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

[Madartist]

While we have plenty of data regarding the low ball trade-in offers for Tesla vehicles in this forum, I have not heard much about the other cars in general. Are the trade-in offers for non-Tesla (i.e. ICE) cars competitive? Does anyone think that the wholesale dealers that Tesla is working with also reduce their offers knowing that there is a sale tax offset? I've heard that Tesla is working with multiple wholesale dealers now (not just Auto Nation). In theory, this should yield a more competitive offer for the customer, but I have not seen any evidence for it one way or another in this forum. Does anyone have any personal experience they can speak about?


-- Edit --

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.

There are several large online dealers such as Starwood Motors and Earth Motors who are particularly familiar with Teslas (just check out Cars.com for their listings). You can give them a call. All I did was spent an afternoon taking my car to the local luxury car dealerships just for a quick comparison. Keep in mind that my local dealers knew very little about Teslas and uniformly expressed misgivings about buying an expensive "niche" car for resale, they still offered me nearly $9,000 more than Tesla. Sad, isn't it?

 

[lolachampcar]

Pollux,
I have a strong suspicion that Tesla is going to use some of the low ball money to update the CPO cars in a way that independent dealers can not. We know that active safety has been added to all new production cars. Given that, it is not inconceivable that Tesla would change the brake master and add the Mobieye and ultrasonic park distance sensors such that CPO cars could be made to appear as better value when compared to non-Tesla dealer cars. Of course, it could simply be that Tesla is so inefficient and their margin requirements are so high that they need that low ball buy to be involved in the transaction.

MA,
I too am incredibly curious about ICE trades. Could it be that Tesla has been doing people on ICE trade ins as well by pocketing 12% on the way by (as the car passing through their lot)? I do not know but it would be interesting to see if this has actually been going on for a long time. If it has, it would explain the arrogant approach the company has taken as they would have been emboldened from having already been doing it for some time. It will only be when MS owners who are keenly aware of what is going on with the cars come into play and Tesla wants to keep the cars that the practice comes to light.

One data point for me was my 535i trade in that went AutoNation. The number I got from Tesla was in line with the number I got from my local BMW dealer. However, that was two years ago so hardly relevant today. Tesla was completely unaware and ill equipped to handle the sales tax credit at the point first telling me I had it when I gave up the BMW then changing their minds three months later when they delivered the car. They made that right but not without some effort on my part. I'm beginning to think I am a trouble customer.

 

[3mp_kwh]

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.

Legislatures would have allowed proceeds on personal sales apply against sales tax, if the law's intent were for the consumer. Because they don't (at least in my state), it was not. I think this is a case of by the dealers, for the dealers.

My ICE offer was wholesale+. What I think bears repeating is that Tesla does not allow Tesla trades, like they do ICE trades. Tesla trades are actually bought by Tesla, and it seems many are going back to the dealer network. ICE trades are bought directly by the bidding dealer, and Tesla applies proceeds to sales tax. I don't think they have a dealer on the line, when they put a number on their own cars. The salty part is you lose when they outright reject 3rd party bids on Teslas, choosing instead to game how much they know their buyers have in their own cars, the tax-credits and fact you've got nowhere else to go to apply sales proceeds on your next Tesla.


Like I said before, Tesla doesn't want to compete with their own cars. They apparently want to capture the lower price segment by getting their used models down there, and fostering the belief that is an appropriate value, where they belong. I'd liken it to the way GM fleets its cars out, which has the same effect when supply later destroys prices like it is helping do on Volts. "old" is a perception dealers have been amplifying for a long time. Here, it is sad that Tesla's rare favor, to 3rd party ICE trade, has ended up making their weak Tesla bids look even worse.

 

[lolachampcar]

3mp,
I understand where you are coming from and believe I understand the intent of the dealer facilitated trade process as well. Your point is valid but I would ask you to consider the mechanism at play.

Personal trade documentation is subject to valuation fraud which is rampant in Florida (paying sales tax on self described purchase price on a private purchase). Self reporters can not be trusted to accurately disclose the real purchase price let alone properly document a trade which significantly reduces the tax liability.

