I’m not even PO. Not silly. Lol. Not because the price was lowered. Because for me that makes their products and future values extremely volatile. If I buy something today that can costa 25 k less tomorrow. I prefer to go with a different brand. Most cars lose money but lowering msrp is totally different. Once again. Not selling or looking for anyone to jump on my train. It’s a forum and just sharing my opinion. Buy what you want with your money. But personally the pricing strategy of who knows what it will cost next week. Doesn’t work for me. I’m not yelling at Tesla or boycotting. Just don’t work for me.
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Model S&X Price Adjustments
- Thread starter Cars 97
- Start date
So no Ford either? They raised truck prices and then lowered them. Or is it only stuff you got burned on personally?
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long term profit is in volume. Hi margin low volume products have in the past been profitable. But we are in a new era. Pricing reductions move inventory and get new orders. Getting low enough to get a tax credit is another 10% price cut. Increased sales will offset anyone feeling burned. We won’t be talking about this in a year.
I wonder if Tesla will offer its own Gap insurance.
There used to be a rule that buyers would try to put 20% down (have 80% loan to value or LTV). This is because as many astute people in this thread have pointed out, cars are depreciating assets. And, in the first 12 months, residual values are usually around a 25% drop. So that 20% down equity and the first year's worth of principal payments are effectively wiped out by that up front depreciation. But that also means it's unlikely the car buyer will be "upside down" where the residual value is less than the remaining balance of the loan.
When Tesla whacks pricing as significantly as they've done this year, they are also wiping out the residual value of anyone who bought at the higher price. This means someone who put 20% down on a Tesla in 2022 is likely significantly underwater since the residual is much less than the remaining loan principal. This may not be an issue for normal people continuing to make loan payments, but it'll completely destroy anyone who has a significant insurance claim.
Tesla owners would benefit from some cheap Gap insurance since these things are often total losses even for minor battery damage.
PS, other automakers spend a lot of time managing residual values for their own loan/lease portfolios, so when they drop net pricing (net of incentives) it's usually much more calculated and with less shock to the system.
There used to be a rule that buyers would try to put 20% down (have 80% loan to value or LTV). This is because as many astute people in this thread have pointed out, cars are depreciating assets. And, in the first 12 months, residual values are usually around a 25% drop. So that 20% down equity and the first year's worth of principal payments are effectively wiped out by that up front depreciation. But that also means it's unlikely the car buyer will be "upside down" where the residual value is less than the remaining balance of the loan.
When Tesla whacks pricing as significantly as they've done this year, they are also wiping out the residual value of anyone who bought at the higher price. This means someone who put 20% down on a Tesla in 2022 is likely significantly underwater since the residual is much less than the remaining loan principal. This may not be an issue for normal people continuing to make loan payments, but it'll completely destroy anyone who has a significant insurance claim.
Tesla owners would benefit from some cheap Gap insurance since these things are often total losses even for minor battery damage.
PS, other automakers spend a lot of time managing residual values for their own loan/lease portfolios, so when they drop net pricing (net of incentives) it's usually much more calculated and with less shock to the system.
zoomer0056
Active Member
Lol. Fords don’t interest me. And I didn’t get “burned “ I paid the price I was willing to pay. No gun to my head. But I also don’t agree with the pricing policy of the company. So like a thinking adult I’ll choose not to give them anymore of my money. Your trying to create some type of “angry man post from me “. I’m not angry. I make personal choices. Do what you want as an adult I’ll either see you perspective or I won’t. Either way I’ll respect it. So thanks for the reply.
My 22 myp was totaled from rear end collision, recovered $62k from insurance company, I paid 70k for the car, new myp is about $53k now. But I’m hoping the X will still drop or offer 1/2 off FSD for me to bite for a X Plaid.. cash on hand, just waiting for the right time. Till then money is 6 month cd @ 5% interest.
solardudesf
Member
Most auto insurance companies provide gap insurance as an add on. Tesla is in the auto insurance business. That is why they are asking the question. I doubt Tesla would do this since they know their own volatile pricing strategy and it would end up hurting their insurance side if the business.
