Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Model 3 Resale Value Top of Class

This site may earn commission on affiliate links.
Right now there are precious few Model 3's available, so used pricing is strong. But what happens in 3 years when this first wave of them starts to become available used?

That's exactly the type of questions KBB attempts to answer with their estimated resale value of cars built recently. Nobody said it was an easy task or that they will get it right within 0.1%. But there is also no reason to think it's an impossible task to come up with a reasonable and educated estimate of future value. They certainly have the access to the kind of data one would want and the experience to make use of it. And they might make a mistake or future market conditions could change in unexpected ways. I get that. But I see no evidence that their estimate was politically corrupted or they are trying to do Tesla a favor here or they are incompetent. The Model S had considerably lower depreciation than other cars in its price range and I find it reasonable that they would rate the less expensive Model 3 as having a little less depreciation relative to the Model S.

I am just pointing out that Kelly Blue Book has exactly zero experience with this kind of car as this kind of car has not existed before...

While I agree, it's not an easy task to estimate future values, especially of such a unique car, I don't think it makes sense to throw ones hands up in the air and say "We might as well just throw a dart at a dartboard". No, KBB takes their years of experience of used car markets and what they know about the Model 3 and, using all available data and reasonable assumptions, makes their best estimate. It's not the word of God but it's better than a wild ass guess and I'll take it over a non-professional Internet armchair guess any day of the week.

Even though I don't plan to sell either of our model 3's anytime soon, I find it heartening that auto industry experts are projecting very low depreciation rates relative to gasoline counterparts. There is no evidence that KBB is biased toward Tesla or EV's.
 
  • Like
Reactions: dhrivnak
That's exactly the type of questions KBB attempts to answer with their estimated resale value of cars built recently. Nobody said it was an easy task or that they will get it right within 0.1%. But there is also no reason to think it's an impossible task to come up with a reasonable and educated estimate of future value. They certainly have the access to the kind of data one would want and the experience to make use of it. And they might make a mistake or future market conditions could change in unexpected ways. I get that. But I see no evidence that their estimate was politically corrupted or they are trying to do Tesla a favor here or they are incompetent. The Model S had considerably lower depreciation than other cars in its price range and I find it reasonable that they would rate the less expensive Model 3 as having a little less depreciation relative to the Model S.



While I agree, it's not an easy task to estimate future values, especially of such a unique car, I don't think it makes sense to throw ones hands up in the air and say "We might as well just throw a dart at a dartboard". No, KBB takes their years of experience of used car markets and what they know about the Model 3 and, using all available data and reasonable assumptions, makes their best estimate. It's not the word of God but it's better than a wild ass guess and I'll take it over a non-professional Internet armchair guess any day of the week.

Even though I don't plan to sell either of our model 3's anytime soon, I find it heartening that auto industry experts are projecting very low depreciation rates relative to gasoline counterparts. There is no evidence that KBB is biased toward Tesla or EV's.

Completely agree that what they have done is the best educated guess that we collectively have access to!
 
  • Like
Reactions: StealthP3D
Time will tell. These same type of posts came out early about the Model S being top in its class on depreciation, and for a few years it was. But, not so much now. Used Tesla Model S Prices Show Signs of Weakness - Tesla Motors Club

The S is the oldest model in Tesla’s fleet, so it has the most data now. It is getting pressure from the 3 I am sure, especially in the used market.

But the 3 will get pressure from the Y once that comes out, as there are quite a few people who would rather have a CUV/SUV style vehicle. Those types of cars are the most popular today so much so that sedans are being discontinued left and right. If that trend continues, the 3 will not hold its value well in the long term as the customer base will have moved on to the Y.


Personally I expect the depreciation curve for my 3 to be much closer to my Volt than my Tacoma. Especially since I have a discontinued model and AP3/4 will be right around the corner making my car even more out of date.
 
All of you fail economics. :D

Worth = willingness to pay +/- buyer/seller knowledge.

What should be worth more - a 2016 Model S built in Dec 2016 or a Model S built in Feb 2017? KBB would price this matchup wrong.

Especially since I have a discontinued model and AP3/4 will be right around the corner making my car even more out of date.

Your model is not being discontinued. It's being produced for sale overseas. IF/when it makes sense for Tesla to bring back the LR RWD, it will do so.

Your car is also eligible for AP3.

"Around the corner" in Tesla time is like 6 months maybe, 6 years definitely.

Asking if Musk is overly ambitious and optimistic is like asking if the Pope is Catholic.
 
That's a lot of words to say that you know more about the likely depreciation rate of the Model 3 than the folks at Kelley Blue Book.

Especially since I didn't say that.

I pointed out their models don't account for a bunch of factors that made their predictions pretty worthless since they're inputting highly skewed data into a model that doesn't know that.

I pointed out since a lot of things are unique to tesla in general, and model 3 in particular, there's really no basis to model the future values off of- and recycling the same model they use to tell you what a 3 year old Camry is worth is going to produce poor results.

At no point did I say I had a better wild guess than they did- I was just pointing out why that's all their prediction amounts to no matter how experienced they are predicting depreciation on Civics.


