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

[lolachampcar]

My car will be a done deal when the wire arrives but I am happy with the number. The D order is pending the arrival of the wire and feedback on coil/air damping from the engineering group. I agree, it should be amazing. It makes me smile to hear the enthusiasm in the engineering team's voice when they talk about the performance. They are rightly very proud of what they have accomplished.

 

[TSLA Pilot]

Tesla is entering the CPO business just like you guys want. They are doing it by low balling your trade in. You may want that; I do not so I went and got another wholesale bid which was $9500 higher than Tesla's bid. Tesla killed that bid.

This is not what I expect nor want from Tesla and their CPO program.

Concur 100%.

I too have gone from being a huge supporter of "All Things Tesla" to not bothering any longer as Tesla has become WORSE than a car dealer of late.

My specific case: we mis-ordered our second MS (base sound was atrocious, the car had a few "let's rush this car out the door for the End-of-Quarter push issues," and we were mislead/misinformed into agreeing to accept the car, a SEPTEMBER production S85, days after the AP-upgrades were being delivered to others). After 3 weeks, and facing a long two-week wait just to get the car into service to fix its issues, we agreed to step up our order to a new MS (S85D, with about $12k-worth of upgrades relative to our trade-in MS). We hoped it would help us get a decent trade-in on our 3-week old car.

Not even close.

I am LIVID with Tesla.

We went from a net 3-figure loss to about $5k, all due to Tesla's direct action to bend us over worse than a car dealer. The dealer/buyer that I found ON MY OWN was willing to offer $78.9k for our MS, thus allowing us to recoup much of the $5.6k I had just paid in state sales taxes on our MS, but that sales tax credit only happens if we trade-in to Tesla, of course. (But the buyer was part of Tesla's "network" of used car buyers so no problem, right?)

Nope.

Tesla contacted the buyer advising that they wanted our MS car for their CPO program . . . . (Is this even legal?), but buyer was still interested in our MS (gutsy move on their part).

No, Tesla would NOT match the $78.9k, instead offering us the "best value" of $75k.

Thus, I ask the question: if a regular car dealer would do an "in-and-out" paperwork shuffle for effectively nothing, why does Tesla take advantage of me here? Because I am a "tax hostage" and Tesla knows it--and has decided to exploit their customers when they can.

Again:

1. I FOUND THE BUYER.

2. Our three-week old MS had ~1k miles and needed NO reconditioning.

3. The buyer had their own transportation ready to ship the car.

4. It would have been a "paperwork shuffle" on Tesla's part.

But the only way for me to apply some of my $5.6k in state sales taxes toward our next MS was by trading our old one in to Tesla, and Tesla has abused our relationship to the tune of about $5k (the net $4k is trade-in value loss, plus the sales tax on that as well).

If there was a competitor to Tesla, I'd be long gone...but, for now, there isn't.

I think Tesla has gotten so big that a lot of these details are falling through the cracks; Elon can't be everywhere all the time.

Let me be blunt: It's too bad too many former car dealer personnel are now among Tesla's high-level employees. They are destroying some of what's made Tesla special.

Sign me,


DISGUSTED WITH TESLA

 

[GSP]

About a year ago, I asked Tesla if they would process a private sale of my ICE trade. Tesla's answer was a flat "NO." No car dealer has refused to do this, and it saves me from paying sales tax on the price of my trade-in car. In fact, it is a profit center for the dealer since they can sell financing, waranty, etc to the buyer that I bring to them.

I hope that Tesla grows into eventually offering this basic service to their customers.

GSP

 

[lolachampcar]

Pilot,

I take issue with but one of your comments. You said-
"It's too bad too many former car dealer personnel are now among Tesla's high-level employees."
I do not believe this is the issue. I was working with the same people I have known from day one. These are smart guys/gals that know EXACTLY what they are doing. They have made a decision to treat customers a certain way so that Tesla can get what it wants. This is not rouge dealer DNA seeping into the company unbeknownst to Elon. This is a perfectly calculated decision to act in a certain fashion; at least that is how I view it.

 

[rcc]

Frankly, I don't see what the fuss is all about.

