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Evolution of the Tesla Trade In (or Sanity Check Please)

Discussion in 'Model S: Ordering, Production, Delivery' started by lolachampcar, Oct 29, 2014.

  1. lolachampcar

    lolachampcar Active Member

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    Background
    I got my first car in February of 2013 and actually provided my BMW trade in December to lock in the trade in number. Tesla was just beginning the whole car delivery thing in earnest and was going through trade in growing pains. They quickly realized that having a sole source bidder for their trade ins resulted in low ball offers and was not in their or their customer’s best interests. Somewhere along the way one of the Tesla SuperStars, Seneca Giese, got involved. Seneca was around in the Roadster days when Tesla had to actively sell the last of the Roadsters as the production run was not fully subscribed so he knows what it is like to earn a sale and thus knows the value of a customer.


    I suspect Seneca was heavily responsible for implementing their current trade process where the trade is evaluated and then the summary is provided to a group of dealers who then provide their highest number. This creates competition thus dramatically improving the bid Tesla’s customers receive for their ICE trade in. It was a simple stroke of genius that has worked well for the company and for the bidders that have access to a steady supply of high end high quality trades.


    Enter the CPO program carefully timed with the introduction of the D and some things have changed. This is where I would like to hear some competing thoughts as I am a bit miffed and do not do my best thinking in this state.

    - - - Updated - - -

    I’ve been very busy trying to make sense of trading my P+ in for the new PD and had placed a PD on order. When I finally ran down the last of the avenues available to me, I sent the following note to Tesla Sales. They did not respond so I called them today. They told me they had canceled the order and I would be receiving a refund of my deposit. I told them I really did want the car and hoped they could have done better.


    I’d love to hear some counter and/or different views on this especially from others that have been working the whole MS trade in bit with Tesla.




    Tess,


    I have been working on my P85+ trade in heavily over the last week without
    success. Here is what I have learned so far.


    It took several days but I did succeed in tracking down a trade in offer
    from Tesla. It was $9,500 below wholesale market value for the car. When
    I inquired about the discrepancy, I was told by the SE Regional Sales
    Manager that Tesla was doing good things with their CPO program and the
    bid was good for customers. Tesla markets the MS as being better long
    term than ICE and thus it should hold its value. Tesla then underbids my
    trade in by $9500. I am a (your) customer and this is not good for me.


    Once I saw the Tesla offer I sought out other wholesale offers for the car
    and received the above mentioned bid. I then asked Tesla to provide a
    courtesy trade so that I could recoup $4,000 in Florida sales tax. This
    is the exact same transaction used for ICE trade ins through Tesla and the
    same used when I upgraded from my previous P85 to my current P+. Tesla
    declined telling me it was not in Tesla’s interest to have MS going to
    other dealers. Facilitating a courtesy trade costs Tesla nothing while
    denying it costs me $4000.


    I have now learned that my wholesale bidder is backing out of the bid.
    This dealer gets a lot of ICE trade in product from Tesla and values that
    inventory. This makes it difficult for him to take my car as there is the
    distinct chance that doing so will affect his access to ICE inventory in
    the future.


    Tess, I have tried my best to make this happen and yet Tesla has fought me
    every step of the way. Tesla has put a wonderful program in place whereby
    ICE trades are offered out to bid to yield the highest number and then the
    trades are processed by Tesla for the sales tax credit. Not only is Tesla
    not doing this for their own customers (the ones that bought MS) but you
    are actively pulling on the other side of the rope against your customers.


    I would like to buy a PD. This would be my fifth MS purchase. If you can
    not do better for your customers than the above, please cancel my order
    and return my deposit.


    Best Regards,
    Bill Hart”
     
  2. 30seconds

    30seconds Active Member

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    any way to get back in touch with Seneca? really no excuse for lowballing wholesale and signaling like this to area dealers.
     
  3. Chuck P85D

    Chuck P85D Member

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    I guess I'm confused as to why you are so stuck on trading your car into Tesla, and why you are so offended at their offer. They have the right to offer you any price they care to, and not explain or justify a darn thing to you.

    You, then, have the right to decline their offer and look for a better one. i.e. sell it privately.

    I'm not sure why you are deciding to be offended at their offer, demand an explanation into their internal processes, and then just give up on getting the P85D.

    i got an offer from Tesla, laughed at it, then found a great deal in the course of two days privately, more than making up for the sales tax hit. that said, Virginia (and many other states) doesn't even have that sales tax trad-in law, so whether i traded in or not, i'll be paying sales tax again.
     
