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M3 P+ Depreciation
- Thread starter tess19
- Start date
I see you are making the same old argument car dealers say to try and persuade people to go PCP rather than buy out right the old 'think what else you can do with the cash' pitch.
IF you really are planning to swap cars ever 2 years than PCP/Lease is fine, as your funding deprecation which every way you buy, even cash. In that regard yes lease/PCP is better because your not exposing your cash to the risk associated with unknown deprecation.
BUT if have the cash and want to keep the car for any decent length of time leasing makes little sense. Say you lease a M3P now for 2 years and pay out £17K, what are you going to do in 2021? You either have to buy new again - in which case you have just deferred your cash spend by 2 years and added £17K of wasted money, or lease again. However, if your going to spend £17K on a lease every 2 years by 2025 you will have spent nearly the purchase on renting and still have no actual owned asset to show for it.
If your reason for leasing is to use the £50K to generate interest than you will have to better a £17K return in 2 years to make it work. Conversely, if you have bought out right now with £50K cash, come 2021 there is NO ADDITIONAL COST to keeping the car, its a sunken cost but with very little ongoing commitment, unlike a lease.
Also bear in mind there are rumours Hyundari/Kia are about to jack up the price of all their EVs by 5-10%, so a Kia eNiro is going to hit over £35K+, given the way the £ is heading and almost a guaranteed 'no deal' Brexit, new EV prices are only heading one way. £35K for a 2 year old P Model 3 will be a steal in 2021!!
If you're clear in your mindset your willing to pay a premium to have a brand new car every 2 years a lease makes sense, but if your working out total cost of ownership over 5-10 years lease deals make zero sense if you have the cash already.
Thanks. That makes it clearer.
I'm not trying to make a car dealer argument, sorry if it seemed that way. I've always owned my cars outright so this is all new to me. Was trying to make sense of the numbers.
2 years is about how long I imagine myself being satisfied with it. 2 years is a fair amount of time in EV terms, is it not?
Also I wasn't really looking at this from the point of view of locking myself into endless leasing. The lease quote I was looking at, via Leaseplan, the broker said that they would be amenable to either extending the lease or giving me an option to purchase the vehicle. In the latter case I would presumably have a market value price to pay that wouldn't be too far off what it would cost me to buy a 2 year old M3P in 2021, I presume? Obviously they could decide at any point during those 2 years that they don't allow purchasing anymore, in which case yes I would be back to square one.
Also doesn't the argument that there is no additional cost after 2021 if I paid £50k today assume the car doesn't depreciate after this date? I'd either be losing the money in depreciation or lease cost, but the net effect is the same isn't it?
I'm not trying to make a car dealer argument, sorry if it seemed that way. I've always owned my cars outright so this is all new to me. Was trying to make sense of the numbers.
2 years is about how long I imagine myself being satisfied with it. 2 years is a fair amount of time in EV terms, is it not?
Also I wasn't really looking at this from the point of view of locking myself into endless leasing. The lease quote I was looking at, via Leaseplan, the broker said that they would be amenable to either extending the lease or giving me an option to purchase the vehicle. In the latter case I would presumably have a market value price to pay that wouldn't be too far off what it would cost me to buy a 2 year old M3P in 2021, I presume? Obviously they could decide at any point during those 2 years that they don't allow purchasing anymore, in which case yes I would be back to square one.
Also doesn't the argument that there is no additional cost after 2021 if I paid £50k today assume the car doesn't depreciate after this date? I'd either be losing the money in depreciation or lease cost, but the net effect is the same isn't it?
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The point of 2 years is also personal, we've had our X for 2.5 years, 37k, I have no interest in replacing it anytime soon, and actually I can see it staying in the family till it falls apart.
The second point is all related to the first, the biggest cost of car ownership is deprecation, there is no way around it. But depreciation is the most on a new car regardless of how you buy. If your willing to put up with new car deprecation rates every 2 years because you want a new car than a lease makes sense, if you want the cheapest way to own a car you buy new and you keep it. If you bought cash in 2 years time you have no pressure to sell, and if you don't sell you will have no additional captial costs to find for a new car.
