Largest concern about buying a model 3

[jsvinda]

I bought my M3 middle of March. Best car I ever owned for all the reasons already listed. My wife especially was very concerned about the solvency of Tesla. But Tesla possesses far too much valuable technology to not be bought out by anyone who wants to instantly become a player in the EV space. Having said that, every day I google “Tesla” and hope I don’t read bad news!

 

[pdq]

I bought my M3 middle of March. Best car I ever owned for all the reasons already listed. My wife especially was very concerned about the solvency of Tesla. But Tesla possesses far too much valuable technology to not be bought out by anyone who wants to instantly become a player in the EV space. Having said that, every day I google “Tesla” and hope I don’t read bad news!

My job for roughly 7 to 8 years recently was doing corporate acquisitions on behalf of my parent company. Often we would buy in order to establish ourselves in a new market or to extend an existing product line versus building something ourselves from scratch. As we all know, all the major manufacturers are pouring billions of dollars into developing EVs. The harsh reality here is that every day that they come closer to developing their own proprietary technology, the less Tesla's technology is worth.

I'm not bashing Tesla, as the above applies to just about any type of product or technology that you want to talk about, and it's what I had to deal with all the time when doing my job for a very large wealth management technology company. I could see a company buying just their network of Superchargers as opposed to taking on the capex of replicating it themselves.

 

[mediaboy]

I have had the same concerns and agree with some of the other posts. There would certainly be a lot of interest in acquiring their assets (supercharging network), brand and customer base from many types of buyers. They could also reorganize in bankruptcy by wiping out the equity and restructuring the debt which would leave them in a much more sustainable financial position. So I think the biggest risk as car owner would be short term service issues.

Ultimately, I ordered a cheaper SR+ and shorted the stock to hedge the risk. Allows me to make some $ to offset issues that may arise from a filing. But I am a pragmatist and a capitalist.

A

I had the same concern as the OP. I resolved it by (mentally) making a list of all the upscale, performance auto manufacturers. Then I crossed off all of them that have an EV even close to the Tesla. The 2 lists were the same.

That's my tongue in cheek way of saying that Tesla's technology would be a major asset to BMW, Mercedes, Lexus, Acura, etc, etc, etc.

Which isn't to say that your resale value would take a hit, but parts and service would likely still be available.

Huh? Parts and service are barely available now... I don't see the situation improving if they Tesla goes under.
Leasing option looks good from this perspective only....

 

[hcdavis3]

A


Huh? Parts and service are barely available now... I don't see the situation improving if they Tesla goes under.
Leasing option looks good from this perspective only....

Stock is up today around 11 bucks last time I checked. Tesla is finally going to raise capital.

 

[cfichuck]

My head says maybe but my heart, which has wanted an electric car since I was a child building solar powered golf carts with my dad, says no. So trying to convince my rational head.

Just do it! The car will last six years. You will still get it repaired and serviced. You'll love it the moment it is delivered and there'll be no looking back. Car companies have been going bankrupt for decades and bailed out by the government when other institutions ruined the economy.

I see Tesla's bigger business issues as competition in the space.

 

[Jimbo435]

Consumer Reports applies the term "Recommended" to products that test well. The "Not Recommended" moniker is rarely used, and applies only to products that are really bad; to be so labeled, a product has to do worse than to simply not make the Recommended list; it has to be dangerous, extremely unreliable, or otherwise awful. To the best of my knowledge, CR has not put any Tesla into that category. Of course, a product that is not on the Recommended list is by definition not Recommended, but that's different from being in the separate "Not Recommended" list. AFAIK, CR has no "Highly Not Recommended" category. I think it's important to get the terminology correct, since CR has specific things in mind for the three categories of "Recommended," no recommendation, and "Not Recommended." Unfortunately, "Not Recommended" sounds like it would be anything not in the Recommended list, which can lead to confusion, but that's not the case. Fortunately, few products fall into that category.

That said, I think you may be referring to, but imprecisely reporting, the reliability score, which CR reports on a 5-point scale using graphics from red (bad) to green (good), but I'll refer to as 1 (bad) to 5 (good) for clarity in text. The Model X currently gets a score of 1. The Model 3 got a score of 3 originally, but that dipped to 2 after a few months. Historically, the Model S has gotten anywhere from a 1 to a 3. (The 2018 production -- the most recent reported so far -- gets a 1. Apparently the model's been suffering from some recent design changes.)

Reliability is only one factor in CR's car tests, albeit an important one. In order to make the Recommended list, a car must have an average (3) or better reliability rating, but that's not the only factor. The Model 3 and Model S have both achieved a reliability rating of 3 some years (or months, for the Model 3) but not others, which means both of those cars have been Recommended at one point or another; but neither currently makes the grade. Teslas, and especially the Model S, shine in most other categories, including customer satisfaction (another survey result, from the same users as, but independent of, reliability ratings), crash tests (based on NHTSA and IIHS data), and road test (acceleration, braking, handling, seat comfort, etc.; as tested by CR).