I look at it this way; Tesla is obligated to collect state sales tax as a function of being granted a business license and, more importantly, a Florida sales tax number. That tax does not belong to them nor is it paid by them. They are simply a functionary that moves it from the customer to the state. Applying that very same thought process to a statutory right to a sales tax credit for a trade in and I am led to believe that the sales tax credit belongs to me and not Tesla. So, when Tesla refuses to facilitate a wholesale trade through of the exact type and nature that they do for ICE, they are taking from me. When they tell customers that the Tesla offer is competitive with the wholesale channel if you consider that Tesla can give you the sales tax credit, they are taking from you. They are pocketing that which does not belong to them to enrich the company at the expense of customers that have, by buying a Tesla in the first place, put their trust in the company.

This is disgusting.

 

[rcc]

I'm sure you've done your research but I have to ask.

I'm guessing that what Tesla could do, if their ICE trade-in partner(s) agree to it, is have their ICE partner(s) take Model S trade-ins until Tesla is ready to go with its CPO deal at which point the flow of Model S tradeins would go to Tesla instead of the ICE trade-in partner(s).

I can see the following scenarios being in play:

1) the trade-in partners want rights to the Model S trade-ins for too long - say minimum of 3 more years instead of 1 year. So Tesla has to handle current trade-ins and they can't make market value offers and break even at any kind of scale because their sales and operations aren't set up to handle trade-ins.
2) the trade-in partner is agreeable on when S trade-ins start going to Tesla but the deal still makes Tesla nervous because it their partner(s) now control trade-in pricing. Which means their partner could set the market price for S's lower than Tesla would like which would be incredibly painful in a number of ways. Which brings up back to #1 above.
3) Tesla could be trying to accumulate inventory to upgrade for CPO sales later. I don't buy that one though. If so, they'd be making S trade-ins more appealing, not less.
4) They are making the same type of offers that you'd get from BMW/Mercedes/etc. if you tried to trade in a used BMW/Mercedes when buying a new one. Do they low-ball you knowing that you get the sales credit if you trade in to them and not if you sell to someone like CarMax?
5) They could be getting greedy. This may be true but makes no sense to me. It doesn't line up with how the company has behaved until now. It's fundamentally stupid to try an establish a used car sales and pricing support model like BMW/Mercedes but handle the trade-in values differently. If this is going on, someone should take this to Elon because this is just dumb. Tesla ought to be willing to break even or even lose a little bit of money on each trade-in if that will establish the pricing structures they want when they roll out CPO.

Do you know which one's going on?

 

[lolachampcar]

rcc,

I'm not sure if you have been following this whole thread but the bits that are applicable to your points are-

Tesla has stated (to me) that they do not want cars going to dealers for various reasons.
Tesla wants the cars.
Tesla has no interest in a competitive bid for the MS trades as this would (1) put them in a position of feeding the dealer channel with MS product (see above) or (2) put a big bright light on the fact that Tesla is underbidding wholesale.

Given the above, your post and points seem to be in the wrong thread. Did I miss something?

 

[rcc]

rcc,

I'm not sure if you have been following this whole thread but the bits that are applicable to your points are-

Tesla has stated (to me) that they do not want cars going to dealers for various reasons.
Tesla wants the cars.
Tesla has no interest in a competitive bid for the MS trades as this would (1) put them in a position of feeding the dealer channel with MS product (see above) or (2) put a big bright light on the fact that Tesla is underbidding wholesale.

Given the above, your post and points seem to be in the wrong thread. Did I miss something?

Yes, you missed that I misread or didn't read your original post carefully enough and have been too busy to read the entire thread. And you missed my complete bamboozlement because business ethics aside, this move just seems so STUPID on Tesla's part that I'm having a hard time believing there isn't something else behind it. Major cognitive dissonance on my part. None of which is your fault .

Here's why I think it's stupid - the CPO program for S's isn't out yet, right? I've been assuming they're waiting until the first leases run out. But let's say they want cars now to fill the pipeline or launch the program early or whatever.

If you want a commodity, you bid at or above market rates. If you want sustained goodwill or at least avoid generating ill will, you treat your customers at least as well as your competition / benchmark - in Tesla's case, that would be BMW and Mercedes.

