Tesla depreciation

[Quickturtle]

I'm trying to do a budget for buying a Performance Model 3 and am curious about people's thoughts on this, since I don't have good data on how Teslas fare in terms of resale value.

1. Is it reasonable to assume that the car will loose ~20% of its value during the first year of ownership, and perhaps 15% in each the 2nd and 3rd year (so it will have lost ~half its value after 3 years)?

2. Can I expect a Performance Model 3 to retain a decent portion of its $10k premium over AWD, $15k over RWD, if I sell it? Say I sell after 5 years, and assuming the above total depreciation of 50%, will it sell for $5k more than an AWD (when it originally cost $10k more)?

3. It is reasonable to assume that since tax credits will expire by next summer, that the $7,500 I will have received absorb some of the depreciation (say the car looses 20%=$15k in value in the first year, that would become $7500 after tax credits).

Just trying to get a sense if these guesstimates are completely crazy one way or another, or sound reasonable. Thank you!

 

[dhrivnak]

If you look at Roadster's they have lost 50% to 60% their base value over 7 years so your 50% over 3 years is likely conservative. But with the Roadster and other cars I may add, options are lucky to retain even 25% of the value.

 

[jelloslug]

At least for right now, expect to take $7500 off the top because of the tax credit. After that, it's very hard to calculate because of how popular the car is right now. If you go based off of S and X values, you can guess a deprecation of 25% after two years, down to 50-60% after five years.

 

[davidc18]

It will be more than you would like so get the car you want and enjoy it everyday.

 

[goodjon24]

I have a spreadsheet tracking this to estimate when I'll be willing/have enough cash to buy a used one. But so far it's more just the used price getting down to retail price, so my model is overpredicting deprecation.

 

[goodjon24]

Figured out how to attach from my phone...

 

[goodjon24]

Depreciation on deprecation, haha

 

[Quickturtle]

At least for right now, expect to take $7500 off the top because of the tax credit. After that, it's very hard to calculate because of how popular the car is right now. If you go based off of S and X values, you can guess a deprecation of 25% after two years, down to 50-60% after five years.

Cool, so you don't think Tesla will reduce the prices next year to make up for the lack of tax credit?

 

[goodjon24]

Sorry to keep posting, but here's a deprecation calendar from Edmunds for a model S. Looks like they're estimating close to 50% in the first 5 years.

2017 Tesla Model S Sedan 0-cyl. Electric 1-speed Direct Drive True Cost to Own

 

[Jedi2155]

I think the depreciation on the 3 P will be higher than a model S and X and roadster because of the existence of a SR /35k model.

I believe this because the stock features on the 3 will satisfy the majority of owners while those who can afford a higher resale or would like to get the performance would likely be able to buy newer cars already. In order to justify a higher than resale value, the model has to be unique/rare kr have features that are harder to get than a comparable cheaper vehicle.

I would place the depreciation above a Mercedes but worse than a Model S/X. Definitely not a roadster (due to their rarity)

 

[P85_DA]

Paging @MXWing

 

[MXWing]

I'm an economist and I haven't modeled the depreciation curves because I was getting a P3 no matter what. I have chosen to suspend logic and disbelief and went with the inner manchild in me. Hint: Regular bare bones AWD-3 with no options and software is best bang for buck period.

No one will know for sure how much a 3 will depreciate. There is not enough data to influence a purchasing decision in time. You can guess looking at S values over time. Though I would say S depreciation is outsized a bit given their higher base price.

Ceteris paribus, your losses will be mainly dictated by your holding period.

A P3 has many things going for that may allow values to hold longer than usual.

-Full Tax Credit. This is a subsidy that lowers your net TCO that is halved first half of 2019 and gone completely in 2020.
-Access to AP3 in place upgrade. Autopilot generation is a key demarcation point with how people shop for Tesla's.
-Free unlimited supercharging. IF Tesla were to finally eliminate this as a demand lever, FUSC cars start to be unicorns.
-3.5 0-60 is plenty fast for most people. Even 10 years from now, 3.5 0-60 is going to be quick. Raw performance have allowed cars like the Toyota Supra in the past to punch above their depreciation curves due to the performance floor being so good.

So you can either take my word and go for it.. or study all the formulas and graphs on how the *sugar* above is derived and come up with your own conclusion.

 

[P85_DA]

I'm an economist and I haven't modeled the depreciation curves because I was getting a P3 no matter what. I have chosen to suspend logic and disbelief and went with the inner manchild in me. Hint: Regular bare bones AWD-3 with no options and software is best bang for buck period.

No one will know for sure how much a 3 will depreciate. There is not enough data to influence a purchasing decision in time. You can guess looking at S values over time. Though I would say S depreciation is outsized a bit given their higher base price.

Ceteris paribus, your losses will be mainly dictated by your holding period.

A P3 has many things going for that may allow values to hold longer than usual.