Good luck. I have a feeling he X price drop had the intended effect, and maybe even too much. The price of a yoked Model X has effectively increased $1250 since the price drop already.
Tesla is gouging. How many other manufacturers do you know that can drop the price of a car by $50k in 6 months.
Of course prices go up and down but not by huge swings like this. Huge swings like this is straight up gouging. Has anything changed in the past few weeks with supply chain to warrant an additional $10k off? Nope. Not even a new model coming out.
No one seems to like what I am saying here and that’s fine. Just pointing out some truth that people don’t want to hear.
All of you, don’t fool yourselves that buying a Tesla directly from manufacturer is way better than buying from a dealership. As I’ve said before if Tesla wants to be transparent then please list market adjustment amount on the window sticker. This would be what they are charging based on demand. Equivalent of amount above MSRP. That part is clear with a dealership. Also with a dealership you can go to another one if you feel they are gouging too much. Here everyone gets gouged at mass levels and we are led to believe that the car actually costs more than what it truly does.
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zoomer0056
Active Member
Still is interesting that with lower prices, people are complaining about high prices. Nobody is forced to buy at "gouge" prices. There are always alternatives.
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I believed that building an X or an S is expensive and hence why the car is expensive. Now I have realized they really aren’t as expensive to build as what one may think. Example is plaid started at $129k when it came out. Today it is $89k.
What I am saying is I made a bad assumption thinking that buying from Tesla direct is a more honest price. I can tell you if a dealership was selling a car that listed for $89k MSRP and was selling for $129k I would walk away knowing exactly what’s going on.
That’s the transparency missing in Teslas model. I would have walked away if the window sticker said market adjustment $40k.
Of course it’s all my mistake but just pointing this out for future buyers.
zoomer0056
Active Member
Ah grasshopper, a little less naive. Future transactions will only be the same in principles. Watch Shark Tank. The products with the highest margins are the ones that the sharks invest in. Nothing new here.
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Don’t buy a Mercedes or Audi then…. 22 EQS owners must be passed because MB offered up to $30K in incentives earlier this year and Audi did the same with the e-tron GT.
Tesla cuts MSRP but carmakers offer insane incentives to move metal.
Tesla was an aberration in the last few years. EVs depreciate 50% in 3 years. Nobody should be buying or leasing an EV and expecting old school Toyota resale values (new Toyota are sh*t and will most likely depreciate).
Agreed. But at the same time cutting msrp is worse than incentives. I use an electric car for my business and I will say it’s my second Tesla and I have absolutely nothing bad to say about the car. I think it’s a great car. But cutting msrp really destabilizes the value of the car. Not Tesla car bashing as I’ve said. I disagree with that way of pricing the car. It’s better for the consumer if Tesla created levels or reduced the price of the car by including more features free.
zoomer0056
Active Member
Just like they created the plaid edition. They could have created a different level. Or they could have associated the price reduction to a model year change. I’m just tossing ideas out there but the objective is to lower pricing in a controlled manner without destroying resale. Even if they just included FSD on all older models or a “credit for charging “. Any of this would have not tanked the value on prior sales.
Technically if you believe depreciation is a problem, you should be leasing and not buying. Poor resale value by itself doesn’t mean leasing is bad.
For example this EQS had a 13 month lease residual of 74% of MSRP. But manheim estimated retail value has 13 month old EQS around 63% of MSRP.
That crappy 1 year real- life resale value makes the 13 month lease a massive bargain. Because that means Mercedes is floating almost $12k to subvent the lease residual. And the aforementioned $30k was also being offered to cover the depreciation of the vehicle during the 13 months.
These EQS leases were basically a 13 month rent charge plus doc, government fees, and taxes. Such a good lease deal.
TLDR, don’t write off all leases just because you don’t like the resale value. But you still need to find a good lease, so it doesn’t mean all leases are good either.
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