Yeah the interesting thing I saw looking at CR ratings, is that all Tesla cars have a "Predicted Owner Satisfaction" of 5 out of 5.
Does this mean that even while some cars have issues, the owners still love them?

 

[Stark_Raving]

I have been lurking these forums for a couple of months so I know some people are going to respond that Tesla is all unicorns and rainbows but for the rest of us I have a question. My largest concern about buying a model 3 (besides that it will be, by far, the most expensive auto I have ever purchased) is a potential collapse of Tesla. I don’t want to buy this car with a shiny 4 year warranty then have tesla go out of business 3 months later, this car has to be able to get me to work for the next 6+ years. And while I know Tesla is always riding the edge it seems like more of its exes are abandoning ship, US demand isn’t great, they are trying to pull ever demand lever every created, they lost a ton in q1, wall street is worried, etc. Does anyone else share this concern?

Having scanned the responses to your post, I'll try not to be redundant. I'm on my second Tesla and am a committed fanboy. Concerns about any company's survival are legitimate and should be part of your evaluation. The history of independent car companies isn't great but I believe that Tesla is a very special case. I've never bet against the likes of Jobs, Gates, Ellison, Zuckerberg et.al. and I don't expect that I'll ever bet against Musk. That said, you should consider a different car like a Ford F150 and if you wait a year or so, you'll be able to get the electric option. In the meantime, you can grin and bear it when gas jumps a nickel a gallon each week.

 

[Guy V]

I think you might have misunderstood, so allow me to ignore your manners and take your message more seriously.
I’m definitely not upset that I couldn’t order an SR M3 by phone. Or by visiting the local store. Or by smoke signal. If and when Tesla does offer them again through their regular configuration page (meaning they’ve decided it’s OK to sell them) I will not be ordering one. The rear wheel drive LR meets my needs better (and is, for the moment, also among the missing). If they solve their spotty QC and service issues, that’s the one I will order when the time comes.
What does concern me is this: Tesla sent the base model off to the place where unwanted model variants are supposed to die. They have done this before. They did it for a reason then, and they’ve done it for a reason now. As I said, it might even be a good reason, in the short term anyway. If you need the margins, you up sell to more expensive cars.
But in the longer term, cutting off the base of your demand and focusing on those higher-margin vehicles means staying a niche manufacturer for a while longer. It is not consistent with a corporate build out designed to sell base model cars in base model numbers. And to circle back to the OP who was concerned about buying an expensive orphan, that is a probably a legitimate worry, but certainly not to everyone. Plenty of optioned up M3’s are being sold, and I hope the next sales report shows a strong recovery from Q1 winter doldrums.
Hope that helps,
Robin

EVERYBODY uses their base model as a tool to upsell customers. No one wants you to buy their base model. It's just to get their foot in the door for your consideration. What do you see as wrong with that as long as you can buy it if you want to? What kind of terrible accusation is it that their higher priced versions are such a better value that people can't resist buying them instead? Elon always said the base model would still be a great car compared to the competition, and it is! If you don't want more, then by all means buy it and not complain that something more expensive is nicer.

 

[Guy V]

I'm also a lurker and a soon to be purchaser, but my concern isn't with the company. I have a situation where my finances aren't where I'd like them to be to justify the purchase. I can easily afford a Model 3, but I'd like to feel comfortable knowing my financial house is in order.

Having said that, company health is a valid concern. Irregardless of whether or not it's that aspect, or new competition coming into the market, or another reason not to make a purchase... that will always be there.

Buy the car you feel 100% confident in.

You seem confident you can afford it now and that your finances will improve but are worried something untoward could happen to them. Buying the car isn't an ultimate financial commitment. Worst case, you have to sell it, take a depreciation hit and have to downscale to whatever level necessary. I have a Model S, but I also have a 20 year old F150 with a bit of rust that still runs great. I love the S, but I could survive without it.

 

[Spiderbird2018]

You seem confident you can afford it now and that your finances will improve but are worried something untoward could happen to them. Buying the car isn't an ultimate financial commitment. Worst case, you have to sell it, take a depreciation hit and have to downscale to whatever level necessary. I have a Model S, but I also have a 20 year old F150 with a bit of rust that still runs great. I love the S, but I could survive without it.

That's essentially it. What I'm waiting on is a new event that I'll starting in October around virtual design sprints. Once that starts showing some promise, the purchase would be a no-brainer. I may pull the trigger much sooner than that, as my wife's 20 year old Honda Civic is barely hanging on.

 

[Guy V]

Tesla cars are like most technology items, every year they seem to get better and cheaper.
If you don’t have an early adopter personality, I would buy something different and wait until you feel comfortable making the leap.
Personally, I wish I had purchased earlier than I did. I have never enjoyed any car so much.

This overlooks the fact that every ICE vehicle is becoming out of date and obsolete much faster than any Tesla ever produced.