In my experience, Tesla has consistently tried to do as good or better than BMW/Mercedes. Which is why I asked whether BMW/Mercedes lowball their trade-in offers in states offering the sales tax credit. I've lived in states that don't give that credit for the past 25 years (luck, I suppose) so I've got zero knowledge in that area.

The only possible way I could this being something other than colossally stupid (and slimy) on Tesla's part is if BMW/Mercedes act the same way in which case Tesla is just following industry-standard "best" practices. If that's the case, I can understand it but I think they ought to think again about whether that's the right thing to do.

The other stupid part of this is Tesla's reaction to market pricing. I didn't realize the market pricing for Model S's is so high. Makes sense I guess because the supply is very low and likely to stay low until enough leases start to run out. I'm guessing that could be March of next year or later.

Once supply increases, I'm sure the prices for used S's will drop. Until then, Tesla has to suck it up and deal with it just like the other buyers. If they want the cars, they need to bid at market or above and turn the car over quickly or hold the car and suck up any loss due to price movement.

And I'm seriously wondering if I should sell my car sometime before the price of used S's drop... Be nice to get into a D with sensors and better paint .

I have to wonder if Elon knows and understands what's going on. This behavior seems totally at odds with what he's done in the past.

 

[gpetti]

I have to wonder if Elon knows and understands what's going on. This behavior seems totally at odds with what he's done in the past.

I'm dealing with someone regarding my trade in value and the experience is identical to dealing with other used car dealers in the past, except that I have no other options given that I have already ordered the P85D and I can only get the tax benefit of only paying the delta if I sell the car to Tesla. He pointed out that I'm being spared the frustration of negotiation which is basically true as the "offer is the offer" as he has pointed out when I debated it (see below). I looked this guy up on Linked in and he has only worked at Tesla since April having worked at BMW for the previous 4 years and about 5 other car makers (in sales) previously. I'm assuming he was hired for this experience and turned loose on this situation - not much Tesla culture evident in my dealings and it will take a while driving my P85D to get the sour taste out of my mouth.

To provide a flavor: He gave me an offer based on 11,000 Kms and I was trying to get him to up the offer as I only had 9,700 Kms on the car. Someone had extrapolated the number to 11,000 based on my giving the car to them in December but yet he made it clear that I had to give them the car immediately. He also made it clear that if my car had more than 500Kms above the quoted amount, the quote would be void. I realize that 1,300 less KMs is not much of a difference but it is about a 10% error (and much larger than their buffer number) so I thought it worth trying to get an extra $1,000 on the trade. Maybe that was naive on my part but given their offer seems to take account of my tax break I thought that this was not a big ask. Either way, I think what annoyed me more than the refusal was this ridiculous paragraph:

"[FONT=&amp]Unfortunately we cannot increase the estimated trade value but what I can offer you is this. We can have a third party company come and inspect your vehicle to verify the amount offered, and we can also have your trade vehicle picked up free of charge and shipped to Vancouver once we secure the value. Lastly, I just wanted ensure you have alternative transportation available to you until your new Tesla comes in? It is important to us that your are kept mobile. The offer is the offer and this way you do not have to worry about the frustration that comes along with negotiating. Hope this works. [/FONT]"

Obviously the first two items are nothing to do with me. The inspection is part of their process and shipping to Vancouver is their decision and is essentially because there is no SC in Calgary. Making it sound like this is some great offer to me is ridiculous. I was curious about his comment, asking me about my alternative transportation, so I asked him what he was offering there and got this response:

[FONT=&amp]Thank you very much for the quick response. Yes I am offering to have your trade in vehicle picked up and delivered back to Vancouver free of charge. I will take care of the transportation costs associated with getting your current Tesla back to Vancouver. We do hope that everything evens out for you as you start cruising in your new P85D. I know that driving that vehicle would be sure to bring a smile to almost anyone’s face.

[/FONT][FONT=&amp]I clarified that I was not asking about the generous offer to ship the car to Vancouver free of charge (yes I'm being sarcastic), and then got this:[/FONT][FONT=&amp]

"I was not offering anything here. Just wanted to ensure if we took your car that you had alternative transportation. Some of our clients don't think this through. I know it sounds odd, but it has happened. Hope this clarifies. Sorry for any misunderstanding. "

[/FONT]So basically he was offering me.... nothing, except advice on the fact that if I give them a car a month before my new car arrives... I may be without a car. Thanks for nothing.