  4. breser

    breser AutoPilot Nostradamus

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    Not sure I can help you much but I'll share my experience with the trade thing so far.

    As you may remember I'm trading my roughly one month old S85 with ~2500 miles on it. My net cost for the vehicle was $86,820 and Tesla offered me $82,000. I had forgetten to mention the paint protection and the tint I had done to the vehicle before they gave me the original quote and wondered if those things would change the quote. I got a response that they would need pictures to consider this. How you show paint protection that's designed not to show was tricky but I sent them pictures showing few spots I could find that were visible and a brochure from the installer detailing where the film was installed.

    My original request for the trade-in offer was on the 16th, got a call back on the 17th wanting the mileage, got the offer on the 20th which was set to expire on the 24th (7 days form the 17th). Asked about the paint/tint on the 20th and got the answer back to send pictures on the 21st and sent them that evening. Didn't hear anything, so I called on the afternoon of the 23rd and left a voicemail. I tried calling again on the 24th several times but kept getting voicemail. After my 3rd call I got a call back shortly after where I was told that they couldn't adjust the offer for the paint or tint since it was a risk to them given that they'd have to stand behind it.

    Given the peculiarities of Washington State and the sales tax I figured this was a fairly decent offer anyway. A Washington state buyer would have to pay the sales tax (which is around 9.5%, varies slightly by city/county). Which mean their net purchase of the vehicle would be $89,790. I suspect it would be very hard to find a buyer of the car wanting to pay more than $3k more than I paid for the car. I might be able to equal Tesla's offer since the used buyer would value the paint protection and tint. But given the hassle of selling it myself, I don't think it'd be worth it to get roughly the same. Now that price might be very attractive to someone in another state, but then I have to deal with out of state buyers and all that this entails. So I decided to accept the offer.

    Called the individual I'd been dealing with back and said that I wanted to accept their offer. I pointed out that the offer expired that very day and that I still had not received the title. Was told that they didn't want to "penalize me for that." We agreed to hand the transaction off to my Owner Advisor at the nearby store that I'd worked with for the first order (and whom I was really happy with). So I sent him an email and heard back from him later that day.

    He told me that he'd try to setup the inspection for the trade-in that weekend. We then moved to discussing some questions I had about the new vehicle order (wanted to see a sample of the Alcantara headliner, wanted a different DS). He told me he'd be around at the store for the rest of the weekend and to just email before stopping in. We stopped in that evening on the way to dinner, looked at the Alcantara headliner while he was on the phone. I asked about tires (were the Primacy tires standard now), he didn't know but would find out. He told me that he was wrong about doing the vehicle inspection on the weekend and that it would be sometime during the week. We sat down and placed a new order. I was wearing a Tesla jacket my girlfriend had bought me for my birthday and he offered to comp her one. Both on the phone and in person he was very concilitory about how our first order had been handled. We left feeling good about what we were doing and the customer service we'd received.

    Monday (27th) comes and goes and I don't hear anything about scheduling a inspection. So on Tuesday morning (28th) I send an email to my Owner Advisory asking what goes on. He replies that he forwarded my questions to the trade team and I had a call from someone on the trade team in a few hours. He appologized for the delay in getting back to me but said they were very busy given the D announcement. Shortly after I received an email from Alliance Inspection Management saying that Seneca Giese had added me as a Dealer Contact and with a URL to set a password. I logged in and set a password and it said Tesla Motors as the company. There was a option to order an inspection, but I had the distinct impression this was not how things were supposed to go so I didn't do anything.

    I called back the guy from the trade team but got voicemail. So I sent an email to my Owner Advisory. While I was sitting here writing all this up the trade team person called me back and I explained what had happened. He put me on hold for a few minutes and then told me that some mistake had been made on their side or on mine and that they'd get it taken care of. That AIM should be contacting me via telephone to schedule the inspection.

    I'm not confirming my new order until we get this trade handled. I actually want the trade to be essentially a separate transaction because there's no sales tax here on new Tesla's so it doesn't buy me anything to let Tesla essentially borrow $82,000 from me until February (decided to order an 85D). But given how this is moving, I'm a tad worried about getting this done by next Friday.

    If nothing else, it seems that the trade process is new to them and they're figuring things out as they go.

    Edit: They just called back again and told me that I'd be getting an email and phone call from the inspection place to setup the time within the next 24-48 hours. They also mentioned they were rolling out a new process for this and it was causing some bumps along the road.
     
