Help me justify a P85D instead of 70D ($8k difference)

[cryptyk]

I put a deposit on a 70d yesterday and have 7 days to modify it before it gets locked in. I'm on the fence about upgrading to a P85D and today had a revelation - It's really only about an $8k cost difference! Tell me if you buy this line of thinking:
If I purchase the P85D for $30k more than the 70D, I'll probably be able to sell it for about $22k more than the 70D in four years. If I can afford to let that $30k "sit" in the Tesla as equity for 4 years, I'll get most of it back out. I only really lose out on the depreciation of the incremental cost.

Does that make sense? I'm trying to convince myself

 

[gaswalla]

Not true... But the 30 grand is worth it for folks that can appreciate it (and afford it )

 

[Max*]

I think you're being too optimistic about the $8k difference. That puts the depreciation of the car at 7.5% per year for the first 4 years. I'd expect more in the tune of 15%-20% for a luxury car, and the hardest hits are going to be in the early years.

 

[RiverBrick]

Insurance will probably be higher for the P85D. Not sure if you're taking into account the extra sales tax that you will not recoup. In some places (like my province) there's a luxury tax that will cost you hundreds of extra dollars per year to register the P85D.

You can invest the money saved and increase the value of the $30,000. The P85D is a great car, but the 70D is probably a better value.

 

[Max*]

I have the 70D and love it. But if you're debating about the 70D vs. the P85D, have you thought about compromising on the 85D? It's $10k more upfront, but over 4 years (assuming 20% depreciation per year) you'll only spend an additional $4k.

 

[4SUPER9]

My guess is that in 4 years you will be able to sell it for about $4,000 more. $22,000? Not going to happen. You forget that the P100D will be out by then and your car will devalue more than you ever imagined. My P85 value plummeted.

 

[Galve2000]

3 in the bush is not the same thing as 2 in the hand.

The P85D looses it's value somewhat faster than the 85D and the rest. the difference is certainly more than $8,000 so if that is what you are banking on, I would rethink your master plan and stick with the 70D.

if you need more range get an 85-(non D) or an 85D instead.

 

[Max*]

My guess is that in 4 years you will be able to sell it for about $4,000 more. $22,000? Not going to happen. You forget that the P100D will be out by then and your car will devalue more than you ever imagined. My P85 value plummeted.

Both cars (70D and P85D) will plummet in price, but he's asking about the delta between them.

Look at the CPO prices of the S60 vs. P85+, it's about $20k, not $4k.

 

[dsm363]

Not sure it works like that but whatever it takes to get the P85D is worth it

 

[cryptyk]

I was figuring a 25% depreciation over 4 years.
Since the price difference between the cars is $30k, I'll lose out on 25% of that, or about $8k. The other $22k I'll recoup when I sell the car (because you can sell a used P85D for more than a used 70D).

Maybe this makes more sense:
brand new 70D: $87k
brand new P85D: $117k

After four years, assume 25% depreciation of both.
You can sell the 70D for $65k
You can sell the P85D for $87

So you spend $30k more for the P85D, but resell it after four years for $22k more, for a difference of $8k to own a P85D instead of a 70D for four years.

- - - Updated - - -

I'm driving an 85D for the day today. I feel like there's a bigger difference in power between the 70D and 85D, compared to the 85D and P85D. I've driven each of them for 24 hours back-to-back.

 

[Drucifer]

Ps have been depreciating faster than 85s or 60s. Trust me on this. The market is too thin on the + version to use that as a benchmark, IMHO.

 

[DoubleDownOn9]

Ugh. You'll be a lot happier not making the equity argument. Better equity advice? Buy the 70D and put the $30k in TSLA stock after today's beating... I think you'd be hard pressed to find anyone that hasn't lost 25% in any EV in the last 3 years.

 

[Max*]

I was figuring a 25% depreciation over 4 years.
Since the price difference between the cars is $30k, I'll lose out on 25% of that, or about $8k. The other $22k I'll recoup when I sell the car (because you can sell a used P85D for more than a used 70D).

Maybe this makes more sense:
brand new 70D: $87k
brand new P85D: $117k

After four years, assume 25% depreciation of both.
You can sell the 70D for $65k
You can sell the P85D for $87

So you spend $30k more for the P85D, but resell it after four years for $22k more, for a difference of $8k to own a P85D instead of a 70D for four years.

Whatever floats your boat. But I'll eat both monitors in front of me, if I get 25% depreciation on my Tesla in FOUR years.


Here's an example of a P85 for sale in the Tesla forums which lost 25% in TWO years, and it's still available, which means it's overpriced. 2013 Model S P85 Black/Black 18k miles

Check out CPO listings too, you'll see that 25% for 4 years is just silly.