The tax credits will be expired so that's not going to significantly affect it one way or the other.

Except it is. I even showed you the specific math of how it will do so (and is doing so right now in a current thread).

Which is why values for the next couple years will be skewed by that.

Also by the original scarcity that meant KBB was putting artificially high used sale prices into their model for this past year.

Which are just 2 of the many reasons I pointed out their output from said model is pretty worthless.

And, no, they are not basing their Model 3 prices three years out on actual transactions because they don't have a crystal ball. Recent transactions are the primary method to help appraise current values of used cars, not future value of cars that are new now!


... what?

What other than real-world used car sales could they be using to predict future values?

They've got a year of such data now- and as I pointed out it's badly skewed for the model 3 for a number of reasons compared to all the "normal" cars they're used to modeling.

What else do you imagine they're using to come up with their numbers via their computer model?



But it's obvious you're just spinning your tires


In explaining things to you? Clearly :)
 
What other than real-world used car sales could they be using to predict future values?

You still don't get it.

It's an educated guess. But they don't explain all the data points they use. We can guess they use data from Model S sales when it was introduced and blend it with other industry knowledge, correction factors etc. They are industry experts using past experience to make an educated guess. It's not perfect but it's better than an armchair Internet expert saying we just don't know because the Model 3 is too new and too different.

And since the Model S had some of the highest resale values in the industry, it's a good assumption the Model 3 will be at least that good.
 
You still don't get it.

Respectfully StealthP3D, I am not sure that you are taking into account the real world feedback that a couple of posters (including me) have provided. The very same folks at Kelly Blue Book completely missed the mark on predicted 36-month resale value on four "new technology" cars that I have personally owned. Zero for four. So, while I am heartened by their prediction that the Model 3 will continue to be desirable enough to have a good resale value, given my personal experience, I take the prediction with a grain of salt. So, no matter how experienced they are, what formulas they use or how reliable their predictions may generally be with more "typical" vehicles, I really do believe that historical performance is a better indicator here of how valid this prognostication will ultimately end up being. Time will tell!
 
Time will tell!

Yes, time will tell. Just as it did with Model S. As I recall, their projections on the Model S were very close to actual sales figures in the used market - Model S has had very good resale value vs. comparable vehicles. Since more expensive models and brands tend to take a bigger hit in depreciation than more affordable cars, and because Model 3 is designed to be more easily upgraded (AP technology) than Model S, it's a good bet the Model 3 will hold it's value even better than the venerable Model S.

You can learn more about it, and the methods used to project future value by reading about independent case studies done on resale value:

Let's Look Into The Resale Value Of A Tesla Model S
Tesla Depreciation Case Study a Positive Read on Demand | Loup Ventures
 
Your car is also eligible for AP3.

I don’t think Hardware 3 is going to be the same as the next full AP revision. I don’t know if they will call it AP 3 or 4, but that is what I meant. The next revision of AP that won’t be retrofitted as it will have new sensors and whatnot. I am guessing it will come very shortly after hardware 3.


Yes, time will tell. Just as it did with Model S. As I recall, their projections on the Model S were very close to actual sales figures in the used market - Model S has had very good resale value vs. comparable vehicles. Since more expensive models and brands tend to take a bigger hit in depreciation than more affordable cars, and because Model 3 is designed to be more easily upgraded (AP technology) than Model S, it's a good bet the Model 3 will hold it's value even better than the venerable Model S.

You can learn more about it, and the methods used to project future value by reading about independent case studies done on resale value:

Let's Look Into The Resale Value Of A Tesla Model S
Tesla Depreciation Case Study a Positive Read on Demand | Loup Ventures

Have you seen the latest Model S data? Those are all using the out of date (and questionable) Autolist data based on list prices not sales prices. Here is some new sales data from CarGurus: Used Tesla Model S Prices Show Signs of Weakness - Tesla Motors Club
 
Have you seen the latest Model S data? Those are all using the out of date (and questionable) Autolist data based on list prices not sales prices. Here is some new sales data from CarGurus: Used Tesla Model S Prices Show Signs of Weakness - Tesla Motors Club

*Sigh* The study I linked to was not the Autolist study, it was a statistical analysis of the Autolist study looking for potential errors. They found none. The fact that they used list prices of used cars is not an error because they used list prices of all the cars, even the ones that the Tesla were being compared against. In order to find fault with that methodology, you would have to assume that the sellers of Certified Pre-Owned Model S were more willing to accept a lowball offer than the sellers of the other used luxury cars in the comparison. It's pretty common knowledge that Tesla was, if anything, less likely to accept lowball offers.

The CarGuru data is just a blip in time (90 days) following the wide release of the Model 3, a car very similar to the Model S, and one that sells in the same price range as used Model S. Obviously, the sudden availability of the Model 3 without a lengthy wait caused a sudden drop in the value of Model S inventory. That's exactly what I would expect to see but I can't see the Model Y having as big of an impact on the 3 because the Model Y will be *more* expensive than the used Model 3's and it will be SUV vs. sedan instead of sedan vs. sedan.

