Owning an M3 "for free?"

[Vic_F]

Bonnie, how fast Ye forget... CA $2500 rebate is 30 months

 

[azred]

The ending of the rebate would be the only thing to save you. *ignoring the whole legality of taking the rebate thing and then selling.

I myself am considering this. A few things to consider: The early Model 3's will have only the launch features as Elon has alluded that the some of the cool ideas they had won't come at launch so they don't delay start of production, so by the time the masses can pay retail ie: 35k after the 400k backlog clears in 2 years, they'll have lots of new shiny options to choose from first with the S & X (as Elon has promised all the cool stuff will start there) then onto the M3.

Gee, I'm now bummed that I will be getting my 3 so soon. After waiting a year as of March 31, I guess I should just ask for my deposit back and get a much cooler car in two or three years. As for my 2016 S I think I should dump it now. Thanks for ruining my day.

 

[dsvick]

I disagree on the amount of backlog. I think once people see these amazing cars on the road, the back log from new orders will outpace even the 500K a year output.

Meaning in 2018 even if they sold 500K cars, the back log could be 800K+ long by Jan of 2019 with new orders.

Call me crazy, but I would not be surprised one bit.

I would be surprised if it were 800K long in 2019. It would be a pleasant surprise but I'd still be surprised

On the other hand you could be right. If there really are 600K now and they produce 400K between now and the end of next year, I could see them receiving a few hundred thousand more reservations in that time. Assuming the has no big initial problems and production stays on track.

 

[Buddy]

I would be surprised if it were 800K long in 2019. It would be a pleasant surprise but I'd still be surprised

On the other hand you could be right. If there really are 600K now and they produce 400K between now and the end of next year, I could see them receiving a few hundred thousand more reservations in that time. Assuming the has no big initial problems and production stays on track.

I think many reservations will be cancelled. I got one fhe day it was made available but bought a Model S. I think a decent group of people converted when the new S 60 came out.

Besides that there will be some who simply change their minds.

What i dont know is how many people will cancel (or not buy). 1,000? 10,000? $100,000?

 

[ModelNforNerd]

I would be surprised if it were 800K long in 2019. It would be a pleasant surprise but I'd still be surprised

On the other hand you could be right. If there really are 600K now and they produce 400K between now and the end of next year, I could see them receiving a few hundred thousand more reservations in that time. Assuming the has no big initial problems and production stays on track.

Those of us who receive our cars are going to be what drives more people to buy them. The queue could grow faster than they could be made.

 

[TacC]

This transaction doesn't take place in a vacuum.

The tax credit doesn't prop up resale value - it actually hurts resale prices. Buyers know you received it and will use that against you. Plus, it is being issued on current deliveries so plan on having plenty of competition.

How will you compete against this in a couple of years? You're not bringing unlimited Supercharging or Performance to the table. And that all assumes that buyers only want a Tesla sedan.

What's your plan for recouping the sales tax?

I'd be careful.

 

[slipnslider]

This transaction doesn't take place in a vacuum.

The tax credit doesn't prop up resale value - it actually hurts resale prices. Buyers know you received it and will use that against you. Plus, it is being issued on current deliveries so plan on having plenty of competition.

How will you compete against this in a couple of years? You're not bringing unlimited Supercharging or Performance to the table. And that all assumes that buyers only want a Tesla sedan.

What's your plan for recouping the sales tax?

I'd be careful.

My thinking is that because of tax credits (7500 fed+2500 CA state), I could get a 45k 2018 model 3 (sales tax included) for 35k. Then the 7500 fed tax credits will expire. Someone looking to buy a similar Model 3 in 2020 will have to pay 42.5k (assuming 2500 CA state tax credit is still available), and possibly wait in line for it. There might be plenty of buyers who would happily pay 35k for my 2 year old model3 instead of waiting to pay 42,500 for a brand new one. If I made the sale, I would have owned and driven a tesla for 2 years for essentially no money.

 

[ModelNforNerd]

My thinking is that because of tax credits (7500 fed+2500 CA state), I could get a 45k 2018 model 3 (sales tax included) for 35k. Then the 7500 fed tax credits will expire. Someone looking to buy a similar Model 3 in 2020 will have to pay 42.5k (assuming 2500 CA state tax credit is still available), and possibly wait in line for it. There might be plenty of buyers who would happily pay 35k for my 2 year old model3 instead of waiting to pay 42,500 for a brand new one. If I made the sale, I would have owned and driven a tesla for 2 years for essentially no money.

So your Tesla isn't going to depreciate at all in 2 years? MAGIC!!!


EDIT: I see you factored depreciation, however, you're not accounting for new technology and maybe even essentially zero wait 2-ish years down the line.

 

[slipnslider]

So your Tesla isn't going to depreciate at all in 2 years? MAGIC!!!


EDIT: I see you factored depreciation, however, you're not accounting for new technology and maybe even essentially zero wait 2-ish years down the line.

No it would depreciate from the 45k I bought it for to the 35k I sell it for. But that loss won't be felt by me due to the tax credits I took that are no longer available to the next buyer.

 

[chillaban]

LMAO. As I said, good luck getting that to actually happen. I've personally never seen this math work out in practice for any car. Having an entry level car only depreciate 25% over 2 years, particularly a first generation, is virtually unheard of, even if you had a Prius.

