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Tesla Kills Resale Guarantee Program!
- Thread starter theslimshadyist
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- Model S
Kensiko
Member
I think it's fine, they did that to give confidence for new buyers. Tesla isn't that a new comer anymore.
It doesn't matter. The promised resale value was so far below what you could actually sell the same model s for on the open market that I don't think anyone will miss it.
Ok. I wasn't sure what the true market value was on the MS, which is why I had some concerns. Good to know that the private party market is stronger than what Tesla is guaranteeing.
Nikki's Dad
Member
Can anyone point me to the official announcement? I can't tell from the articles if Tesla is terminating going forward only or for all existing agreements as well (which I don't think they can do).
There is a statement at the end of this article: Tesla ends ‘Resale Value Guarantee’ on new vehicle purchases
Its a good thing--the original intent was to help buyers manage the risk of an unknown depreciation curve. Our baby is growing up.
CapeOne
Active Member
Perhaps but it's not just about what you may be able to get for the car selling privately (not everyone wants to go through that process) but also what you can get as a trade in and posts here and elsewhere have stated trade in offers less than what the RVG would've provided.
Also, the resale market for Model Ss in the coming years may get softer and softer as cheaper alternatives like the Model 3 become available. At least leasing still provides protection against any notable MS market changes.
TaoJones
Beyond Driven
*chuckle* It only took 12 days for the popular press to report that "story".
Private party sales were reportedly outpacing GRV prices by 7-15%. There was no need for the program to continue on that basis, plus owners with the GRV paid a fairly high price for that option due to the higher interest rate.
As an owner with a GRV that I may or may not execute in 17 months, I can say that at the time I decided to get it, which of course narrowed my financing options, it made some modicum of sense because a) there was no CPO program yet, b) there weren't many Model S with AP in the wild and nooooobody had much of a credible clue with regard to future value, and the lease returns hadn't quite started, so there weren't really that many used Model S for sale at all (relatively speaking).
The cost to play has been 1% extra interest, a minimum loan amount (couldn't put down $50K, for example), and a minimum number of payments (36) with interest. So even if your plan was to pay cash, and you paid the car off in a week, your cost to play was 36 payments' worth of interest. Plus there's a mileage limit and penalties for exceeding same - just like a lease.
In the end, I don't regret doing it at the time, and am just as glad to not have the option to do it again when it's time for the next Model S or Model 3 if they're ready at that point. Credit union rates are too good, and the private party used market, by all accounts, should do nicely both before and after the Model 3 arrives.
Private party sales were reportedly outpacing GRV prices by 7-15%. There was no need for the program to continue on that basis, plus owners with the GRV paid a fairly high price for that option due to the higher interest rate.
As an owner with a GRV that I may or may not execute in 17 months, I can say that at the time I decided to get it, which of course narrowed my financing options, it made some modicum of sense because a) there was no CPO program yet, b) there weren't many Model S with AP in the wild and nooooobody had much of a credible clue with regard to future value, and the lease returns hadn't quite started, so there weren't really that many used Model S for sale at all (relatively speaking).
The cost to play has been 1% extra interest, a minimum loan amount (couldn't put down $50K, for example), and a minimum number of payments (36) with interest. So even if your plan was to pay cash, and you paid the car off in a week, your cost to play was 36 payments' worth of interest. Plus there's a mileage limit and penalties for exceeding same - just like a lease.
In the end, I don't regret doing it at the time, and am just as glad to not have the option to do it again when it's time for the next Model S or Model 3 if they're ready at that point. Credit union rates are too good, and the private party used market, by all accounts, should do nicely both before and after the Model 3 arrives.
heysteveh
Member
Well, that post pretty much covers everything... we can just end this thread right now. Well said, informational, and avoids "the sky is falling" thinking about future resale value.
EarlyAdopter
Active Member
That liability assumes:
A) Everyone with the RVG exercises it, and
B) Tesla resells the returned vehicles for $0
In reality, few people are exercising it and Tesla seems to be doing quite well reselling the CPOs for more than $0, but accounting rules require them to carry this on the books this way until the RVGs expire or are exercised.
Good riddance, from an accounting pov.
