prices after subsidies run out

[phalseid]

So, I know this is the for sale thread, and my question is about teslas for sale, but I am not sure if it is okay to post this here, so mods feel free to move if it belongs in a better place.

My question is simple: I am looking to buy a used model S. after the federal (and possible state) subsidies run out, what will happen to prices of used Teslas?

I am wondering from a strict economic point of view, as in supply and demand.

will prices of used vehicles go down or up?

 

[Stuberman]

Prices will go up because the alternative of buying a new Tesla will now be more expensive. Of course other factors will affect pricing as well.

 

[HankLloydRight]

What? No choice for "Prices won't change"??

Since you're asking our opinions (everyone has one)... I don't think prices will change, or if they do change it won't be directly related to the federal tax credit or state subsidies. As mentioned above, there are many factors that are in play here. By the time the tax credits run out, there will be more competition for EVs (especially at the low end). That will have a much greater effect on prices and supply and demand.

Also, the federal tax credit phases out slowly. Jan 2019 it drops to $3,750, and then July 2019 it drops again to $1,875, and then Jan 2020 to zero. That's too slow to have any measurable effect on the price of used cars. If it went from $7,500 to zero overnight, you might see some price movements in the market, but they would be short lived.

And on top of that, the tax credit only affects NEW cars. It doesn't really affect USED car sales, except cars that are less than one year old, where the buyer expects to reap a portion of the tax credit the seller benefited from. Cars older than one year? No price difference.

Bottom line: if you're trying to time the market to buy a used Tesla based on the tax credits phasing out, I'd say don't bother. Just buy the car when you're ready, it's really not going to make much difference in the long run.

 

[bomquito]

I would argue that the price will remain unchanged as well. This pricing is affected by the new models. If Tesla maintains the price for new vehicle purchase next year, the cpo Pricing will stay the same

 

[ewoodrick]

First, tax credits aren't going to run out for over a year.

Next, used cars have never been subject to the tax credit, so no big changes would be expected. The introduction of the Model 3 was a much bigger impact than that tax credits would be.

 

[Super_Popular]

This thread would get more traction if it wasn't in the For Sale section where discussion is proper.

#commonsense

 

[phalseid]

This thread would get more traction if it wasn't in the For Sale section where discussion is proper.

#commonsense

im happy for it to be moved as I said in my original post. can we get a mod to move it?

 

[Sunshine State]

People purchasing a new Tesla may purchase another brand new EV car with full credits still in effect. I don’t believe it will push a new car shopper to used cars. That said I don’t think the small number of crossover shoppers to used will be enough to change pricing. I do however think it will be a bigger boost to the new EV competitors.

 

[KSilver2000]

For NEW vehicles....Looking at how Tesla has a very dynamic pricing schedule, along with their use of incentives that keep on returning and disappearing, I am very certain Tesla will adjust prices and/or change options to negate the reduction of tax credits by a similar amount.

For USED vehicles, it really depends on how Tesla changes their used car pricing algorithm. They may or may not change used car pricing as a result of the tax credit changes. Tesla really dictates the used car market with regards to pricing and warranty, etc. I was very happy to purchase my used Performance X for much, much, much less than what private sellers and 3rd party dealers were asking for of similar configuration.

 

[HankLloydRight]

Since there's (still) no choice for "prices won't change", I just voted for "prices go down" simply because over time, prices go down. Time really is the biggest factor in used car prices over anything else.

I bought my P85D(+) used less than 2 years ago for $86,000 which was an average price at the time (but the car was in excellent condition). Same car today would be selling for the mid $50s. And here I thought the original owner who bought it new in 2014 took a big depreciation hit.

 

[AMPd]

Next, used cars have never been subject to the tax credit, so no big changes would be expected. The introduction of the Model 3 was a much bigger impact than that tax credits would be.

Incorrect. When pricing a used model s people would compare it to a new model s - tax credit.

Think about it, if someone is selling a model s for 90k that is priced at 100k new but they bought for 90k after tax credits. Would you buy it?