To me, it's clear. Tesla right now doesn't want to and probably isn't set up to handle a true "used car" sales model. Their inventory sales model is totally different. That's selling low mileage demo cars, not cars that have been in someone else's hands for a few years.

So just like the people who charge more money for services they can do but would rather not do, Tesla is low-balling trade in offers. Some of that is probably to discourage trade ins. Some of that probably reflects Tesla's inefficiency at making money off trade-ins. They probably *need* to lowball the number to some degree to offset the operations disruption created by every trade in.

I believe this situation will change once they get their CPO program in place and spun up. Until then, I think us early adopters need to either sell private or sell to someone who's business model is about making money off trade-ins. Like CarMax.

As a low VIN holder, I get this isn't an ideal situation. But I can see the business logic behind it and I realistically can't expect Tesla to make me a market price on a trade-in when they can't make enough money off the deal at the market price.

 

[lolachampcar]

Yes, and I am sure you are happy when they deny you access to the sales tax credit on your vehicle unless you take their low number. You are exactly what Tesla likes, wants and needs in a customer. You will do fine.

Please pardon the sarcasm. Tesla knows exactly what they are doing and are relying on people like rcc. Soon the discontinuity of a large number of trade ups to PD will pass, the noise surrounding this will fade and Tesla will be free to proceed as planned. I just hope they drop the hypocrisy with all the big bad NADA talk.

 

[lloyds]

I too have started noticing the gradual change from 2012 to current in their business attitude. pre-2012, they were all about customer relations and satisfaction. Now, the script is changed.

 

[redi]

I too have started noticing the gradual change from 2012 to current in their business attitude. pre-2012, they were all about customer relations and satisfaction. Now, the script is changed.

My personal observation all along that Tesla is concerned mostly (only) with a) their public image to keep momentum and fire up the potential new buyer pool and b) selling new cars to (primarily) new customers. Everything else is not a core mission and is prioritized as such, and those that have already made the buying decision are closer to the bottom of the list. You only have to watch Tesla's footprints. Supercharger rollout seems to me to be mostly due to marketing/"a", and not because of the owner pool.

One man's opinion, mind you - I am almost never surprised with how the owner base is (not) prioritized.

 

[lolachampcar]

and yet we come back for more....

Thank you sir; can I have another

 

[rcc]

Ok, I understand the sales tax credit issue now. I didn't think of that because we don't get that credit in California. We get hosed for the full tax on a new car regardless of any trade-in value.

But still - Tesla's not set up to sell used cars efficiently or effectively right now. That's the price of doing business with a start-up just like the price of doing business with Target is you don't get individualized service.

 

[Madartist]

Ok, I understand the sales tax credit issue now. I didn't think of that because we don't get that credit in California. We get hosed for the full tax on a new car regardless of any trade-in value.

But still - Tesla's not set up to sell used cars efficiently or effectively right now. That's the price of doing business with a start-up just like the price of doing business with Target is you don't get individualized service.

Well, let me ask you this: If you don't live in CA, but instead a different state which allows for the sales tax offset (say 6-9%) when trading-in a used car, would you be willing to pay an extra $10,000 to $15,000 when you're ready to buy your next Tesla? Is that the kind of "price of doing business with a start-up" you would be willing to pay?

 

[redi]

Well, let me ask you this: If you don't live in CA, but instead a different state which allows for the sales tax offset (say 6-9%) when trading-in a used car, would you be willing to pay an extra $10,000 to $15,000 when you're ready to buy your next Tesla? Is that the kind of "price of doing business with a start-up" you would be willing to pay?

Plus give Tesla back your $7500 income tax credit you owe them

 

[Tedkidd]

The dealer/buyer that I found ON MY OWN was willing to offer $78.9k for our MS, thus allowing us to recoup much of the $5.6k I had just paid in state sales taxes on our MS, but that sales tax credit only happens if we trade-in to Tesla, of course. (But the buyer was part of Tesla's "network" of used car buyers so no problem, right?)

Nope.

Tesla contacted the buyer advising that they wanted our MS car for their CPO program . . . . (Is this even legal?), but buyer was still interested in our MS (gutsy move on their part).

No, Tesla would NOT match the $78.9k, instead offering us the "best value" of $75k.