  5. lolachampcar

    lolachampcar Active Member

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    30seconds,

    I've had many good in-depth discussions with Seneca over the years. Once I learned he was responsible for the CPO program I reached out to him and we talked. At that point I had a good competing number for my car and was simply trying to get a courtesy trade for the sales tax credit. For the first time, the conversation was devoid of any real substance. It was more like speaking to a politician. However, it was clear that Tesla knew exactly what it was doing. He did offer to have the car evaluated to see if they could up their number. I asked him what that number would be if the car was a perfect 18K mile car. It was a direct question and yet I could not get an answer. I had already reached agreement with the other wholesale party and was not comfortable going back on my word so I declined.

    This is where things have gone off the rails for me-
    Tesla learned that competing wholesale bids are a requirement to get a correct trade valuation.
    Tesla provides this service if you are coming to them with an ICE trade.
    Tesla will not provide this service if you are coming with a MS trade. If you trusted Tesla and bought their product, you will receive a lesser service.
    Tesla will underbid your MS trade. If you are not familiar with the whole process, you trust Tesla while they are taking money out of your pocket.
    Tesla's relationship with my wholesale bidder killed the offer on my car.

    Tesla knows exactly what they are doing here and they are doing it on purpose.
     
  6. breser

    breser AutoPilot Nostradamus

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    If Tesla is quoting low on trades in order to make a CPO program profitable they're going about it the wrong way. CPO vehicles sell for more to buyers than a non-CPO vehicle because the CPO process (inspection, warranty, etc) adds value to the buyer. What should be happening is there should be a wall between sales and trade-in valuation and the CPO program. Sales/Trade-in values a vehicle at a fair wholesale value. Then CPO looks at a vehicle and decides if it's worth becoming a CPO vehicle (cost, condition, etc) and if they do so and mark the vehicle up from there to provide profit.

    If they don't provide fair wholesale value to customers they are hurting the new sales of vehicles that ultimately keep the company going. Because customers, will end up doing what you're doing, walking away from the new purchase. CPO is a valuable additional revenue stream, but you can't have a CPO program without new vehicle sales. So it seems like they're cutting off their nose to spite their face.
     
  7. Stoneymonster

    Stoneymonster Active Member

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    May I humbly ask why you insist on doing a trade-in vs. a private party sale? In my experience, the extra hassle is almost always worth the significantly higher sale price. (Note: I'm in California so trade-ins are not tax advantaged and I haven't run the numbers).

    Having said that, Tesla can and should do better, especially for customers who are forming a long relationship with them over many vehicles.
     
  8. lolachampcar

    lolachampcar Active Member

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    I was told by the SE Regional Sales Manager that the trade in number was "good for customers" and that there were things of value in the CPO program which were not yet public. I took this as Tesla needed to buy the cars at below wholesale so they could add the auto pilot features and perhaps reinstate the full manufacturer's warranty (or anything else that would add value, make Tesla's CPO program more competitive when compared to other dealers with Tesla product and set Tesla's CPO program apart).

    Sure, this is good for the NEXT customer but you are using your position as the initial point of contact on trade ins to get your CURRENT customer to pay for these upgrades.

    On the flip side, the secondary market is high as the cars were holding their value. If Tesla did not get the previous customer to fund the upgrades by accepting a low trade in number, the cost of the CPO cars would likely match or exceed the cost of new.

    Tesla knows exactly what they are doing and who they are doing it to.
    Tesla has made the calculated decision that current customers to not need to be treated fairly as there is more demand than product.

    What really burns me is that I can always seek another number if I do not like Tesla's. If Tesla chooses to throw up a $4K sales tax credit roadblock to prevent me from going elsewhere and they are comfortable doing such things to their customers than that is there choice. What really gets me is using their 800lb gorilla status with the wholesale channel to kill the bid on my car. NADA's dealers are bad but even they have never done something like this to me.

    Stoneymonster,
    I'll be happy to pay you five points for doing a retail sale on my car provided the hassle to me is no more than a simple wholesale transaction.
     
  9. breser

    breser AutoPilot Nostradamus

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    I know this is pure speculation on your part but I don't think they will be adding Autopilot to CPO cars. If it was cost effective to do for CPO vehicles they'd offer it as a retrofit. I don't think the $9,500 below your other offer Tesla quoted you would even begin to pay for a Autopilot retrofit. I suspect it'll be a warranty much like they did with the Roadsters.