 

[lolachampcar]

I've tried multiple times to let this stuff roll of my back. Every time I get the hairs on the back of my neck to lay down, Tesla makes another move that hikes them back up.

Is anyone else having this level of gut reaction to what is going on? I'm feeling like I may want to take the next step and would like to discuss next steps with others who have similar concerns.

Thanks,
Bill

 

[Jgdixon]

I've tried multiple times to let this stuff roll of my back. Every time I get the hairs on the back of my neck to lay down, Tesla makes another move that hikes them back up.

Is anyone else having this level of gut reaction to what is going on? I'm feeling like I may want to take the next step and would like to discuss next steps with others who have similar concerns.

Thanks,
Bill

As you can no doubt see by some other posts in this thread we are having the same issues here in Canada.
Many owners have contacted me privately with concerns about the low ball trade offers. I just asked for a value on my Sig and I am anticipating the same. My DS told me in most cases dealers and wholesales will be buying the cars which is a huge mistake for Tesla in my opinion. BTW I have been in the auto business for a long time and I think Tesla was caught off guard by the number of trade ups to the D. Their inexperience with the trade in process is showing big time.

 

[lolachampcar]

I give them more credit for thinking this whole thing out (based on conversations from Tesla people and the complete lack of any contrition). I believe they knew exactly what would happen when the D came out and that it was a trial run for when the X ships. They also know they want to control the secondary market and that the D would drive the first significant influx of product into that market. If they were going to act to prevent it, they needed to do so now. Of course, this is all just educated speculation as the people that used to talk freely no longer do so (again, a clue that they know exactly what they are doing).

 

[Tedkidd]

Seems abusive and unethical.

If you go to the trouble of finding a third party buyer it seems wrong not to either match the offer or facilitate the transaction. (What if you want to pass the car to a friend or family member?)

This shouldn't be a lose for Tesla, they could charge a large transaction fee for managing the paperwork. People may gripe about that but it would lack the scent of monopolistic abuse.

NADA could point to this current this current behavior and say "See! They have abusive non-free market practices! They are abusing consumers!" ...when arguing not to allow the direct sales model.

 

[Pollux]

I'm having trouble making the leap to Tesla "abusing consumers". I have only one piece of concrete evidence for that: @lolachampcar's report of what could be interference in his resale arrangement with a wholesaler.

Otherwise, I see a business model for trade-ins that I don't *like* but am still free to avoid by arranging a private party sale or a sale to a non-Tesla dealer. Or even a trade-in to a non-Tesla dealer.

What I don't like:
+ Reducing the car's price by the amount of the Federal incentive tax credit (do they also do this for State incentive tax credits?)
+ Low-ball trade-ins
+ Reported failure in some (many? all?) states to allow state sales tax recapture on any but a direct-to-Tesla trade-in

I pay a lot of money for my Model S. I'd like it to have maximum resale value, if for no other reason so that I can roll into my next Model S. Just like my iPhones and iPads, but on a larger dollar scale.

IMHO these are unpleasant business practices that injure Tesla's own reputation, *not* "abuse" of consumers -- again, excepting @lolachampcar's report of interference.

Alan

P.S. Although not on point, I take seriously these reports of an influx of traditional auto sales staff into Tesla. Corporate culture matters a great deal! I have dealt with many Service Center staff who have prior experience with traditional automobile companies, and I'd summarize their attitudes as being grateful to be at Tesla and excited to be **doing things differently and better for the customer**. I am grateful to those people for bringing a wealth of experience with them to Tesla, and grateful to Tesla for having hired these people who have good attitudes and will make a positive contribution to the Tesla culture. I fear an influx of traditional auto sales staff, who may bring with them traditional auto sales attitudes. It would be all too easy to degrade Tesla culture significantly.

Seems abusive and unethical.

If you go to the trouble of finding a third party buyer it seems wrong not to either match the offer or facilitate the transaction. (What if you want to pass the car to a friend or family member?)

