Model 3 depreciation after tax incentives expire

[DMan]

There may be a thread on this already so you can link this post to it if that's the case.

I was holding off on the Model 3 until the AWD versions came out. It looks like I will already be missing out on an incentive (WA state sales tax incentive) before that happens. With all the incentives out there, it seems to drive the resale price on EV cars from the get go, which isn't a problem if you're keeping the car forever. Now say someone purchases a Model 3 just after the $7500 fed tax credit expires. I'm assuming that will see a more significant % depreciation than a Model 3 purchased when the fed tax credit was still effective. I know that it won't go from $7500 to $0 and that it will be a tapering credit, but you get the idea.

 

[Az_Rael]

Well, I think it might have the opposite effect. Right now the high depreciation is because folks do get the credit when buying new. So any used cars instantly depreciate by the amount of the credit at the minimum.

Once no one can get the credit on a new car, it now becomes a non-factor when deciding used vs new. I expect the depreciation rate to settle back to a more normal curve once the credits are no longer available.

 

[rhaekar]

We won't really know until used 3s start coming on the market. Sellers might be more willing to sell the car for less since they got ~$10k back. If dual motor becomes the standard for 3s like the S and X, rwd 3s might not be in high demand so that's going to drive resale prices down too.

 

[tracksyde]

We won't really know until used 3s start coming on the market. Sellers might be more willing to sell the car for less since they got ~$10k back. If dual motor becomes the standard for 3s like the S and X, rwd 3s might not be in high demand so that's going to drive resale prices down too.

If you check out the Teslas For Sale subforum here.. you'll see in the case of pretty new (1 year old?) X and S's that there seem to be quite a few owners who seem to conveniently forget that they got a $7500 federal tax credit. The TMC Price Police are always quick to point out that sometimes a selling price is as much as or only slightly discounted over a new car + tax credits and incentives.

 

[sub]

The opposite is true, I received 10k back in rebates on our X (Fed and State). Let's say the tax rebate ran out the following week, new buyers now have to compare buying used vs buying new with no rebates. This will pull the price of used EV's up, not push them down. Let's say you buy a model 3 for 50k and get 10k in rebates. You drive it for 6 months and want to sell for 35k. Your out 5k after the rebates. A new buyer might prefer a new model 3 for 40k after rebates instead of used at 35k. However, once those rebates are gone they now have to decide new for 50k or used for $? Not going to let yours go for 35k now, can probably get 40-45k. Numbers are just an example, not meant to be exact. It doesn't mattter that you got rebates at this point, they don't exist anymore so it's moot. All that matters is how much an EV is going to cost them today, not what it cost you pre rebate expiration.

 

[ewoodrick]

There may be a thread on this already so you can link this post to it if that's the case.

I was holding off on the Model 3 until the AWD versions came out. It looks like I will already be missing out on an incentive (WA state sales tax incentive) before that happens. With all the incentives out there, it seems to drive the resale price on EV cars from the get go, which isn't a problem if you're keeping the car forever. Now say someone purchases a Model 3 just after the $7500 fed tax credit expires. I'm assuming that will see a more significant % depreciation than a Model 3 purchased when the fed tax credit was still effective. I know that it won't go from $7500 to $0 and that it will be a tapering credit, but you get the idea.

The 2015 Leaf is going through some of that right now. There were a lot of them sold at some really great prices on leases. But now that the cars are coming off lease, there's a glut of them and prices are having issues. But even with that said, I saw some 2015 Leafs at a dealer today that had $10k+ prices written on the Windows. Since the car was $30-35k new, ($22.5-27.5k after fed rebate, or in some cases <$20k) a price of $10k is not too awful bad.
The problem is that when the "official" sources list a resale price vs the "new/buying" price, they don't account for gov rebates. So on the book the Leaf has lousy resale. But to an owner moving it, it's not bad.

So, will the same happen to a M3? Will Tesla adjust decrease the price after the fed rebate disappears?

You know what, cars have never been a great investment. And if you want to invest in cars, then you really don't buy new ones.

 

[Boourns]

Well, I think it might have the opposite effect. Right now the high depreciation is because folks do get the credit when buying new. So any used cars instantly depreciate by the amount of the credit at the minimum.

Once no one can get the credit on a new car, it now becomes a non-factor when deciding used vs new. I expect the depreciation rate to settle back to a more normal curve once the credits are no longer available.

This makes sense to me. If you frequent the Tesla For Sale forum, you know the first thing that happens after a new 3 (or S or X for that matter) is listed near MSRP, is that someone says the price is too high and subtracts the tax credit. Once the credit is no longer available that will stop happening.

 

[insaneoctane]

It's what the market will bear. Those who got the rebate will likely be responsible for any additional devaluation of their own car. There are 2 sides to bargaining (seller movement and buyer movement). I will exaggerate this for the purpose of illustration. 2 people buy the same car, 2 days apart. One gets $7,500 rebate and one does not. Fast forward 3 years. Assuming that the vehicles are driven the same distance and are in the same shape.... I would argue that to a prospective buyer, the vehicles are identical in value. Now, if the owner who got the discount is willing to take or ask for less, then that is their choice and doing so would lower the value of all similar cars.... including those that maybe did not get the rebate! So IMO the loss of the rebate gives those who got it more flexibility on what they are willing to accept.