    That's a good point, but if that's true then I don't think Tesla should be offering a CPO program yet. The whole point of the CPO system is to increase the price of used vehicles. If the vehicle is naturally high you can avoid the CPO system entirely. Given Tesla's already very good warranties on the Model S I think they could offer nothing other than used Model S vehicles that Tesla inspects and says they are in good condition.

    To be clear do you think Tesla reached out to your other offer and got them to retract it? I think that might be a stretch to believe they did that. I suspect the dealer just decided it wasn't worth risking their relationship with Tesla for one deal.
     
  10. iadbound

    iadbound Member

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    It strikes me that Tesla is simply being very conservative -- possibly to its own detriment. Thus, Tesla isn't offering up particularly good trade-in offers on the Model S because it wants its CPO to be a guaranteed winner -- at least early on. On the other hand, the folks trading in are buying yet another Tesla product, which presents a great opportunity for profit given the margins on new cars. If I were Tesla, I would risk a little less margin on the trade-in given all the upside on new car sales.
     
  11. lolachampcar

    lolachampcar Active Member

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    breser,

    I was guessing about upgrades given the words "we are doing a lot with the CPO program that is not public and I can not talk about it" were used as a retort to "Why are you offering me $9500 under wholesale?".

    To be clear-
    I reached agreement with the wholesaler. He was going to go to bat for me for the courtesy trade with Tesla based on his relationship with them. He backed out of a done deal.
    It would matter if Tesla specifically told him to back out only if I were interested in Tortious Interference in a Business Relationship. I am not. The only thing that matters is Tesla can pick up the phone and tell the dealer "your ok to do this deal.... we are ok with it" and the deal would be DONE.

    The response to why Tesla would not do the courtesy trade still rings in my ears. "It is not in our interests to see MS going to dealers".

    iadbound,
    I have no problem with Tesla bidding whatever they like. It is their money and they should spend it as they see fit.
    I do have a problem with them killing my deal with another party. I also have a problem with them abusing their first point of contact and customer trust to under bid cars.
     
  12. gpetti

    gpetti Active Member

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    Apparently they are counting on people like me who are annoyed with the terrible trade in offer but want the car badly enough to put a deposit down even though i have no idea how much i can get for my car. the persons i dealt with seemed to know that the offer was poor and recommended me to sell the car privately. the impression I get is that they dont want these cars unless they get them for a price where they can easily unload them without making a loss.
     
  13. AnOutsider

    AnOutsider S532 # XS27

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    It's things like this that give NADA's arguments power. Doing everything through the manufacturer definitely leaves you susceptible to their every whim. Historically, Tesla has NOT always acted in the best interests of customers, regardless of what most proclaim.

    Not that I'm vilifying them for it either. They ARE a business and need to do what works for them, but the whole "the consumer needs choice" works both ways.
     
  14. breser

    breser AutoPilot Nostradamus

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    Have you specifically asked Tesla to make such a phone call to the dealer? Would you still sell to the dealer at the previously agreed price even if you didn't get the courtesy trade with the sales tax advantage?
     
  15. MsElectric

    MsElectric Active Member

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    @lolachampcar: So sorry to hear about this mess. Could you bypass all this by selling directly to a private party? I think you mentioned you had listed your car on EBay. Have you considered cars.com along with listing it here and the Tesla Corporation forums? If you sell for slightly over the wholesale price that will more than make for your tax benefit...

    I think Tesla should launch their own CPO program ASAP. I actually think the current sales structure for trades where the cars are then routed through Starwood/Earth Motorcars results in awful trade in values because there are now two dealerships essentially making a profit on the same transaction. The trades are lowered not just by the Tesla profit but by the profit made by Starwood/Earth Motors as well. A forum member on the Tesla Forum was offered $51/52K for his S85. If Tesla had their own CPO program and sold the cars back directly they could likely have offered him a better trade in value.
     
  16. breser

    breser AutoPilot Nostradamus

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    Based on my discussions with them today it seems like Tesla is not intending to resell my vehicle to a dealer. Like I mentioned before this is a new process for them, so I suspect my vehicle is going to be resold as a CPO. Based on what lolachampcar has said here and in another thread he came to the same conclusion earlier. So I don't agree as to your conclusion that the Starwood/Earth Motorcars relationship is dragging trade values down.
     