 

[Bobbo8]

Tesla Model 3 out sells the whole BMW car line and it also out sells the complete Mecedes car line. Those 2 companies would drool for a car like the M3. Tesla would be bought by a competitor in a heart beat. I also think the 2nd quarter will be better as the shipments to Europe and China will now be recorded on the books as installs and revenue in a timely manor not the 2-3 weeks shipping lag. On top of that I LOVE my Model 3, far and away the best car I’ve ever owned or drove. I’m 75 and had lots of cars BUT none as much fun as this.

 

[Wooloomooloo]

The harsh reality here is that every day that they come closer to developing their own proprietary technology, the less Tesla's technology is worth.

That actually could not be further from the truth. Tesla will benefit enormously from others joining and growing the market - owning 85% of a $1bn market might seem great, but owning 20% of a $100bn market seems a lot better.

Besides, not all car makers will go proprietary, and I would be personally shocked if one of the mid-sized Japanese makers doesn't join Tesla and make a version on the Tesla under their brand - maybe Mazda or Subaru for example.

 

[daver3]

I have been lurking these forums for a couple of months so I know some people are going to respond that Tesla is all unicorns and rainbows but for the rest of us I have a question. My largest concern about buying a model 3 (besides that it will be, by far, the most expensive auto I have ever purchased) is a potential collapse of Tesla. I don’t want to buy this car with a shiny 4 year warranty then have tesla go out of business 3 months later, this car has to be able to get me to work for the next 6+ years. And while I know Tesla is always riding the edge it seems like more of its exes are abandoning ship, US demand isn’t great, they are trying to pull ever demand lever every created, they lost a ton in q1, wall street is worried, etc. Does anyone else share this concern?

I bought a model 3 at the end of last year. I had 2 friends with other Tesla models and one also had a 3. I loved the idea of the driving technology, but when I got it, just driving it blew me away and I love everything except the road trip limits. But with all the "I love its" included I had a similar thought when profits were down. I concluded that there is definitely some risk involved, but I'd say a very small amount of risk. The quiet, unbelieveable ride is so much fun that there will be a significant following. The obstacles are charging time and price and both are getting fixed fairly quickly. "mostly unicorns and rainbows"

 

[MXWing]

Also, added shares at 235. Wish me luck!

What did Tesla say to the God of Death?

NOT TODAY.

 

[pdq]

This overlooks the fact that every ICE vehicle is becoming out of date and obsolete much faster than any Tesla ever produced.

This is a truly ridiculous statement.

I leased a P90D. At 3 years I thought I'd buy out the lease and sell it. Wrongo. I couldn't find anyone who wanted it, given that the car had technology that was far behind the current model, such that at 3 years old, my car was considered obsolete. If I'd bought out the lease and used it as a trade in, I was looking at a $20,000 hit.

Teslas are like computers that get better and cheaper at a very rapid pace which is good, but a 3 year old computer is almost worthless compared to its purchase price.

 

[MXWing]

This is a truly ridiculous statement.

I leased a P90D. At 3 years I thought I'd buy out the lease and sell it. Wrongo. I couldn't find anyone who wanted it, given that the car had technology that was far behind the current model, such that at 3 years old, my car was considered obsolete. If I'd bought out the lease and used it as a trade in, I was looking at a $20,000 hit.

Teslas are like computers that get better and cheaper at a very rapid pace which is good, but a 3 year old computer is almost worthless compared to its purchase price.

Your first mistake was leasing a Tesla.

Your second mistake was picking a S/X P Model
and expecting it to hold any kind of value.

I’m satisfied with my buy and hold of a Model X 60D with HW2.

 

[Guy V]

This is a truly ridiculous statement.

I leased a P90D. At 3 years I thought I'd buy out the lease and sell it. Wrongo. I couldn't find anyone who wanted it, given that the car had technology that was far behind the current model, such that at 3 years old, my car was considered obsolete. If I'd bought out the lease and used it as a trade in, I was looking at a $20,000 hit.

Teslas are like computers that get better and cheaper at a very rapid pace which is good, but a 3 year old computer is almost worthless compared to its purchase price.

ROFL

Yes, Teslas are like computers. How many are using typewriters and adding machines these days. All those are worth is scrap and collectibles. Your car was only out of date compared to newer Teslas, but is still far more advanced and desirable than anything yet sold by BMW or Mercedes.

Didn't anyone tell you that luxury cars depreciate faster than Toyotas? Teslas hold their value better than others. Teslas have the shortest time on resale market too.

 

[SammichLover]

Ah. Remember, it is always possible to disagree without becoming disagreeable.

Sometimes getting called out on total BS feels a lot like "disagreeable" when it was just the normal outcome of your foisting total BS upon others.

 

[daver3]

You're reading fake news. Demand is substantial. Q1 sales dropped because they were shipping overseas, and so if you count sales of en route vehicles in Q1, they beat expectations. They just couldn't be counted as sales till they were actually delivered. Q2 should look better to wallstreet.

I read that Q1 was also a typical seasonal dip. If I'm not mistake the M3 was the top selling luxury car in 4Q18