There is nothing wrong with leasing, but its not a cheap way to own a car if your interested in longterm ownership. If your want swap every 2 years by all means lease/pcp.
The other argument against lease is that if you go over your mileage you will potentially get hammered. We have an E Class that we looked into leasing but was worried if we went over. We were doing 30k pa in the previous car. It isn't a year old yet and is over 70k already. Now for us it's a business vehicle and we have grown so quickly but if we took a 3 year lease at 30k pa but done an extra 200k over the 3 years that would be £24000 in excess mileage at £0.12 a mile! I know our case is very exceptional. If you do pcp at least you can pay the balloon if this happens.
I’ve always owned my car outright, and as I change my car every three years I’m losing a lot in depreciation. But I’ve always hated the thought of not owning my own car so I’ve put up with it.
This time I’m leasing an M3 simply because the whole EV thing is new to me so I’m just dipping my toe in the water. Quite probably I’ll buy outright again next time. But just over £16K for a P+ on a two year lease seems pretty reasonable. If a typical M3 retains more than 70% of its value after two years then I’ll lose out, but it doesn’t change my reasons for leasing this time round. And excess mileage is only 4.44ppm so if I go over by a few thousand miles the cost will be minimal.
This time I’m leasing an M3 simply because the whole EV thing is new to me so I’m just dipping my toe in the water. Quite probably I’ll buy outright again next time. But just over £16K for a P+ on a two year lease seems pretty reasonable. If a typical M3 retains more than 70% of its value after two years then I’ll lose out, but it doesn’t change my reasons for leasing this time round. And excess mileage is only 4.44ppm so if I go over by a few thousand miles the cost will be minimal.
It's a shame those excess miles rates aren't available anymore!
I don't plan to change it after 2 years, I just feel like 2 years is potentially a long time in EV tech. Is there a chance there would be a better version of a Model 3 out in two years? Is there a chance Tesla might facelift it and make the older ones less valuable (above and beyond depreciation), or increase the battery capacity significantly ?
I guess that stuff is weighing on my mind. I think if I were looking at, say, a C63S to buy (similar price) I wouldn't be so concerned because ICE tech is very mature and predictable.
I'm basing a lot of this on the i3 I'm currently driving. I nearly bought one before Evezy came along. Having driven it, and loved it, I wonder whether I'd want to own it after 3 years when there would almost certainly be a bigger battery or otherwise markedly better version. I think the answer would be no.
I acknowledge that wanting the latest greatest tech costs money, but it intuitively feels like EV tech is moving so fast that even a couple of years feels like at least twice as long.
I don't plan to change it after 2 years, I just feel like 2 years is potentially a long time in EV tech. Is there a chance there would be a better version of a Model 3 out in two years? Is there a chance Tesla might facelift it and make the older ones less valuable (above and beyond depreciation), or increase the battery capacity significantly ?
I guess that stuff is weighing on my mind. I think if I were looking at, say, a C63S to buy (similar price) I wouldn't be so concerned because ICE tech is very mature and predictable.
I'm basing a lot of this on the i3 I'm currently driving. I nearly bought one before Evezy came along. Having driven it, and loved it, I wonder whether I'd want to own it after 3 years when there would almost certainly be a bigger battery or otherwise markedly better version. I think the answer would be no.
I acknowledge that wanting the latest greatest tech costs money, but it intuitively feels like EV tech is moving so fast that even a couple of years feels like at least twice as long.
Well that's a bit of a myth given the lead times involved in the auto industry. At the moment manufacturers are struggling just to obtain enough supply of current tech batteries to keep up with demand. Of course things will move forward incrementally, but this is not the same as mobile phones etc. There's far more inertia in the automotive industry, typically with 6 year product cycles.
I think the exact opposite, you have to be nuts to pay £50k+ for big petrol car now or even worse a S4 which is now a diesel. In a fews time with more congestion/ULEZ zones proposed, and advent more public awareness on EVs who is going to want to own big petrol car? Even Chris Harris the very role model for petrol heads have just bought a Model 3.
