Model 3 resell values have plummeted.

[AndrewZ]

Model 3s (and Ys) have historically done pretty well on resale value. Not "I can sell my new car for more than I paid for it" well, or "I can sell my 1 year old car for more than I paid for it" well, but well in general.

Thats why (frankly) its frustrating to see people rush to post "Oh noes, model 3 values have plummeted!" as even though the actual fact is true, its "plummeting" from values that were not driven by reality'

Its like someone complaining that the price of Toilet Paper has "plummeted" from its pricing in Mid 2020 or something, when people were hoarding toilet paper and "flipping" it online.

The Y has only existed since the pandemic lol, I'm not sure much can be gleaned from that

But in both cases, the idea that value will be strongly retained in models now being produced in such massive numbers kinda runs counter to what typically drives value retention in assets like these. I'd float the idea that past price performance from the early days when production numbers were much lower might not be indicative of future results with the goal of flooding the world with 3s and Ys.

This is like the antithesis of a collector's car, Tesla wants a 3 or Y on every corner and that could be highly dilutive to retained values now that factories are absolutely churning them out.

But if EVs are to be adopted widely, that should be the goal

 

[sleepydoc]

This reminds me of the real estate bubble back in the mid 2000’s. Suddenly everyone realized how crazy it was and we were in a recession, then a bunch of people were crying, saying ‘wadya mean I can’t sell this place for 25% more than I bought it for last week?’

The Model 3 market hasn’t collapsed, it’s normalized (or is normalizing,) along with the rest of the used car market.

 

[coleAK]

Historically cars have never been an investment. They are a depreciating asset. Buy a new car plan on losing ~20% the second it becomes “used”. Plan on losing 30-50% in the first 2-4 years. Financially it has always never made sense to buy a new car and whatever you buy keep it for a long time (at least 7-10 years). I sold Porsche/Lotus/Ferrari years ago and we were thought to use lines with Porsche and Ferrari like “these cars are an investment because they lose the least value compared to other brands (15-20%)”


That said the late few years the used car market has been nuts and in no way sustainable and peaked this last summer.

My last new ICE I purchased (still have it) is a 2013 Lexus LX570. Window sticker was $104k, I paid $80k in early 2014 with just under 3k miles on it, was a dealer service loaner for 6months. The dealer offered me $72k for it this summer when I came in to get parts, 8 years older and 85k miles. I could have sold it on the private market all day for $75k. 3 years ago I would have gotten more like $50-55k. A year from now will likely be more like $40-45k

 

[Chattanooga3]

Supply is up, demand is down.

It's hitting ALL brands, just hitting Tesla more because there are a ton of them right now.

 

[traxila]

FSD is worth *zero* to Tesla. They can add it or remove it from any car in their possession. Why would they "buy" a software license from you for *their* own software?

They valued my FSD on my 2018 M3 at the 10K I paid for it. Carvana offered me 10K less.

Traded it in for a 2021 M3 cause even then prices were way too high and I wanted all the updates like the motorized trunk. But looks like I should have waited until mid 2022 lol.

 

[traxila]

Historically cars have never been an investment. They are a depreciating asset.

This is accurate and if anything a severe understatement. Maybe 0.01% of cars ever manufactured actually appreciate after inflation.

But of course everyone here knows this, because this is a short lived phenomenon of the past couple of COVID years only.

 

[ThomasD]

After a certain amount of years some cars can go up in value. I see the original Roadster going for 6 figures in about 8 years

https://www.carsforsale.com/vehicle/details/86660625

1972 Chrysler Imperial for sale in Sarasota, FL / classiccarsbay.com

Used 1972 Chrysler Imperial for sale for $19900 in Sarasota, FL with features and rating. View now on classiccarsbay.com

classiccarsbay.com

 

[randmness]

You can actually find recently-bought-and-traded-in used 2022 Ys (sub 1K mile vehicles) for less than the current reservation price now, so I wonder how far things will drop; some of these vehicles are approaching 120+ days on the lot and are dropping thousands every week. Last summer, used car values were up 45% over last year alone, so there's probably 20-30% at least left to drop before we reach "normal" numbers again. Of course, if the used car market collapses entirely, we may see prices crater more than that. One of the reasons new appraisals have plummeted is because dealers now need to make up for their heavily underwater inventory.

I'm really curious what effect this will have on new car prices. We have a Y reservation with a EDD of late December 2022. If used car prices drop another 15-20% by EOY (they're currently dropping 1-2%/week), we may just opt to pick up one of the low mileage used Y over buying a new one.

