Horses for the courses I guess. With Tesla, you have to play by the market. Overall, it is like tech shares than asset like a traditional car. With traditional car market there are certainities - around 40% loss in 3 years time and then depending on the badge and miles you lose 10-15% every year or so. Also, the certainities surrounding you will get some money back and owning is better than leasing and buying used car helps you to tide over the depreciation all are out of the window with Tesla. You have to play by the market and change course as you think suits your financial risk taking.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Trade in Values from Tesla (& other dealers)
- Thread starter Ambergold
- Start date
Lease companies may also be more cautious because of the volatility, the harder something is to predict the larger the safety net they may want. And any upside is all theirs.
It’s certainly true to say that at the start (2019) lease companies didn’t know how to price the cars so the monthlies people were getting offered ended up being in their favour.
The used price craziness of 2021 and early 2022 meant the early finance customers could get out of their cars and into a new one at no loss at all.
Tesla’s pricing shenanigans and residual crushing are now well known so I would assume finance companies are pricing that in.
The used price craziness of 2021 and early 2022 meant the early finance customers could get out of their cars and into a new one at no loss at all.
Tesla’s pricing shenanigans and residual crushing are now well known so I would assume finance companies are pricing that in.
Finance companies do only one side of the calculation. Tesla dilute the market with cash advances when the base interest rate is around 5.25%. Last time I heard Tesla was paying cash advance of £3000 to keep the interest rate low of 1.9%. And Tesla also set prices based on commodity market fluctuation. Finance companies do not have that much reach.
I will not quote any particular member posts, but it strikes me as unfair and counter to the mission of expansion of EV take-up to bash Tesla for re-pricing as if it is by design to deliberately crush resale values. Tesla enjoyed outsize margins (compared to most other car manufacturers). Competition and improvements in efficiency (cost) of production has resulted in price decreases. It should have been predictable to some degree as any business in a competitive market would do. It's not as if they are selling cars at a loss as some predatory pricing strategy. Would people actually prefer that Tesla's pricing never reduced? To my mind, making EVs more affordable should be welcome and praised.
And due to Covid and parts shortages there was an unprecedented period of used car prices of all makes being unusually resilient, which meant some people were able to swap into new vehicles at no or minimal cost. That is not likely to occur again.
And due to Covid and parts shortages there was an unprecedented period of used car prices of all makes being unusually resilient, which meant some people were able to swap into new vehicles at no or minimal cost. That is not likely to occur again.
2020 M3 SR+ with 22k miles. Offered £16.4K directly with Tesla. WBAC.com are at £19k, but I expect them to come down from there in-person.
Placed an order today in the SC for a Y RWD. Adviser said he’d try and get the Tesla offer up to £19k.
Balloon payment is favourable, even with Tesla’s offer, just want to get as much as possible to put back into the Model Y.
Placed an order today in the SC for a Y RWD. Adviser said he’d try and get the Tesla offer up to £19k.
Balloon payment is favourable, even with Tesla’s offer, just want to get as much as possible to put back into the Model Y.
Rooster6655
Active Member
There will be a floor price but will take some time to balance as now the market is being flooded with 2nd hand electric cars
The downside of the model 3 being so popular with lease companies in its first few years is that they are just sent to auction when the lease expires, there are currently 3x the amount of Teslas going to auction than there are any other electric car Kia and then Polestar, so with excessive inventory the cars sell for less.
Then when companies like Tesla/WBAC give a trade in price they use the car auction guide to value the cars which is based on the current selling prices at auction, hence why we are seeing such low trade in prices right now for the model 3.
The Model Y is still new so the depreciation isn't so bad right now but I expect from March to start seeing some bargains for 2 year old models around the £30k mark
In 2019 I thought we would see 20-30% off the prices for a 3 year old car, in 2022 I got away with a 10% depreciation, never expected to see what is happening right now with many cars 50%+ depreciation on 2 year old cars though!
Last edited:
That’s the thing, Tesla IS actually maintaining above average residuals compared to its competitors.
You can get an 22 plate EV6 Long Range for a lot less than a 22 plate Model 3 standard range. The EV6 is highly rated and a lot more expensive to buy compared to the Model 3. I posted the two cheapest examples on Autotrader being sold by dealers yesterday.
Fully loaded Polestar 2’s are down under £27k on a 70 plate (plus and pilot packs), they were over £55k and some near £60k new depending on paint and leather seats).
The issue is the upper end used car market has had an implosion due to the cost of finance. If you want to PCP a used car, you are looking at 10% APR.
Tesla’s price drops may have has a small impact on used prices but not down at the 4 year old mark. The prices are still higher than they were 4 years ago (many of those cars had a £3.5k government subsidy). The price dropping thing also isn’t unique to Tesla.
The reality is that wider market forces are pushing the values down and it’s got very little to do with new car pricing. People buying 2-3 year old cars are not in the new car market.
You can get an 22 plate EV6 Long Range for a lot less than a 22 plate Model 3 standard range. The EV6 is highly rated and a lot more expensive to buy compared to the Model 3. I posted the two cheapest examples on Autotrader being sold by dealers yesterday.
Fully loaded Polestar 2’s are down under £27k on a 70 plate (plus and pilot packs), they were over £55k and some near £60k new depending on paint and leather seats).
The issue is the upper end used car market has had an implosion due to the cost of finance. If you want to PCP a used car, you are looking at 10% APR.
Tesla’s price drops may have has a small impact on used prices but not down at the 4 year old mark. The prices are still higher than they were 4 years ago (many of those cars had a £3.5k government subsidy). The price dropping thing also isn’t unique to Tesla.
