Future Depreciation of Model X in the next 2-5 years

[ninefiveone]

Model S provides a direct model for depreciation with respect to increased battery capacities, new tech, etc.

Imminent competition will likely help keep used Tesla values high for a couple of years as competition deploys immature first gen products (see also: disappointing range of Mercedes suv, dealer charger strategy of Porsche, etc).

Beyond that, hard to say. Not all ICE manufacturers will successfully navigate the change to electric. Might be a lot, might be a few. There are new entrants to consider as well. I don’t think any of that will be clear for 3-5 more years.

Tesla has three competitive differentiators. Electric expertise, autonomy features, and charging network. A competitor either needs to match those, exceed those, or have other differentiators that overcome those.

A top end Mercedes interior is significantly better than a Tesla, has a mature dealer/service network, and a lot of brand equity. Does that overcome the poor range, lack of charging network, and fewer autonomy features?

People like to throw around the word competition like this is a market for disposable pens and one product is no different from another. That oversimplification is a bad thing.

 

[DCGOO]

Tesla has three competitive differentiators. Electric expertise, autonomy features, and charging network. A competitor either needs to match those, exceed those, or have other differentiators that overcome those.

A top end Mercedes interior is significantly better than a Tesla, has a mature dealer/service network, and a lot of brand equity. Does that overcome the poor range, lack of charging network, and fewer autonomy features?

Tesla also has an advantage of having NO dealers, instead using factory web site sales only and a network of company owned delivery/service centers. Why on earth would an ICE DEALER have the slightest interest in selling an electric car that requires far less routine maintenance.

 

[bob_p]

We bought our first S in early 2013 and traded it in in June. We now have a 2017 S and a 2018 X,.

For long-term depreciation, we estimate 2% per month - which was fairly close for the re-sale value of our S P85, less a reasonable amount for doing a trade-in vs. a sale. And, we expect to see roughly the same depreciation for our S 100D and X 100D, assuming we keep both to about 100K miles.

 

[Peteski]

I don’t think anyone doesn’t expect basic scaled depreciation. My concern is for extreme depreciation due to big jumps in battery chemistry and range improvements.

What big jumps in battery chemistry are those? Nothing coming onto the market in the next 5 years is going to be a big step change in tech - actually everything I've read about is similar to a current Tesla in terms of range, battery, performance etc. Batteries might get a little cheaper, but that's about all in that kind of timeframe. If you look longer term then any non-classic car over 10 years old is practically worthless anyway, so it doesn't matter how the tech improves long term.

 

[tc521]

What big jumps in battery chemistry are those? Nothing coming onto the market in the next 5 years is going to be a big step change in tech - actually everything I've read about is similar to a current Tesla in terms of range, battery, performance etc. Batteries might get a little cheaper, but that's about all in that kind of timeframe. If you look longer term then any non-classic car over 10 years old is practically worthless anyway, so it doesn't matter how the tech improves long term.

It’s hard to predict the future but if you look back at the last 5 years till now battery technology in the form of capacity, power and charging has increased substantially. LG/Panasonic does have a roadmap for battery development and if I’m not mistaken they plan for the next jump to be around 2020-2021.


Use the i3 for reference. The original 60ah battery gave it 81 miles of range. Now in the same space they have a 94ah pack which gives it 114 miles of range. All while in the same footprint of space.

Lastly, it’s hard to believe Tesla and Elon are going to stop developing better battery chemistry. Beyond minimizing required rare earth metals they will need to continue to be the leader in the higher charging rate game.

 

[NoBeard]

Why on earth would an ICE DEALER have the slightest interest in selling an electric car that requires far less routine maintenance.

Our local Nissan dealer told me...
"We'll start selling the Leaf the day Nissan forces us to with a gun to our head"
Truly enlightened individuals

We bought our first S in early 2013 and traded it in in June. We now have a 2017 S and a 2018 X,.

For long-term depreciation, we estimate 2% per month - which was fairly close for the re-sale value of our S P85, less a reasonable amount for doing a trade-in vs. a sale. And, we expect to see roughly the same depreciation for our S 100D and X 100D, assuming we keep both to about 100K miles.

So (presuming it's not straight line which would be at 0 in month 50) that works out to residual values of:
Months/%
12 / 78.5%
24 / 61.6%
36 / 48.3%
48 / 37.9%
60 / 29.8%
72 / 23.3%
84 / 18.3%
96 / 14.4%
108 / 11.3%
120 / 8.9%

Sound right?