If you want to "justify" the P85D use a different metric. How about this one: $30k for a lot of fun, is that worth it to you? Yes -- buy it.

 

[deonb]

Here's some more justification for you:

After 4 years, you P85D will be a P80D, where your 70D will be a 65D...


One problem with the P85D resale value though, is that it's the top-of-the-line model. If Tesla comes out with something even higher, e.g. P85DD, you'll immediately take a pretty big hit. Not so much a problem with the 70D.


But there's only really want justification you need that matters: "I want one".

 

[Johan]

I was figuring a 25% depreciation over 4 years.
Since the price difference between the cars is $30k, I'll lose out on 25% of that, or about $8k. The other $22k I'll recoup when I sell the car (because you can sell a used P85D for more than a used 70D).

Maybe this makes more sense:
brand new 70D: $87k
brand new P85D: $117k

After four years, assume 25% depreciation of both.
You can sell the 70D for $65k
You can sell the P85D for $87

So you spend $30k more for the P85D, but resell it after four years for $22k more, for a difference of $8k to own a P85D instead of a 70D for four years.

- - - Updated - - -

I'm driving an 85D for the day today. I feel like there's a bigger difference in power between the 70D and 85D, compared to the 85D and P85D. I've driven each of them for 24 hours back-to-back.

Your math is correct. Only problem is what happens as the cheaper model price come close to 0? The P85D still sells for something like $20k-30k? No it doesn't. It probably sells for close to 0. So the curves are not linear and approach each other after a while meaning that over time the more expensive car's curve has to slope down more in order to get close to the cheaper car's curve as time passes along the x-axis (hope you get my vision here). This starts early, so I think you are wrong to assume 25% appreciation for both cars even in the first 4 years. It's probably more like 23% for the 70D and 28% for the P85D or something like that, run that calculation and you get:

After four years, assume not similar depreciation of both.
You can sell the 70D for $67k
You can sell the P85D for $84
Difference $17k (not 22 as in your example above).

 

[deonb]

So the curves are not linear and approach each other after a while meaning that over time the more expensive car's curve has to slope down more in order to get close to the cheaper car's curve as time passes along the x-axis (hope you get my vision here). This starts early, so I think you are wrong to assume 25% appreciation for both cars even in the first 4 years. It's probably more like 23% for the 70D and 28% for the P85D or something like that, run that calculation and you get.

Depreciation is cumulative. You don't need to change the % of a higher value for the curves to approach each other. Both of these are 20%, one starts at 120'000, the other at 70'000:

.

Having said that - 25% depreciation after 4 years - it's not realistic. That's about where I am on my P85 after 2 years with < 25000 miles on it.

 

[Johan]

Depreciation is cumulative. You don't need to change the % of a higher value for the curves to approach each other. Both of these are 20%, one starts at 120'000, the other at 70'000:
View attachment 86790.

Having said that - 25% depreciation after 4 years - it's not realistic. That's about where I am on my P85 after 2 years with < 25000 miles on it.

Right - so over say a 4 year period that comes out to different % values total depreciation, assuming the same % of yearly depreciation due to, the cumulative effects from having the starting prices be different (same % of more $$$).

 

[steph280]

When I was lusting after P85D during my 70D purchase, I tell my self, if I had to ask, I can't afford it.

 

[Scoper]

I was figuring a 25% depreciation over 4 years.

I'm driving an 85D for the day today. I feel like there's a bigger difference in power between the 70D and 85D, compared to the 85D and P85D. I've driven each of them for 24 hours back-to-back.

THIS is going to be the main deciding factor for you, I believe. The extra acceleration performance has to be "worth it" to you before you spend the money, whether it be $10K for the 85D or $30K for the P85D. For me, I REALLY REALLY wanted to spring for the P85D, but that extra $20K delta to me wasn't worth it. (especially since I get my 3.3sec 0-60 thrills on my Daytona)

I'm pretty sure you'll have a good idea after driving the 85D around for a day. I wouldn't look at the numbers so closely. In the luxury segment, in the long run, the extra cost / value is based on more emotion than economics.

 

[deonb]

Right - so over say a 4 year period that comes out to different % values total depreciation, assuming the same % of yearly depreciation due to, the cumulative effects from having the starting prices be different (same % of more $$$).

It comes out to different $ values of total depreciation, not different % values.

E.g. in the graph above, at period #6, both cars have depreciated down to 26.21% of original value (i.e lost 73.79%). However, the one car has lost $88547 of value, and the other one $51649 of value. But percentages are the same throughout every point on the 2 curves above.


Having said that, I do believe the P85D will depreciate at a higher % than the 70D for other reasons, but it's not needed to make the math work out. The car values can both approach 0 without having the %'s be different.