Thus, I ask the question: if a regular car dealer would do an "in-and-out" paperwork shuffle for effectively nothing, why does Tesla take advantage of me here? Because I am a "tax hostage" and Tesla knows it--and has decided to exploit their customers when they can.

Again:

1. I FOUND THE BUYER.

2. Our three-week old MS had ~1k miles and needed NO reconditioning.

3. The buyer had their own transportation ready to ship the car.

4. It would have been a "paperwork shuffle" on Tesla's part.

But the only way for me to apply some of my $5.6k in state sales taxes toward our next MS was by trading our old one in to Tesla, and Tesla has abused our relationship to the tune of about $5k (the net $4k is trade-in value loss, plus the sales tax on that as well).

If there was a competitor to Tesla, I'd be long gone...but, for now, there isn't.

I think Tesla has gotten so big that a lot of these details are falling through the cracks; Elon can't be everywhere all the time.

Let me be blunt: It's too bad too many former car dealer personnel are now among Tesla's high-level employees. They are destroying some of what's made Tesla special.

Sign me,


DISGUSTED WITH TESLA

Discouraging to hear. This is the exact type of abusive practices I thought it was Tesla's mission to avoid. I wonder if this is a few bad apples taking advantage, or systemic. Seems a flat paperwork fee might be a smart policy for states with trade in sales tax benefits.

 

[lolachampcar]

I was working with people near the top that I feel were no longer free to speak their mind as they have been over the previous three years. This tells me the plan is well thought out, they knew they would take this flack and the decision was made at the very highest levels. I do not believe this is the work a few bad apples or of NADA DNA seeping in with the employment of a few from the industry.

 

[yak-55]

I wish I had any evidence to the contrary, but I hope this development is due to growing pains, the (necessarily) bigger organization, the (perhaps inevitable) dilution of the Tesla "we will be an awesome car company" culture. Tesla have innovated in so many positive ways (product, sales experience, service experience, dealership model) that now concluding "at the very highest levels" to compromise all that and act like "just another (sleazy) car company" is depressing. Lets hope they still have a learning culture (and a champion in Elon/Leadership) to defend against this dumbing-down of the corporate identity/brand promise. I don't expect them to never make mistakes, but if they don't recognize this one, and correct it, then something special is being lost ... lets have an "awesome CPO program" that's far better than the current auto industry practice and deserving of the Tesla brand. Come on Tesla ... step up ! (again)

QUOTE=lolachampcar;803465]I was working with people near the top that I feel were no longer free to speak their mind as they have been over the previous three years. This tells me the plan is well thought out, they knew they would take this flack and the decision was made at the very highest levels. I do not believe this is the work a few bad apples or of NADA DNA seeping in with the employment of a few from the industry.[/QUOTE]

 

[Lloyd]

I believe in reading this thread Tesla is getting into an area that they did not anticipate in their original business model. Remember early on that Tesla was going to be 'The new way to buy a car' ...... No Haggle Pricing...... Great Buying Experience..... Great Customer Service.... Etc.

Now with the CPO program, they have entered into an area that is Dealer-esque, and requires haggling, price negotiation in order for both parties to be satisfied. It's just part of the process for two parties to enter into an agreement. Tesla is trying to hang onto the no haggle pricing, but that does not work in all situations when considering a used car.

Tesla has to be a little flexible when negotiating a price on someones car and be able to listen to arguments justifying a higher price than offered. That said, the option if their offer is too far from a fair price is to sell the car privately. As with any sale of any property, the price a buyer wants to pay may not be what the seller wants to accept. Thats just part of the process.

Its secondarly bad that Tesla caused the loss of you other offer. Based on that I think they should step up and make it right for you. They should be flexible in your case for customer loyalty if nothing else. How about adding $$$$ for every prior Tesla you have owned on trade in as part of thier formula that they apparently tied into! JMO

 

[gpetti]

Ok, I understand the sales tax credit issue now. I didn't think of that because we don't get that credit in California. We get hosed for the full tax on a new car regardless of any trade-in value.

But still - Tesla's not set up to sell used cars efficiently or effectively right now. That's the price of doing business with a start-up just like the price of doing business with Target is you don't get individualized service.