 

[terranx]

Careful, it is not a "refund". It is a tax credit. You must actually have $7500 in federal income tax liability in the same year the vehicle is purchased to receive the full credit.

I think it is fair to say most people that can afford a new Tesla have an income that would qualify. When I bought my short lived Nissan leaf I knew I would get little if any of that credit as my wife and I are retired. As it turned out I paid almost no federal taxes that year as I took write-offs after doing improvements to my rental property.

Wasn't too upset as the Leaf was a new leftover 2020 model and the dealer incentives and factory rebates made it a steal. Then I got a good trade allowance to boot.

The new one is an actual refund. You get the full $7500 regardless

 

[evtifosi]

We had a similar experience recently.

This summer while EV car shopping we priced out our 218 LEAF and it was getting quotes as high as $25k - we bought it used in 2020 for $18k...

We finally settled on a used Model 3 - from Tesla's used car sales - and picked it up a couple of weeks ago.

This week we sold the LEAF to Carvana for $22k - not quite the price it was getting in the summer. This is the first car I have ever sold for more than we paid for it.

 

[randmness]

The new one is an actual refund. You get the full $7500 regardless

Unfortunately, for those financing, they’ll likely lose most of this to higher interest rate charges. If Tesla ends up qualifying for only half, it may actually cost you more to wait til 2023.

 

[HateiLove]

From this thread, I'm guessing I should just keep waiting before buying a used Tesla? I was looking to buy a used M3 LR Dual Motor used directly from Tesla. From the number of times, I have been looking at Tesla's inventory the lowest I seen is a 2019 M3LR Dual Motor for around 42.6k with 22k miles. That one was brought in half a day. I'm not in a rush as I still have my ICE car though the mpg really is not good.

 

[terranx]

Unfortunately, for those financing, they’ll likely lose most of this to higher interest rate charges. If Tesla ends up qualifying for only half, it may actually cost you more to wait til 2023.

Yep. Not that the model 3 performance would qualify either way, but when I ran the numbers financing the amount I financed at todays interest rates would cost me about as much as the potential interest rate hike. And then when factoring in Tesla’s raised prices across the board since my order, I absolutely came out ahead.

 

[afadeev]

The new one is an actual refund. You get the full $7500 regardless

It's NOT that simple.
There are many conditions that have to be met (by automaker, battery supplier, and individual) before one becomes eligible to collect $7.5K.
Many EVs will not qualify for multiple reasons, and many Tesla buyers will get eliminated by the income limit.
Many of the ERA stipulations are pretty stupid:

A complete guide to the new EV tax credit

Here’s a guide to walk you through the EV tax credit process: Everything you need to know when buying a new electric vehicle

techcrunch.com

 

[randmness]

From this thread, I'm guessing I should just keep waiting before buying a used Tesla? I was looking to buy a used M3 LR Dual Motor used directly from Tesla. From the number of times, I have been looking at Tesla's inventory the lowest I seen is a 2019 M3LR Dual Motor for around 42.6k with 22k miles. That one was brought in half a day. I'm not in a rush as I still have my ICE car though the mpg really is not good.

I would check your local dealers as well. The cheapest Model Y LR you can reserve from Tesla today is $67.5K. Just in my local area, you can find used 2022 LRY, with less than 1K miles, for as cheap a $63.5K. Some of these cheaper-than-a-new-reservation used 2022s, even have less than 100 miles. I dont see anything comparable on Tesla's inventory though.

In terms of 3LR, I've seen a couple options (like this one) that are close to that price. If you check out the price history, you'll see that not only are these vehicles sitting for a while/months, but the prices are being reduced thousands every week. The only downside to waiting is that your current vehicle is likely also losing value as aggressively (assuming you plan to trade it in.) Well that, and climbing interest rates.

Yep. Not that the model 3 performance would qualify either way, but when I ran the numbers financing the amount I financed at todays interest rates would cost me about as much as the potential interest rate hike.

Yea, the fed is expecting to raise rates again later this month. A 1% increase in the financing rate, over a standard term and rate, is roughly $2K in extra interest on a $55K car. The fed is likely going to be raising the rate several times so people need to do the math on if it makes sense to wait til 2023 for a credit. Even in the best scenario at $7500, it may not necessarily be cheaper than buying today.