 

[bob_p]

That seems to track the depreciation on our first Tesla - and similar depreciation curves we've seen on other vehicles.

The only difference between a $100K Model S/X and a $50K Model 3 is that the 2% monthly depreciation is more $$$ per month, otherwise, the curves are likely to be similar, as long as there isn't something unusual such as a specific model with a poor history.

 

[MarkX100D]

What big jumps in battery chemistry are those? Nothing coming onto the market in the next 5 years is going to be a big step change in tech - actually everything I've read about is similar to a current Tesla in terms of range, battery, performance etc. Batteries might get a little cheaper, but that's about all in that kind of timeframe.

According to the Munro teardown info, the new battery cells used in the model 3 are 20% larger, but have a 50% increase in capacity when compared with the cells in the S or X which might not be a ‘big jump’ in chemistry, but for an incremental improvement, is definitely significant enough.

 

[TexasRat]

We bought our first S in early 2013 and traded it in in June. We now have a 2017 S and a 2018 X,.

For long-term depreciation, we estimate 2% per month - which was fairly close for the re-sale value of our S P85, less a reasonable amount for doing a trade-in vs. a sale. And, we expect to see roughly the same depreciation for our S 100D and X 100D, assuming we keep both to about 100K miles.

That's actually really extreme depreciation. I didn't think it'd be that bad.

 

[bob_p]

It's roughly the same as we've seen in other relatively high-end vehicles we've owned.

Of course, depreciation looks much worse in the first year, especially if you pay full price late in a "model year". But that averages out over time - and unless there's something unusually good or bad about a specific model/year, it appears depreciation tends to average 2% per month.

If actual value ends up being better, then you'll be pleasantly surprised when you get ready to sell...

 

[Peteski]

It’s hard to predict the future but if you look back at the last 5 years till now battery technology in the form of capacity, power and charging has increased substantially. LG/Panasonic does have a roadmap for battery development and if I’m not mistaken they plan for the next jump to be around 2020-2021.


Use the i3 for reference. The original 60ah battery gave it 81 miles of range. Now in the same space they have a 94ah pack which gives it 114 miles of range. All while in the same footprint of space.

Lastly, it’s hard to believe Tesla and Elon are going to stop developing better battery chemistry. Beyond minimizing required rare earth metals they will need to continue to be the leader in the higher charging rate game.

Look back 5 years and a Tesla of that vintage still looks pretty decent on the battery front. Of course there will be improvements, but you can say that for any ICE car development too. The next 5 years will see further incremental improvements, but I'm not seeing any game changers in that timeframe. The mainstream car industry is very very slow to react to technology change. Even Tesla have only gone from 85 to 100 kWh flagship batteries since 2012 and the newer battery is fractionally heavier. It's basically the same tech only more refined and that will become a game of diminishing returns until there really is a major breakthrough in battery tech.

In 10 or 20 years time, yeah who knows where it will go, but in the next 5 years time they are all using current battery tech in their production cars on sale to the public. Jag, Merc, Audi, BMW, Volvo - all going to be using battery tech we know everything about today. We're not going to see huge gains in range, performance or charging rates (certainly zero for home!) above what a Tesla can achieve here and now. The only differentiators the legacy competition can leverage on Tesla in the short term are brand loyalty and superior QC.

 

[ℬête Noire]

...in the next 5 years time they are all using current battery tech in their production cars on sale to the public. Jag, Merc, Audi, BMW, Volvo - all going to be using battery tech we know everything about today. We're not going to see huge gains in range, performance or charging rates...

Porche claims otherwise, and if they are anywhere near hitting that target in the next few years Musk/Tesla isn't going to let it stand. In fact Tesla has already stated a path (and then revised the target once already) that'll result in a meaningful decrease in charge times. Which will likely be a topic linked to....

Even Tesla have only gone from 85 to 100 kWh flagship batteries since 2012 and the newer battery is fractionally heavier. It's basically the same tech only more refined and that will become a game of diminishing returns until there really is a major breakthrough in battery tech.

The rub here is that the "flagship" doesn't have the latest tech. It has the 6-ish years old tech (well not exactly because there's been some tweaks over the years). The latest tech, and the more likely to better utilize the planned SC kW bump, is the Model 3. Which is sort of a weird situation but there it is. The result is that Model 3 LR has a Wh/kg for the overall pack that's 15% better than those old 85's and 6% better than the newest Model S, even when at the inherent disadvantage of having a smaller total kWh to carry the non-battery overhead, and also having better active temp management plumbing.