I'm not sure if I was understanding this but to use my personal example, Tesla have made me an offer that is pretty low and which on its own I would just refuse; however, they are also pointing out (as part of the offer) that because in my province we only pay sales tax on the difference between a trade in and the new car, this offer is effectively $ 5,445 more than the actual offer in real terms (compared to a private sale where I would end up paying full sale tax on the new car). Effectively this means they can offer me less than might be appropriate because they know that if I want to buy a new Tesla they are the only way that I can get this tax benefit.

 

[lolachampcar]

Lloyd,
The only addition I would have for your comments is Tesla is not offering a price that can or should be compared with a retail sale by the owner. I was comparing their number, as a professional dealer, against other professional dealers at the wholesale level. To not be competitive as wholesale against a retail number is perfectly understandable. To be off by 12% of the value of an asset at a wholesale level is a calculated low ball. The question for me became - What is their leverage that would allow them to think they can do this? Tesla's response on the sales tax credit via a courtesy trade filled in some missing pieces.

gpetti,
I have sensed some level of dismissiveness regarding the whole sales tax credit as if I were asking Tesla to do me a favor or to do something "wrong". What people have not stopped to consider when looking to give Tesla the benefit of the doubt is that the sales tax credit is a benefit granted to the citizen by the state legislators where by the dealer is simply the method of implementation. Dealer's do assignment to dealer and dealers collect the sales tax. The dealer is a functionary and the function required is the very essence of the sales tax on trade in law. Not only is it not wrong, it is exactly what the legislation intended.

The fact that Tesla is using the ability to provide you with something you are entitled to by law in an effort to convince you to accept a lower offer should provide a screaming warning. Tesla is using their position to TAKE your tax credit.

 

[crazybrit]

I am reading this thread with interest, because I just got an offer for my P85 from Tesla that seemed very low. I have a loaded 2013, with 13,500 miles. They offered me $74,800 for it. I see that some folks are going to other dealers for a better offer. Like Lolachampcar, I am not interested in the hassle of a private sale, mainly because of the timing. I have ordered a P85D, and I can't be without a Tesla for a single day. OK, maybe one or two, but it is difficult to time it. Can I just drive my car to any luxury car dealer and get an offer on it, even if I am not buying a car from them? If so, what dealers would you all recommend?

Also, I cannot find a way to value the car online. KBB won't, and neither will Edmunds. Perhaps Tesla is banking on that too, to a certain extent.

I am in Minnesota, and we get charged tax on the full price of the vehicle, regardless of trade in, so no benefit there.

Oh, and add me to the long list of disgruntled Tesla fans too.

 

[Pollux]

gpetti,
I have sensed some level of dismissiveness regarding the whole sales tax credit as if I were asking Tesla to do me a favor or to do something "wrong". What people have not stopped to consider when looking to give Tesla the benefit of the doubt is that the sales tax credit is a benefit granted to the citizen by the state legislators where by the dealer is simply the method of implementation. Dealer's do assignment to dealer and dealers collect the sales tax. The dealer is a functionary and the function required is the very essence of the sales tax on trade in law. Not only is it not wrong, it is exactly what the legislation intended.

The fact that Tesla is using the ability to provide you with something you are entitled to by law in an effort to convince you to accept a lower offer should provide a screaming warning. Tesla is using their position to TAKE your tax credit.

If I were to take the paragraphs above and replace the phrase "sales tax credit" with the phrase "federal and possible state tax incentive credit(s) for first-time EV buyers" -- as in the $7500 first-time buyer federal EV tax credit and possible credits on a per-state basis -- I believe that you, @lolachampcar, have found the simple and powerful words that I would apply to the whole issue of deducting the incentive tax credits from the resale price of the vehicle. "Tesla is using their position to TAKE your [incentive] tax credit." Except in some cases, of course, an owner might not even have *qualified* for those original incentive credits, in which case that owner is even worse off(*).

Tesla is effectively depressing Model S resale values through (a) pre-deducting the first-time buyer incentive tax credits, (b) capturing the sales tax credit on resale, and possibly (c) further lowballing their offers. These advantages will be wrapped into their CPO pricing, which will create additional downward pressure on private resale values.

Apologies for piling on to your particular issue.

Alan

(*)I am not such an owner. I benefited from the full federal tax credit, for which I am grateful.