  17. lolachampcar

    lolachampcar Active Member

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    #17 lolachampcar, Oct 29, 2014
    Last edited: Oct 29, 2014
    breser,
    My letter to the sales agent asking them to do better included-
    I have now learned that my wholesale bidder is backing out of the bid.
    This dealer gets a lot of ICE trade in product from Tesla and values that
    inventory. This makes it difficult for him to take my car as there is the
    distinct chance that doing so will affect his access to ICE inventory in
    the future.”
    So, yes. I specifically told them my wholesale deal was killed and Seneca is more than smart enough to know one simple phone call will fix the problem. However, I do not want to leave any stone unturned so I will drop a note to Tesla now specifically asking them to call the wholesaler and give their blessing for the purchase and to tell the wholesaler that doing so will not damage access to future ICE trade in inventory.


    MsE,
    Actually, I think Tesla did a very good job putting together the competitive bidding process for ICE trades. What they are doing with MS trades is attempting to inhibit competitive bidding while offering low ball numbers. Had Tesla treated my P+ trade like an ICE trade, I would have received my number AND the sales tax credit.
     
  18. ra-san

    ra-san Member

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    I don't know what happened with the offer you had in place that made it go away, but that's not cool. One way or another, someone did something "wrong" it seems to me. Either the guy making the offer screwed up the amount (seems unlikely), got scared all on his own (possible, and would be lame and "wrong" from my viewpoint), or got scared by Tesla (way wrong and smacks of the stuff I see people sued for).

    As for the courtesy trade thing, I confess I don't really get the specifics of what would have to happen, and can see Tesla just not wanting to spend the time/effort on it even if it is "no cost" outside of that time/effort. I don't get the not in their interest statement though, as they already have a relationship with that dealer and the alternate way of interpreting their statement is that it is another means of in effect limiting the prices they have to pay to be "competitive" on offers. I'll call this one murky and haven't formed a strong opinion. It'd be nice if they helped out, but wouldn't necessarily expect it.

    As for the amount of the offer from Tesla itself, well they can offer whatever they want of course. I'd like to see that offer be somewhat less than private party sells. Presumably that'd make it somewhat more than wholesale offers - how much depends on the liquidity of the market and how scared the wholesalers are of electric. I can't understand why Tesla would prefer to see a Model S go to a wholesaler. If the S is in great condition, no one is better than Tesla at making it be like new and reselling it. If it isn't in great condition, then no one better than Tesla for getting it out of the public eye and either making it be great or using parts for other CPO needs. As long as they remain supply/production constrained it seems like that'd remain true. I can see them not wanting to build a large production for handling the rebuild/conditioning of used cars, but also can see how it helps protect the brand and value.

    Bottom line, I'm disappointed in your experience, primarily because of the offer disappearing, but also due to the standard communication delays and snafus. It'd give me pause about my respect level and advocacy of the company, particularly if confirmed Tesla was somehow involved with the offer going away - but I'd want better detail there. Given your interest and investment in Tesla, I'd keep digging as to what really happened with the offer you had that went away and try to get that explained or corrected regardless of whether you would still take it. As for as the sale itself, I'd say talk to Shift if they are in your area, if you don't want to do a private party sell. As to continuing to buy the P85D, well, your call - even if Tesla is downgraded reputation wise to you, it can still be worth it. It's a shame when respect is lost though. It is not easily, if ever, regained.
     
  19. MsElectric

    MsElectric Active Member

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    This is then a new development that is very recent and I welcome it. I've always believed that Tesla can offer better trade in values if they sold the cars directly via a CPO program rather than factor in the profit Starwood/Earth Motorcars would make on trades. I think a bunch of existing Model S customers felt low-balled because their trade in values were so low and I think it was because that included about a 10-15% margin for Tesla and another 10-15% margin for Starwood/Earth Motorcars.

    - - - Updated - - -

    Not to belabor the point but have you considered offering the car for private sale at the wholesale price + the tax delta $ that you were trying to recoup + perhaps an additional $2K for your trouble? Seems that would result in a reasonable price for someone who'd want to buy a Model S and you'd be selling it "Tesla-style" cutting out both middlemen... You can then stop dealing with this whole mess and count the days to your P85D delivery :) Sometimes the path of least resistance may make more sense than the path you know is right...
     
  20. lolachampcar

    lolachampcar Active Member

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    MsE,
    I'll give you five points on the sale if you handle the retail sale, get my number and have it be as easy as a wholesale agree on a number and stick it on a truck :)
     

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