If you run the numbers of what Tesla is aiming at with it's 2-3 year plan in vehicles, suddenly it's looking like a new Model S now is going to be quite dated in tech in 3-4 years. Fortunately it'll still be functional, it'll still drive and be as practical a vehicle as it is now (maybe even a bit better because of OTA updates and the SC network continuing to be built out). Still the tech curve is not going to treat it gently when you start doing comparisons to new EVs.

 

[DarkHelmet]

Porche claims otherwise, and if they are anywhere near hitting that target in the next few years Musk/Tesla isn't going to let it stand. In fact Tesla has already stated a path (and then revised the target once already) that'll result in a meaningful decrease in charge times. Which will likely be a topic linked to....



The rub here is that the "flagship" doesn't have the latest tech. It has the 6-ish years old tech (well not exactly because there's been some tweaks over the years). The latest tech, and the more likely to better utilize the planned SC kW bump, is the Model 3. Which is sort of a weird situation but there it is. The result is that Model 3 LR has a Wh/kg for the overall pack that's 15% better than those old 85's and 6% better than the newest Model S, even when at the inherent disadvantage of having a smaller total kWh to carry the non-battery overhead, and also having better active temp management plumbing.

If you run the numbers of what Tesla is aiming at with it's 2-3 year plan in vehicles, suddenly it's looking like a new Model S now is going to be quite dated in tech in 3-4 years. Fortunately it'll still be functional, it'll still drive and be as practical a vehicle as it is now (maybe even a bit better because of OTA updates and the SC network continuing to be built out). Still the tech curve is not going to treat it gently when you start doing comparisons to new EVs.

A Tesla rep recently told me that if everyone knew what’s coming down the pipe WRT M3 capability that’s yet to be unlocked, no one would buy an S or X.

He also said a lot of the tech improvements made with the Semi and M3 will soon trickle down to the S and X. Take it FWIW.

If I had to guess, with the rebate going away Tesla is going to need to do something big soon to overcome what is essentially a price increase.

 

[Tes La Ferrari]

A Tesla rep recently told me that if everyone knew what’s coming down the pipe WRT M3 capability that’s yet to be unlocked, no one would buy an S or X.

He also said a lot of the tech improvements made with the Semi and M3 will soon trickle down to the S and X. Take it FWIW.

If I had to guess, with the rebate going away Tesla is going to need to do something big soon to overcome what is essentially a price increase.

I think you are very right about the semi tech trickle down, & model 3 battery advances. I think these will significantly impact S & X

This is why I think a battery size greater than 100 is highly likely in the S & X, using the model 3 cells, and that could easily translate to a 110 or 120 S & X, and a 100D or 95D as the new base S. I predict something like this -- with pricing going up maybe $5K per battery size from now.

Model S

95D 0-60 3.5 Seconds 300 mile /500km range

120D 0-60 3.4 Seconds 400 mile / 650km range

P120DL 0-60 1.99 Seconds 375 mile / 625km range

Model X

95D 0-60 3.9 Seconds 275 mile /420km range

120D 0-60 3.75 Seconds 375 mile / 600km range

P120DL 0-60 2.25 Seconds 3 57 mile / 575km range


The 1.99 second 0-60 on the P120DL will enable the "base" roadster to still be faster to 60 at 1.9 seconds

 

[ℬête Noire]

I predict something like this -- with pricing going up maybe $5K per battery size from now.

That's the opposite of mitigating the diminishing rebate, though. It won't do as much damage at the top end but at the bottom end of the Model S, with pressure already there from the top end of the Model 3, a $9K price bump (for the first half of 2019, then to $11K and ultimately to >$13K) is going to impact. The sales it diverts to Model 3 Performance will be fine for the bottom line, because of it's margin, but if the sale slides much further down it'll hurt. The slice it pushes to iPace and then beyond are a total revenue hit.

As for just bumping battery and the 0-60 incrementally, that's pretty lame. The Model 3's strength vs the Model S runs much deeper, top-to-bottom. Chassis handling, drivetrain (insignificant power fade, crazy high efficiency), interior design, etc. The Model 3 lacks some of the premium touches but what it does have it's so much obviously more advanced on. The priority for battery size bump and 0-60 shaving has got to be well down the priority list of "compelling things we can do".

 

[ℬête Noire]

He also said a lot of the tech improvements made with the Semi and M3 will soon trickle down to the S and X.