Some of the comments in here make me think people don't understand the first thing about the art of estimating future used car values. As an investor, I deal primarily in the art of being able to predict future values and probabilities of estimation errors. It's not an exact science and it requires a good amount of "fuzzy" logic. But all signs are pointing to the Model 3 retaining a higher resale value compared to comparable ICE cars.
 
  • Like
Reactions: EinSV
Some of the comments in here make me think people don't understand the first thing about the art of estimating future used car values.

We do understand, some of us just aren't reaching the same conclusions. Doesn't make either position wrong, because as you state, it's all fuzzy logic at this point.

So you have your opinion of future performance and I have mine, both based on the existing data. Frankly, I hope you are correct, as that would be better for all of us. But I still think the 3 will not do well in the long run.
 
don’t think Hardware 3 is going to be the same as the next full AP revision. I don’t know if they will call it AP 3 or 4, but that is what I meant. The next revision of AP that won’t be retrofitted as it will have new sensors and whatnot. I am guessing it will come very shortly after hardware 3.

You might be right but that is speculation however. The more limiting factor right now is how the collected data is processed and decisions regarding the data.

Don’t expect the Model 3 to be “obsolete” in any significant fashion. This isn’t where people shrugged their shoulders like when Tesla switched from AP1 to AP2. “Early adopter” Model 3 owners will be coming with pitchforks.

Elon got driven off Twitter for awhile after lowering prices for future owners.

Tesla has an excuse to charge AP 2.5 owners a lot of money to go to HW3 because an upgrade path was provided through FSD pre purchase. AP4 that couldn’t be retrofitted is going to have half a million angry people in no time.
 
Don’t expect the Model 3 to be “obsolete” in any significant fashion. This isn’t where people shrugged their shoulders like when Tesla switched from AP1 to AP2. “Early adopter” Model 3 owners will be coming with pitchforks.

Elon got driven off Twitter for awhile after lowering prices for future owners.

Tesla has an excuse to charge AP 2.5 owners a lot of money to go to HW3 because an upgrade path was provided through FSD pre purchase. AP4 that couldn’t be retrofitted is going to have half a million angry people in no time.

It will be interesting for sure. I speculate they will try it at least once, as they haven't really had any negative consequences yet. Maybe the 3 owners will rise up (at least the ones who aren't S or X owners and are already accustomed to having their cars outdated quickly like myself).

It might drive Tesla into a more traditional Model Year path if they get too much pushback for updating the cars too fast. Continuously retrofitting cars isn't sustainable either, so they will have to figure out some middle road. Either that or they have to get much more cautious about the promises they make for future capabilities. :)
 
  • Disagree
  • Like
Reactions: Brando and MXWing
Maybe the 3 owners will rise up (at least the ones who aren't S or X owners and are already accustomed to having their cars outdated quickly like myself).

It might drive Tesla into a more traditional Model Year path if they get too much pushback for updating the cars too fast.

I liken it to the personal computer market of the 1990's. Every year the machines would get better and better (and cheaper and cheaper). But owners embraced the improvements, rather than getting mad at Dell or IBM, they simply upgraded more often. The improvements were often worth it.

In the case of Tesla, owners get the free software updates every month or two that keeps their cars "fresh" and "new" feeling without having to buy a new car each year. Every owner I've spoken with about this just loves it. But if they didn't buy full self-driving when they purchased the car, they can't really complain about that aspect getting upgraded without them.
 
It will be interesting for sure. I speculate they will try it at least once, as they haven't really had any negative consequences yet. Maybe the 3 owners will rise up (at least the ones who aren't S or X owners and are already accustomed to having their cars outdated quickly like myself).

It might drive Tesla into a more traditional Model Year path if they get too much pushback for updating the cars too fast. Continuously retrofitting cars isn't sustainable either, so they will have to figure out some middle road. Either that or they have to get much more cautious about the promises they make for future capabilities. :)
It is called competition.
So tell us which car [or company] you feel will treat you better?? OTA [Over the Air] updates don't count? How much do those cost you in time and money? ZERO.
 
It is called competition.
So tell us which car [or company] you feel will treat you better?? OTA [Over the Air] updates don't count? How much do those cost you in time and money? ZERO.

It appears you have misunderstood my post. I am OK with how Tesla rapidly updates hardware and doesn't normally offer retrofits to the existing fleet (the chip upgrade being the exception not the rule). I am not sure everyone else will be OK with that going forward.

Since you brought up the subject of over-the-air updates, I have found them to be a mixed bag overall. For every cool feature that is added or bug fixed, several very annoying new bugs get introduced as well. Sometimes features even get removed. My favorite bug was the one where speed sensitive volume would turn up the volume to max blowing out your ears while driving with cruise control on the freeway then not let you turn it down or change sources. One owner got into a fender bender when that happened to him in stop and go traffic. Good times. I was lucky I could pull over when it happened to me a few times.

I am not sure the average car buyer would find OTA updates to be a bonus on the whole. You have to be very tolerant in my experience. Maybe if Tesla had better software QC?