This shouldn't be a lose for Tesla, they could charge a large transaction fee for managing the paperwork. People may gripe about that but it would lack the scent of monopolistic abuse.

NADA could point to this current this current behavior and say "See! They have abusive non-free market practices! They are abusing consumers!" ...when arguing not to allow the direct sales model.

 

[Madartist]

I've wondered lately why there hasn't been more outcry from the Tesla community about this type of anti-consumer business practice, considering how many Tesla owners are upgrading to the newly announced D. I think one reason may be that this issue primarily affects those of us who live in states with the sales tax offset for trade-ins. For example, Californians do not have this strong financial incentive to trade-in their cars to Tesla because they have to pay the full sales tax on every car they purchase. Therefore, they would simply elect to sell their Tesla elsewhere for a higher price if they felt that Tesla's trade-in offer is below what they would accept. On the other hand, if large numbers of California owners experience the impact of this practice first hand the way we do, things might be different...

Along these lines, it would be most interesting to find out whether or not Tesla's wholesalers would offer a different trade-in values for the same ICE car depending the state in which the owners reside - i.e. offer a lower trade-in value in states which allows for the sales tax offset, knowing that there is a built-in financial incentive for owners to take the trade. Unfortunately, this data would be very difficult to gather and perhaps even more difficult to interpret. Are there any members in this forum with intimate knowledge of the auto sales business to say if this practice occurs in traditional car dealerships as well?

 

[santana338]

I give them more credit for thinking this whole thing out (based on conversations from Tesla people and the complete lack of any contrition). I believe they knew exactly what would happen when the D came out and that it was a trial run for when the X ships. They also know they want to control the secondary market and that the D would drive the first significant influx of product into that market. If they were going to act to prevent it, they needed to do so now. Of course, this is all just educated speculation as the people that used to talk freely no longer do so (again, a clue that they know exactly what they are doing).

Bill, have you tried tweeting Elon about this to ask if this is his policy? I watched part of his MIT talk recently and he asked for people to "Yell at him on Twitter" if something wasn't right. Since you've gone up the chain inside the company, it seems like it would be good to get confirmation that they are doing this intentionally. Also, didn't I hear about Solar City getting into some hot water over inflating the price of their solar systems to capture more tax rebate revenue? Is this a pattern with Elon?

 

[lolachampcar]

santana,

I did hear back from the CPO program manager. His response was explanatory in nature in support of Tesla's actions. It also reinforced my opinion that this is a purposeful path, they know the decision they have made and I am more convinced than ever that it is wrong and diametrically opposed to everything I thought the company stood for. The next time I see Elon exuding pain when talking about how NADA is treating Tesla, I will be hearing it with vastly different ears.

WRT Tweeting, that assumes I have a Twitter account or, for that matter, any knowledge of Twitter apart from it being something that is quoted on the news all the time and a capability that accelerates viral happenings That literally is my knowledge and extent of my interest in Twitter so I do not have the capability to reach out to Elon that way. In addition, I would not be comfortable posting my note to him here in a public forum and would be equally uncomfortable tweeting such things.

I guess I have now become one of those dinosaurs I used to laugh about.

 

[breser]

WRT Tweeting, that assumes I have a Twitter account or, for that matter, any knowledge of Twitter apart from it being something that is quoted on the news all the time and a capability that accelerates viral happenings That literally is my knowledge and extent of my interest in Twitter so I do not have the capability to reach out to Elon that way. In addition, I would not be comfortable posting my note to him here in a public forum and would be equally uncomfortable tweeting such things.

I'd suggest that you send him an old fashioned letter. Address it to him and send it to the Tesla Motors corporate address. Someone else might read it before he saw it. But I suspect given your history as a customer it'd make it to him.

 

[lolachampcar]

I did something similar to that around a week ago when someone over at TM Forums gave me his Tesla email address.

 

[santana338]

I did something similar to that around a week ago when someone over at TM Forums gave me his Tesla email address.

I hope the email didn't get caught in the spam filter...

 

[breser]

I did something similar to that around a week ago when someone over at TM Forums gave me his Tesla email address.

Ahh well then you've probably done all that you can do. Don't think Twitter would be better than that anyway.