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The Death of Resale Value Gurantee (RVG)

Discussion in 'Model S: Ordering, Production, Delivery' started by MXinCT, Jun 30, 2016.

  1. MXinCT

    MXinCT Member

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    I stumbled across the death of the RVG program today when speaking with my Tesla associate at the Mount Kisko NY showroom. 6/30/16 was the last day to enroll in that program when financing with Telsa Finance. Moving forward there will be no Resale Value Guarantee anymore and the only way to be certain of your 3yr cost is to lease.

    Just thought I would share this tidbit with everyone as I see it mentioned now and then when people are looking at Inventory cars with heavy discounts.
     
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  2. heysteveh

    heysteveh Member

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    Thanks for the info. I would be interested to know why they are discontinuing the program. Is it no longer needed now that resale history has been established. Or perhaps the program became less popular among buyers in recent months? Or maybe Tesla just wanted out of that game.
     
  3. MXinCT

    MXinCT Member

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    If i were to guess they feel the cars coming up on 3yrs old are probably showing residuals of equal to or better than the program. Elon started that program to alleviate "Fear of the unknown". We've got cars that are 3-4years old now and from what I've seen even with the it for not having Autopilot still selling for greater than the average 46% that RVG gave you (50% base, 43% options).

    The other nefarious thought I had was that they know Autopilot 2.0 is coming and when that happens the existing cars will take a beating compared to new ones. The only way to mitigate that is to make sure that AP 2.0 cars cost a lot more in which case the value drop wouldn't be as significant in the used market.
     
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  4. ChadFeldheimer

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    Interesting, I hadn't heard about the RVG being discontinued. Thanks for sharing.

    Here is an example of the RVG being used:

    Moved from 2013 85 to 2016 90D: wow

    Tesla initially offered 40k for a trade in, then had to pay 53k after realizing the RVG was in effect.

    The RVG sits on Teslas books as a liability. I would guess that the main motivation for getting rid of the RVG is to remove this liability on future sales.
     
  5. SteveW25561

    SteveW25561 Member

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    I still see the RVG on the Canadian configuration site today.
     
  6. Zeromus-X

    Zeromus-X Member

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    I was planning on leasing or going with the higher-interest RVG lenders just because I fully expect the value of the cars to drop pretty significantly when the Model 3 is released. Changed my mind when I realized I was going to keep the car until I ran it into the ground anyway so it didn't matter, and just went with the lower-cost Alliant.
     
  7. xav-

    xav- Member

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    Is it really a liability? Considering how expensive their CPOs are?

    I suspect it could be a huge liability in 3 years onwards though as the 3 becomes widely available.

    Also has their been clear communication that they are discontinuing the program?

    Thanks
     
  8. Cosmacelf

    Cosmacelf Active Member

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    It was an unusual program to begin with. No other automaker has something similar afaik. Tesla probably felt that they didn't need it anymore. And it no doubt does cost them money for the cases where they have to buy back cars at that higher value.

    A three year old Mercedes S class isn't that much different from a current model Mercedes, except for some styling and safety systems that aren't anything all that different. But Tesla makes big changes to their cars in the Autopilot area. And we will be getting AP 2.0 hardware maybe this year too. That drops the value of older Model S cars quite a lot, even though they are still great cars.
     
  9. brkaus

    brkaus Member

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    When I started looking at the model s, the RVG was very prominent in the web page. It was hard to find starting about a year ago.

    Not surprised it's going away.
     
  10. Out4aDuck

    Out4aDuck Member

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    The RVG was a bridging strategy until more conventional leases became available. To some extent, I believe there is still some sort of RVG offered to the banks who own the leases.
     

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