As for EV teaching moving along....it really hasn't. A 2015 i3 is pretty much the same as a 2019 i3 with the exception of the battery.
I can pretty guarante you a 2019 P Model 3 will be one of the best EVs around even in 2021 regardless of anything else.
Brand new EVs in 2019 are MORE expensive than they were in 2015, yes range is better but once you hit the 200 mile range marker certainly for the UK market anything more is not needed.
A base spec 70S in 2015 was £49k with leather. 230 miles EPA range. A 2019 SR+ Model 3 is cheaper, but a much smaller car. Infact the 70S back in 2015 pretty much matches the specs of a 2019 iPace/eTron.
Looking at Autotrader 2015 70S are still going for £35k, so £15k depreciation in 4 years that takes some beating!!
Finally don't forget which way the £ is likely to go, I can see Tesla prices easily going up 10% in the UK over the next 12 months. In which case its an even better argument to buy a £50k P Model 3 now.
We don't need a 3, our 4.5 year old Lexus is perfectly fine, but purely based on likely increase in cost of the Model 3 here in the UK post 'hard brexit' am tempted to get one sooner rather than later.
If you have the cash to buy a P Model 3 for me its a no brainer decision, unless you honestly believe you can get better returns with £50k on the finance markets versus cost of a lease.
Rooster6655
Active Member
Here is the best answer to the depreciation question.
The model 3 also has the future potential to be upgradable to FSD, whether that is in your ownership period or not doesn't matter as the potential is still there for the future so should give it some extra value.
I think it will be some considerable time before "FSD" makes financial sense. At the moment it's a complete misnomer because it doesn't offer anything near full self driving, nor will it anytime soon. "Full self driving" suggests Level 5 autonomy, and that is still a long, long way off.
There are also many autonomy experts that maintain that no car can ever achieve FSD unless it's equipped with LIDAR. Elon the Prophet rubbishes these claims and says it is perfectly possible with the current setup of radar, cameras and ultrasound. Certainly this is simpler and cheaper, though it does need a lot more processing power and is far more prone to both false positives and false negatives. As with so many things there is not yet a clear answer.
The other factor is the cost. £5K isn't cheap, especially for something that has very limited functionality. There will apparently be a price increase in August, and Musk has indicated significant price increases in the future.
And then there are people like me who love driving and would much rather drive their own car. I want the safety features that may prevent me having a crash, but FSD? No thanks.
Rooster6655
Active Member
I am not debating the FSD ability here, I am referring to a Model S 70 with no ability to upgrade to FSD will likely have less value vs a FSD upgradable car.
Regardless of whether the £5k package is purchased or not, a car that has the possibility to be upgraded at some point in the future to FSD even if its 5 years away will likely be more valuable than a car that has no possibility to be upgraded.
Possibly, but only if there is any point in FSD in five years. And to stop misleading people it shouldn’t be called FSD, which it clearly isn’t, but “Autopilot plus a couple of very minor features”.
Surely that would depend entirely on whether the existing HW3 hardware is enough to do the job or, more likely I think, it evolves along with the FSD capabilities?
Tesla may well turn round and say that HW3 is not powerful enough to run FSD 2.0 or whatever comes out, in the same way Apple depreciates older iPhones when new iOS versions come out.
Rooster6655
Active Member
Well anyone that has already purchased FSD has been told they will get the hardware upgraded if needed, by this time though the price for FSD will be higher so an upgrade would be priced in if not already purchased.
Still the Tesla Model 3 has more potential to be upgradable than other cars and it might not be useful to the general consumer but if the robo taxi took off, many people would be looking for FSD upgradable cars.
You are simply betting against a lease company...
They will make money off you.
Is not a question of if, its a question of how much you will lose out.
Of course if you cant get a cheap loan any other way thats a different problem.
Tesla are actually very naive on this front. Our 2017 X has had HEPA filter retrofit, CCS charging retrofitted, due AP3 CPU at some point, faster DC charging via software update, and talk of MCU2 upgrade coming.
I've not known a single other manufacture to support their past vehicles so much.