 

[Druidv1]

Your story is confusing. You bought new at the highest price, sold at a slight loss, and now you're waiting to buy used at the right price?

Why didn't you buy used to begin with? Or wait until prices dropped?

Yes, we like to call it buying the dip in other parts of the internet...

 

[HateiLove]

I would check your local dealers as well. The cheapest Model Y LR you can reserve from Tesla today is $67.5K. Just in my local area, you can find used 2022 LRY, with less than 1K miles, for as cheap a $63.5K. Some of these cheaper-than-a-new-reservation used 2022s, even have less than 100 miles. I dont see anything comparable on Tesla's inventory though.

In terms of 3LR, I've seen a couple options (like this one) that are close to that price. If you check out the price history, you'll see that not only are these vehicles sitting for a while/months, but the prices are being reduced thousands every week. The only downside to waiting is that your current vehicle is likely also losing value as aggressively (assuming you plan to trade it in.) Well that, and climbing interest rates.



Yea, the fed is expecting to raise rates again later this month. A 1% increase in the financing rate, over a standard term and rate, is roughly $2K in extra interest on a $55K car. The fed is likely going to be raising the rate several times so people need to do the math on if it makes sense to wait til 2023 for a credit. Even in the best scenario at $7500, it may not necessarily be cheaper than buying today.

I probably will trade in my car but it's an old 2010 ICE so I'm not too worried about depreciation as it is pretty much at the bottom of its depreciation curve. I might keep it as a backup but we will see. Model Y is a bit out of my budget so I' will be sticking with Model 3. On the topic of dealers, I actually went to a local dealer to look at a used 2016 Model S 90D and all the "fees" and extra charges have left a bad impression on dealers in general for me and I will avoid them. Waiting on my credit union to get a preapproved loan at a rate of 3.67% and then I might commit to one. As of now just feeling the market and there are definitely good-priced ones from Tesla directly but you have to be patient and keep checking. I found one that was 43.7k with 37k miles today that was promptly brought within ~2 hours of it being listed.

 

[Druidv1]

From this thread, I'm guessing I should just keep waiting before buying a used Tesla? I was looking to buy a used M3 LR Dual Motor used directly from Tesla. From the number of times, I have been looking at Tesla's inventory the lowest I seen is a 2019 M3LR Dual Motor for around 42.6k with 22k miles. That one was brought in half a day. I'm not in a rush as I still have my ICE car though the mpg really is not good.

I see some on there starting at 35,500 and a few under 40k with FSD.

 

[North of 7]

Good morning all. First post, but I have been considering an M3 for a while. Obligatory Cybertruck on order, EDD...yeah, about that...

I wanted a '22 M3 in white or red with aero wheels; a white interior would be preferable. What I found were numerous M3s with <500km on the odo going for $1,000 less than a factory new M3P. And then came the flood of 3,000-19000km going for the same price! When I asked the various dealers for their logic on this, I was met with a substantial attitude from most of them: basically, there is a shortage so cough up the $$$ if you want a Tesla NOW. I get it, I have an MBA so I am very aware of maximizing profit, regardless if I agree with its method.

After some more thought, I began to lean towards a really new M3P give that I could pay $81k for a low mileage M3 or $82k for a brand spanking new M3P with a 1-2 month wait. Since I do not need a car, I chose to wait. And I am glad that I did.

A bit more research led me to a beautiful M3 spec'd as I wanted (red & white with aero wheels). After watching it for a few days, the price plummeted >$8k. I obviously jumped and contacted the dealer. Whaddaya know, I found an honest used car salesman! He asked if I have been watching the trends because he noticed that these Teslas are not moving as fast as people were hoping. Rightfully so: I was watching over a dozen white M3s with comparable kms and just under $80k asking price -- and no, the dealers were not willing to budge. So, this guy flat-out told me that he bought the car for $70k and was hoping to make a major profit. The other day, he realized that this was a dying dream and would sell to me for what he paid. Given the trends, I respectfully declined.

I'm just a FNG here but if anyone is looking at a used M3/P, I would say wait. COVID was a disaster regarding travel and I predict that there will be many, many, many low mileage used cars (off lease) flooding the market in the next 2-3 years.

 

[father_of_6]

Yes, we like to call it buying the dip in other parts of the internet...

LOL. If I had the choice of buying new or used stocks, I wouldn't buy new stocks, sell them at a loss, then watch the market for a dip in used prices.

Maybe you should buy a few more new M3Ps and sell them at a loss while you wait for used prices to fall?