 

[Rahul]

Since there's (still) no choice for "prices won't change", I just voted for "prices go down" simply because over time, prices go down. Time really is the biggest factor in used car prices over anything else.

I bought my P85D(+) used less than 2 years ago for $86,000 which was an average price at the time (but the car was in excellent condition). Same car today would be selling for the mid $50s. And here I thought the original owner who bought it new in 2014 took a big depreciation hit.

What was the MSRP on the car you bought? I'm guessing in % terms you have the same depreciation but in absolute terms you're coming out ahead!

 

[MorrisonHiker]

First, tax credits aren't going to run out for over a year.
Next, used cars have never been subject to the tax credit, so no big changes would be expected. The introduction of the Model 3 was a much bigger impact than that tax credits would be.

While it's not the federal tax credit, in Colorado, it was possible to get a $6000 tax credit on used cars. That led to lots of used cars being imported into Colorado from other states. When the state tax credit was reduced to $5000, they also changed it to only work for new car purchases.

 

[HankLloydRight]

What was the MSRP on the car you bought? I'm guessing in % terms you have the same depreciation but in absolute terms you're coming out ahead!

Oh god, of course! I think the MSRP was $131k or thereabouts. Yeah, he took a bath, but he had a new kid on the way and needed (wanted) to buy a GMC truck or something. It didn't make sense to me, but whatever. He wasn't a real "Tesla" person either -- he was a stock trader who made a bundle on TSLA, so he decided to just buy the top of the line model in 2014, because "why not."

Also, I don't really care about my deprecation, as I bought it and got a great deal for an awesome car, which I don't plan to sell anytime soon. The joy it's brought me is worth a lot more than the depreciation!

 

[Markk993]

i think the model 3 is the real game changer in Model S used car sales... hard to justify paying 55-70K for a used P85D when a new performance model 3 with more range and more technology is the same price or cheaper...

the same goes for lesser cars as well... the dilemma becomes how much do you want to pay for a 4 y/o 60s with for less technology

unless people think the 3 is too small, they will certainly play a role in the resale market on the S

 

[KSilver2000]

i think the model 3 is the real game changer in Model S used car sales... hard to justify paying 55-70K for a used P85D when a new performance model 3 with more range and more technology is the same price or cheaper...

the same goes for lesser cars as well... the dilemma becomes how much do you want to pay for a 4 y/o 60s with for less technology

unless people think the 3 is too small, they will certainly play a role in the resale market on the S

Looking just at price, I would say the comparison is between P3D and 2016 P90D. (You can find these in the 60's from Tesla).
My neighbor just got a used 2016 P90D for the reason you mentioned: size.
I, also, got my deposit refunded when I saw the 3 in person. IMO, it's relatively small for a sedan at a price >$50K for a family needing to occasionally transport small kids (assuming they have a separate family car). The appeal is being an electric car from Tesla. But, if space is a concern, the S is a better choice. Plus, there are convenience features of the S/X that are not found in the 3.

 

[Olds442]

4th option = rat's ass.

honestly, i'm with hank. prices won't change much for used as they're driven by supply/demand. and even if i bought new, i doubt i'd qualify. so it doesn't really find it's way into my decision making anyway.

 

[jegs]

So, I know this is the for sale thread, and my question is about teslas for sale, but I am not sure if it is okay to post this here, so mods feel free to move if it belongs in a better place.

My question is simple: I am looking to buy a used model S. after the federal (and possible state) subsidies run out, what will happen to prices of used Teslas?

I am wondering from a strict economic point of view, as in supply and demand.

will prices of used vehicles go down or up?

The tax credit does affect used prices. However the main driver of used vehicle prices of any vehicle is supply and demand. I have seen a big spike in supply since August. From here it looks like Tesla's marketing plan for their used cars is flawed. As more and more vehicles come off lease Tesla will have to be more and more aggressive in their pricing. I see this happening now. Unless they know something I don't about supply and demand forces in the marketplace they are going to get a very expensive education and introduction into the used car business.