Even with older MCU1 hardware I was sat there browsing the BBC website, listening to Spotify, after dropping my wife in town to pick something from the shops. When she was done she didn't know where I had parked up, but by simply logging into the Tesla App on her phone she quickly found me rather than me having faff with one way roads/traffic.
Tesla is so far ahead of everyone else when it comes to tech integration its not even funny. The M3 will be bang up to date even in 2025!!
These cars are really on a different level to anything else you might have owned before, EV or not. The thought of some else producing a better EV anytime soon is quite funny.
It doesn't matter how much you think your fancy car is upgradeable and how advanced you think it is now it will be obsolete in a few years. Think abut a simple laptop.. you can upgarde the cpu but then need more memory, you then are stuck with the bus speed or the graphics processor or the screen resolution and whatever else you do the battery pack has degraded. It's usually cheapest to run it or a few years then scrap and buy a better one - despite the waste, pollution and poor recycling (despite manufacture claims to the contrary)
So you upgrade your model3 with whatever comes next HW4, newer software but the battery pack is losing range and the newer ones can suddenly charge faster,a better drive motor comes out, Tesla decides to make a 500m range model they introduce a new charging interface than can genuinely self-plug - whatever else you want to speculate about - perhaps extra sockets for in-car entretinment or finally a car that can plug into the house as a back-up - speculation is unlimited.
The simple facts are that cars and computers are obsolete the moment they are marketed. My S was cutting edge 12mths ago and £92K and a new raven with FSD is £84K now.. which means that I'd be lucky to sell mine privately for £70K and trade-in for £60 (probably less).
Your £50K 3 will be worth £35K in a year from the viewpoint of what you actually get from it (not how much someone esle is selling 1 yr old versions ) and in 3 yrs £25K.
So you upgrade your model3 with whatever comes next HW4, newer software but the battery pack is losing range and the newer ones can suddenly charge faster,a better drive motor comes out, Tesla decides to make a 500m range model they introduce a new charging interface than can genuinely self-plug - whatever else you want to speculate about - perhaps extra sockets for in-car entretinment or finally a car that can plug into the house as a back-up - speculation is unlimited.
The simple facts are that cars and computers are obsolete the moment they are marketed. My S was cutting edge 12mths ago and £92K and a new raven with FSD is £84K now.. which means that I'd be lucky to sell mine privately for £70K and trade-in for £60 (probably less).
Your £50K 3 will be worth £35K in a year from the viewpoint of what you actually get from it (not how much someone esle is selling 1 yr old versions ) and in 3 yrs £25K.
Not to be blunt but the price you pay initially for anything is crucial, the S is a £50K car which Tesla jacked up the price on over the last few years. There is no way I would have paid £90K for an S or even an X regardless of 0-60 time, the cars are simply not worth that much the premium you pay for anything but the base spec is essentially profit for Tesla. This is why I can never bring my self to order anything but as the base spec, the base spec Tesla's have always been 'best value', in the real world they do 95% of the top spec versions for sometimes nearly half the price.
As for actual deprecation you only see it if you sell, which goes back to the point of if your looking for long term ownership or not.
If you want the latest and best there is no way around having to pay depreciation, and in which case a lease is fine, but I cannot see any reason why you NEED to swap out of Model 3 in 2 years time.
This thread is actually making me reconsider the decision to hold out on the Model 3 order, I think no one really knows which way Brexit will go, and clearly we're due a recession soon and who knows how interest rates will go for both loans and mortgages, so interms of absolute value for money there is a good chance here in the UK Model 3 costs may well go up soon so actually buying now makes sense if you can afford it.
I just wish Tesla would offer the LR RWD 3, as much as I would love us to have a P Model 3 it comes down to my inability to willingly pay 33% more than the base price for a SR+. We could afford a 'P' 3 but I don't think I could ever bring my self to actually ordering one, its simply not worth £13K more than SR+. Long-range RWD for £40k would be the perfect combination of range and 'value' which we would order tomorrow if Tesla allowed. So am waiting patiently for the Q3/Q4 'demand' lever
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