework I'm likely wrong.
 

NewTMSMan

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Aug 21, 2017
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Ran 6 2015 Model S cars through my formula I mentioned above where I could find the original sticker posted with the listing and all listed prices hit almost exactly at my formula, so 61% of original sticker price. Most had lower than expected mileage (20k - 25k).
 
Ran 6 2015 Model S cars through my formula I mentioned above where I could find the original sticker posted with the listing and all listed prices hit almost exactly at my formula, so 61% of original sticker price. Most had lower than expected mileage (20k - 25k).

If you're looking at $100k MSRP Tesla Model S cars, the Model 3 will depreciate less due to the lower MSRP. If you buy early enough and with the current backlog, I don't foresee people selling for 12-20% off MSRP after the first year of ownership if under ~10k miles
 
If you're looking at $100k MSRP Tesla Model S cars, the Model 3 will depreciate less due to the lower MSRP. If you buy early enough and with the current backlog, I don't foresee people selling for 12-20% off MSRP after the first year of ownership if under ~10k miles

If Tesla can reach 5,000/week that's 250,000/year. That would pretty much eat thru the backlog. If the tax incentive is reduced or gone a 50% take rate on model 3 is realistic. Also the sedan market continues to lose sales each year. Why would anyone buy used if new is close in price? I can see depreciation higher than that.
 
To be conservative on a three year estimated depreciation, we have to assume production levels three years from now are where Model S/X are today. Customers can order a Model S/X now and receive out within two to three months. The $7500 tax credit is applied to the first year cost of ownership as it will hit my 2018 taxes as a benefit. I personally think that if the Model S/X depreciate 40% from MSRP over the first three years on a $100k MSRP vehicle, the Model 3 will depreciate less. At the three year point, likely the tech in the Model 3 will be the same as today, most cars built now will have the long range, premium package, autopilot etc. If you can buy a 20k mile, three year old car with these options for $35k, its should be a great value to buyers.

This is likely the formula I’ll use to financially rationalize the purchase of the Model 3.

Screen Shot 2018-04-10 at 10.26.52 AM.png
 

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