Actually if you keep track of the details on thr cpo thread, it was costing tesla quite a bit. The buyback was more than what it was costing them to sell the cpo due to repairs and refurbishing as well as the new 4 years and 50K miles warranty. So i dont think it can be considered $0 when they buy it back. Whether they cooked the books to make it $0 or not is a discussion for another time.
I am however glad they are at least easing off on controlling thr resale market. We all know the CPO are still over priced. I am hoping this move will help drive used model S prices to something more reasonable.
heysteveh
Member
As a potential buyer, I sympathize with your perspective of CPO's appearing overpriced. However, the fact is they are selling very well right now with perhaps the exception of the older 60's. And private party sales are almost matching and in some cases exceeding what the CPO's are selling for (perhaps due to uneducated buyers?!). From a true market value perspective, to say that CPO's are overpriced right now is, I think, wishful thinking.
No need to sympathize. Look at the cpos. Market forces determines what price cars sell at. At the current price they are moving very slowly if at all. Hence low demand. Basic econ tells you the price is too high. My theory is tesla is purposely keeping the price high to NOT sell the cars so they can keep them in the loaner fleet longer. It is not costing them anything to keep these cars. If they get a sucker to bite then they just made some money. Used tesla are propped up by the buy back guarantee in the past so if someone want to get rid of their cars they can sell it via private party or back to tesla. They know the bottom limit because of the buyback guarantee. Because of the lack of cars available at reasonable price, again caused by the buyback, those demand that are ridgid, are force to buy at the used price or higher CPO price.
All i am saying now that there will no longer be the guarantee, those people that have to rid their model s for whatever reason will not have tesla's back anymore so they will have to find a buyer. They will be forced to lower the price if there is no demand. And especially with the release of the s60 and the x60d i predict even lower used tesla price. Dont forget the auto pilot 2.0 everyone is talking about too. The old cars will quickly be irrelevant and thus less desireable further lowering demand. And obviously more manufacture will release compelling EVs. Again reducing those potential buyers. You get the point. I am not saying the prices will crash but it will definitely not be like it is not.
RobStark
Well-Known Member
Pure nonsense. "if at all?!" LOL
And only fully or nearly loaded S are falling below RVG. Somebody needs to retake Econ 101
S is selling quite well as CPO and used Model S is selling quite well on car selling sites.
Look at the prices S is getting on Ebay Motors.
All cars get obsolesced.
For some S buyers the tech is the most important or very important.
For others it is zero emissions or the prestige of the Tesla brand.
Others want the crash worthiness of S but could not care less about AP because they enjoy driving themselves or are not willing to trust software to that degree yet.
For those buyers a classic S will be very attractive with even a modest discount over new once AP 2.0 is released.
1) you say I need to retake Econ 101 but you never say what was wrong about my supply and demand picture. Supply is there. Tesla is dangling the teslas for suckers to take. Obviously the price is high hence little to no movement. I think someone needs to take their own advice here.
2) sure I agree on your point on those highly loaded cars are going for under the rvg. Guess what? Most of the tesla CPO cars are highly optioned.
3) any data point supporting the sale numbers at the current price? During the great purge of tesla I will agree there were a lot of movement. Therefore prices should be a bit higher at that time if you want to use the supply and demand picture. We haven't see those prices since then after almost a year of depreciation. The CPO prices are actually higher than it was then for higher mileage older cars! Think about that one for a moment.
4) those prices on eBay are not priced to move. Keep in mind the guaranteed buy backs are still effect for those used cars. It will take a while before we see cars without the guaranteed buyback on the market.
Look I don't fault you for trying to inflate tesla resale price maybe to keep your tesla's resale value of your current cars high, but we all know people don't buy cars as investment except those rare classics which I doubt the used model s are right now. Moreover tesla is a luxury cars and historically those depreciate the fastest. Combine that with the federal tax credit offered on new model s and hopefully you get the picture.
markn455
Member
Mostly just talk to give early adopter more confidence in purchasing a leading edge product. My observation was that the actual resale ended up being more than expected. However, I fully expect to see resale values decline as time goes on. Not because of anything to do with Tesla but to do with people wanting to get in the next best thing such as the refreshed MS or a new MX. This and because more and more CPOs are available the prices are just going to drop.
jelloslug
Active Member
The point of the resale guarantee was to give early adopters a "safety blanket". There is no need any more now that real resale data exists and it's actually a liability for Tesla.
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