The battery tech required to hit their Semi targets are going to be seismic in impact to BEVs, economically. Back of envelop math says Tesla will be pricing the step from 300mi range to 500mi range at 85$/kWh. That's the retail pricing of the upgrade, not necessarily the internal costs! Even if they were doing this on zero margin, which would be highly unusual, that's still the price point where BEVs begin to match ICE sticker price-points up and down the scale. Where they are already matching, for the Model 3, that will represent domination. A BMW 318 comparable for drive-off-the-lot Camry prices, no rebate needed? That's scorched earth limited only by how fast they'll be able to scale up manufacturing.

I do wonder how much Tesla will try to bite off with the S refresh. With the Model Y on their design plate, would they take a crack at getting ride of the lead-acid 12V system that Musk wanted to do in the Y? That might actually make some sense. Once the Model 3 is clicking properly it'll be dwarfing the S sales, and hopefully on margin, too. So they have some wiggle room to take the engineering risk there to leapfrog the Model S back to proper flagship status.

 

[Uncle Paul]

The future resale of your Model X will have less to do with battery enhancements than due to the unique Tesla Supercharger system.

As long as other manufacturers do not have convenient long range on road high speed charging, then Tesla will continue to command a premium price.

 

[Tes La Ferrari]

That's the opposite of mitigating the diminishing rebate, though. It won't do as much damage at the top end but at the bottom end of the Model S, with pressure already there from the top end of the Model 3, a $9K price bump (for the first half of 2019, then to $11K and ultimately to >$13K) is going to impact. The sales it diverts to Model 3 Performance will be fine for the bottom line, because of it's margin, but if the sale slides much further down it'll hurt. The slice it pushes to iPace and then beyond are a total revenue hit.

As for just bumping battery and the 0-60 incrementally, that's pretty lame. The Model 3's strength vs the Model S runs much deeper, top-to-bottom. Chassis handling, drivetrain (insignificant power fade, crazy high efficiency), interior design, etc. The Model 3 lacks some of the premium touches but what it does have it's so much obviously more advanced on. The priority for battery size bump and 0-60 shaving has got to be well down the priority list of "compelling things we can do".

Not lame at all. The diminishing rebate is all the more reason to update the battery sizes and 0-60 times. Remember; customers are not logical - otherwise no one would by p100dl when a 100 has more range.

There’s a lot more that informs the decision to buy the flagship s or x than just some pretty interior finishings (while an interior redesign is nice and beneficial) or the lack of a 12v battery.

Sure there are some that will continue to buy the S over the 3 or the X over the Y for the size even if the battery sizes and performance stayed the same - but it would rapidly lose flagship status.

I think Elon wants to keep Tesla as the king of the hill, that's why the new roadster is coming - it's not logical considering halo cars and flagships are not volume sales leaders. But 0-60 in 1.9 in a roadster or 1.99 in a P120DL helps to cast a wide positive halo over the brand, that helps justify the margins that Tesla needs.

Bragging rights have always sold cars.

 

[Peteski]

Porche claims otherwise, and if they are anywhere near hitting that target in the next few years Musk/Tesla isn't going to let it stand. In fact Tesla has already stated a path (and then revised the target once already) that'll result in a meaningful decrease in charge times. Which will likely be a topic linked to....

I've seen what Porsche are claiming and also valid reasons why it won't actually happen in practice (at least not in the next few years). Even getting into a Porsche EV in the next 3 years would be a major challenge given the low volumes!

I agree that M3 battery tech is the leading edge, but it's not exactly game-changing, just incrementally better than what we have in the S/X. It's not going to make any difference to current S/X depreciation due to the time lag. People in the market for 3-5 year old used cars are not looking at brand new models on a forecourt or expecting the same level of tech. That's why car depreciation is pretty savage in the first place. For sure the biggest losers in depreciation will be those buying the very last current generation S/X production cars in say 2020/21, but again that's par for the course when buying models due for imminent replacement. Most manufacturers would heavily discount at that point in the lifecycle and maybe Tesla will do the same when replacements are known to be coming? That or their sales will take a huge dip at the end when people start holding off. It's not easy keeping a whole car secret once it starts public road tests maybe a full year or more ahead of first production.

 

[Peteski]

As for just bumping battery and the 0-60 incrementally, that's pretty lame.

Totally agree. The main reasons people don't buy Teslas today are price and limited range compared to luxury ICE, certainly not lack of performance! Efficiency, cost and QC are the things they need to focus on, not top trumps!