-Full Tax Credit. This is a subsidy that lowers your net TCO that is halved first half of 2019 and gone completely in 2020.
-Access to AP3 in place upgrade. Autopilot generation is a key demarcation point with how people shop for Tesla's.
-Free unlimited supercharging. IF Tesla were to finally eliminate this as a demand lever, FUSC cars start to be unicorns.
-3.5 0-60 is plenty fast for most people. Even 10 years from now, 3.5 0-60 is going to be quick. Raw performance have allowed cars like the Toyota Supra in the past to punch above their depreciation curves due to the performance floor being so good.

So you can either take my word and go for it.. or study all the formulas and graphs on how the *sugar* above is derived and come up with your own conclusion.

Darn it 2 threads was hoping for different answer

 

[MXWing]

SR /35k model.

SR Model 3 = Massage
P Model 3 = Massage with happy ending.

A $35K Model 3 has no room to depreciate.. but its nowhere near as much fun.

 

[PremiumPackage]

Loss of the tax credit is actually a huge boon to buyers this year, assume Tesla doesn't change prices.

All else equal, high end specialized cars tend to depreciate faster than "base" models, right? There's a smaller group of used car buyers who want a super performance car than those who just want a family daily driver.

 

[Evoixse]

Cool, so you don't think Tesla will reduce the prices next year to make up for the lack of tax credit?

Haha no way, the way things are going. Premium options prices are going to keep going up while the base prices stay as inflation occurs. Steel has gone up 50% up this year alone so those paint price hikes are in line with what steel costs have gone up.

 

[Quickturtle]

Awesome post, thank you! Just a quick follow-up, did you factor in that FUSC is only for the first owner, i.e, I won't be able to transfer it if I sell the car?

I'm an economist and I haven't modeled the depreciation curves because I was getting a P3 no matter what. I have chosen to suspend logic and disbelief and went with the inner manchild in me. Hint: Regular bare bones AWD-3 with no options and software is best bang for buck period.

No one will know for sure how much a 3 will depreciate. There is not enough data to influence a purchasing decision in time. You can guess looking at S values over time. Though I would say S depreciation is outsized a bit given their higher base price.

Ceteris paribus, your losses will be mainly dictated by your holding period.

A P3 has many things going for that may allow values to hold longer than usual.

-Full Tax Credit. This is a subsidy that lowers your net TCO that is halved first half of 2019 and gone completely in 2020.
-Access to AP3 in place upgrade. Autopilot generation is a key demarcation point with how people shop for Tesla's.
-Free unlimited supercharging. IF Tesla were to finally eliminate this as a demand lever, FUSC cars start to be unicorns.
-3.5 0-60 is plenty fast for most people. Even 10 years from now, 3.5 0-60 is going to be quick. Raw performance have allowed cars like the Toyota Supra in the past to punch above their depreciation curves due to the performance floor being so good.

So you can either take my word and go for it.. or study all the formulas and graphs on how the *sugar* above is derived and come up with your own conclusion.

 

[Quickturtle]

Regarding your point "-Access to AP3 in place upgrade. Autopilot generation is a key demarcation point with how people shop for Tesla's.", this is only true if I buy the Full Self Driving now? Or am I misunderstanding your post?

I'm an economist and I haven't modeled the depreciation curves because I was getting a P3 no matter what. I have chosen to suspend logic and disbelief and went with the inner manchild in me. Hint: Regular bare bones AWD-3 with no options and software is best bang for buck period.

No one will know for sure how much a 3 will depreciate. There is not enough data to influence a purchasing decision in time. You can guess looking at S values over time. Though I would say S depreciation is outsized a bit given their higher base price.

Ceteris paribus, your losses will be mainly dictated by your holding period.

A P3 has many things going for that may allow values to hold longer than usual.

-Full Tax Credit. This is a subsidy that lowers your net TCO that is halved first half of 2019 and gone completely in 2020.
-Access to AP3 in place upgrade. Autopilot generation is a key demarcation point with how people shop for Tesla's.
-Free unlimited supercharging. IF Tesla were to finally eliminate this as a demand lever, FUSC cars start to be unicorns.
-3.5 0-60 is plenty fast for most people. Even 10 years from now, 3.5 0-60 is going to be quick. Raw performance have allowed cars like the Toyota Supra in the past to punch above their depreciation curves due to the performance floor being so good.

So you can either take my word and go for it.. or study all the formulas and graphs on how the *sugar* above is derived and come up with your own conclusion.

 

[Quickturtle]

Darn it 2 threads was hoping for different answer

What do you mean? Can you paraphrase? Thanks!

 

[UltralightBeam]

It could actually be “higher” than we think. In 3-5 years, imagine the demand for good shape used model 3s will be. I imagine that with time, even MORE people will be ready to go electric so with that demand high, prices all around will still be higher than ICE. Now when there are more EVs on the road (over 50 percent dominance), then you can start making the comparisons to what ICE cars depreciate at.