 

[slipnslider]

LMAO. As I said, good luck getting that to actually happen. I've personally never seen this math work out in practice for any car. Having an entry level car only depreciate 25% over 2 years, particularly a first generation, is virtually unheard of, even if you had a Prius.

I think the M3 release could be an outlier because of the way a large tax credit will be available only for the first buyers of the car then quickly disappear for later buyers. Can you think of another vehicle release that has occurred under similar circumstances?

 

[ModelNforNerd]

No it would depreciate from the 45k I bought it for to the 35k I sell it for. But that loss won't be felt by me due to the tax credits I took that are no longer available to the next buyer.

You're also thinking that no one else will be putting their Model 3 for sale and your car rules the used market all on its own.


There are a lot of factors in speculation.....research them wisely.

 

[flamingoezz]

The fact that the tax credits are still in place hampers your resale. Why would someone buy a year old $88,000 MSRP car for $75K+, when they can buy a brand new one for $81K. With the timing being right, that M3 you get in 2018 for under $30K base will cost $35K the following year so resale should be better than they were previously on the Model S/X. Plus Tesla is notorious for lowballing trade ins. On the private market or even at a dealership for another brand, I bet you could get 5K more than you are stating Tesla quoted.

Will you drive your Model 3 for free for a year?...I wouldn't say that with any confidence, but I don't think its ultra risky to try. I doubt it'll end up costing you more in resale than your monthly payments would be on a comparable car in that time span.

Considering my less than 1 year old Tesla was $88,000 new (not counting $15,000 in fees and sales tax) and $59,000 was the trade in offer I received from Tesla two weeks ago, I'd be highly surprised if you can make the depreciation curve work the way you expect. Good luck though!

 

[chillaban]

I think the M3 release could be an outlier because of the way a large tax credit will be available only for the first buyers of the car then quickly disappear for later buyers. Can you think of another vehicle release that has occurred under similar circumstances?

The diesel / advanced fuel BMW and VW SUVs that had a $6500 federal tax credit which is totally phased out now comes to mind. Was in the market for those and the incentive did not substantially help with the resale value.

Most other luxury cars come to mind too…. I had a previous hybrid BMW with a $15k off MSRP discount and I thought that would help prop up its resale value. Was still around $10-15k underwater throughout the whole ownership period that fortunately ended in a lemon law buyback. It was starting to look promising until the next generation of 2.0 turbo 4 gas engines got better fuel economy and acceleration with no hybrid parts, and then my resale value completely tanked.

I mean, I'd love to believe the M3 is special, but I honestly don't find it plausible that the ownership finances will be as awesome as you make it sound.

There's also the added risk that advanced driver assist and autonomy and 200+mi EV's are being pledged by other automakers within the 2018-2020 timeframe.

 

[Sasmania]

I think many reservations will be cancelled. I got one fhe day it was made available but bought a Model S. I think a decent group of people converted when the new S 60 came out.

Besides that there will be some who simply change their minds.

What i dont know is how many people will cancel (or not buy). 1,000? 10,000? $100,000?

Oh absolutely, people will cancel, no question. For any number of reasons.

I just think, especially as more and more are on the road, the pace of new people placing orders will greatly outpace both production and cancelations. I wouldn't be surprised if Tesla's reservations stay north of 100,000 for the next 5 years....and by then the automotive landscape will be completely different than what we see now.

 

[Chopr147]

The $7500 and $2000 NY tax credits right now is the only reason I will buy when my number comes up. If the $7500 is half at buy time I will delay until my S lease is up in 2019. I just can't see delaying and missing out on an almost $10k savings. Sending my wife's Lexus lease back early in 2018 is an option.
Then sell the 3 and make money just kidding

 

[TacC]

My thinking is that because of tax credits (7500 fed+2500 CA state), I could get a 45k 2018 model 3 (sales tax included) for 35k. Then the 7500 fed tax credits will expire. Someone looking to buy a similar Model 3 in 2020 will have to pay 42.5k (assuming 2500 CA state tax credit is still available), and possibly wait in line for it. There might be plenty of buyers who would happily pay 35k for my 2 year old model3 instead of waiting to pay 42,500 for a brand new one. If I made the sale, I would have owned and driven a tesla for 2 years for essentially no money.

I wasn't confused about how you came to your conclusions. I just disagree with them because I'm making different assumptions than you.

Here are the assumptions that I'm making:
- Buyers are not stupid. They won't pay you $35k when they know you paid $35k. Check out this inventory S and this CPO S. You think 200 mi and a paint job are worth $12k? Of course not. The tax rebate suppresses the CPO's value. You're paying $2k for a "newer" car and $10k for the tax rebate.

- There is more competition than just your one Model 3. Market forces suggest that someone else will offer their Model 3 for $34,999 and you'll be forced to lower your asking price. With even a few dozen Model 3s on the market, prices will be driven down quickly.

- Options have value in the used car market. Your Model 3 won't offer dual motors, unlimited SpC, air suspension, etc. so current inventory cars will be reasonable alternatives for your buyer. Older P/L cars may even be within reach. With the SpC network expansion in metropolitan areas, that may be worth $5k to a buyer in California.

- Tesla is not the only EV manufacturer. For that matter, your buyer doesn't even have to buy an EV.

 

[Chopr147]

Tesla is not the only EV manufacturer.

With so many companies now promising EV's by 2019 and 2020 the Model 3 just might not be as huge as we think. You make a good point here. Options will be while not plentiful, much better than today