The reality is that wider market forces are pushing the values down and it’s got very little to do with new car pricing. People buying 2-3 year old cars are not in the new car market.
I agree but that isn't really what Tesla has done. The M3LR has always been around £50k and still is - it isn't more affordable. What they did do was take advantage during the period of demand being greater than supply and put up the price during 2022 through a series of increases and then just drop it back down again in one quick move that suddenly put a lot of traders in a negative position - they now want extra margin to protect themselves from future sudden price drops.
However I don't really see this as a Tesla issue - no one wants secondhand EVs at the moment no matter what badge is on it, hence depreciation on all is horrendous. If you aren't in a salary sacrifice scheme where you have to purchase a new vehicle I don't see why anyone would do so at the moment - just get a 12 month old one and save yourself 30+%.
I don’t think Tesla would do anything with the aim of crushing residuals, certainly not theirs. The problem with frequent price cuts however is you create a downward spiral. Falling prices creates short term demand for cash buyers but if the finance company think residuals are going to fall faster than they have, they act more cautiously. I can’t quickly find figures to back it up but a lease seems to be more expensive today than it was and yet the list price is lower.
I’m sure (maybe I’d hope) Tesla have experts helping them price and understand local markets, but if you pretty much price globally then you’re going to get spacious that seem odd on specific markets.
I just know that looking at the charges my MY which is coming up to 2 years old appears to have depreciated well over £1000 a month
I’m sure (maybe I’d hope) Tesla have experts helping them price and understand local markets, but if you pretty much price globally then you’re going to get spacious that seem odd on specific markets.
I just know that looking at the charges my MY which is coming up to 2 years old appears to have depreciated well over £1000 a month
Wise words indeed and over my life I have rarely bought brand new cars. I suspect an additional problem EVs face in the second hand market is a perception that the batteries are delicate and suffer failures. The press does not help with headline articles of the £25,000+ battery replacement making it seem like a common occurrence. So the general press that currently seems anti-EV and scare stories of the horrors of ownership are not helpful. In my opinion.
I will get skewered most probably, but if Tesla were able to sell a Model 3 or Y at £25,000 and did the repricing in one adjustment tomorrow I would be happy. It doesn't help the resale value of the two we have but we did not buy them with resale values forming any part of our decision and I buy a car on the assumption that resale will be £0. But assuming Tesla doesn't start selling at a loss, there is a fairly predictable minimum price they can go for new, absent some unknown future technological breakthrough. Lease and other finance companies know this. Lease prices are up due in large part to the change in interest rates, no?
Rooster6655
Active Member
The EV6 are going fairly cheap especially when you consider the 7 year warranty and 100k mileage, probably one I will keep an eye on in the next year or so
I agree that the new car pricing isn't the main issue with the pricing right now as they haven't changed that much in general.
With the large amount of used EVs hitting the market in comparison to previous years especially from ex lease/company cars the used market is being overwhelmed with used EVs and is still catching up, so a good time to buy a used one
But back in the real world most people don’t have the luxury of financing “the mission of EV uptake”. They (selfishly perhaps) are buying things that are green but also with an expectation - reasonable in my view - that they aren’t going to lose their shirt when it comes to selling that vehicle.
I’d argue that Tesla’s attitude to pricing IS about increasing volume, which can be framed as “acceleration of EV uptake”, but it has no regard at all for existing customers. I’m not saying they should manage residuals like e.g. Porsche does, by constraining supply, but it would have been nice to know ~4 years ago that my outright purchase of my Tesla was a less performant investment in “the vision” than buying actual shares would’ve been, with the same net result.
I think it’s reasonable to be a bit jaded by the fact that residuals have been crushed even if you buy into the overall mission. As said, not many people have the luxury of losing a disproportionate amount of money on their cars.
Two things and I will drop it:
1. All cars depreciate, yes? What would you view as an acceptable depreciation percentage on a new car purchase at end of years 1, 2, 3 & 4? How far further from "acceptable" has the value of a Tesla fallen? I would suggest it needs to be judged in context and dismiss the recent period when used car prices went haywire. That was somewhat unprecedented and I hope won't be repeated (the reasons it happened I mean).
2. In your second paragraph you imply the purchase was an investment and, at that, less performant than an investment in shares. This may explain our seeming different outlook. I have never viewed my purchase of a car, a prime example of a depreciating asset, as an investment. Quite the contrary in fact.
I am probably abnormal. I don't like seeing the value of my cars depreciate. But I've learned that trying to predict it is a crapshoot and whilst some cars become desirable and collectible, or at least buck the usual steep depreciation curve, that is far from the norm.
I honestly don't mean to be argumentative. Just have a different perspective it seems. And as said, I well may be the odd one out.
Can we take a step back. You talk about frequent price cuts while conveniently ignoring the frequent price rises which happed immediately prior. Current owners were not complaining about that.
The range as a whole is more expensive than it was at the end of 2021 with the exception of the standard range model 3. The price gap between the standard range and long range has never been higher. Standard 3 is only cheaper than late 2021 3 if you pay cash, if any finance is involved, be that loan, PCP or lease, it’s more expensive.
This isn’t unique to Tesla, new car prices have dropped across the board, most more than Tesla because they rose by more than Tesla. RRPs went up at similar rates to Tesla and all the smoke and mirrors dealer discounts disappeared overnight. No one is paying the sticker price, they are throwing incentives at you left and right to shift their stock.
Zilla91
Active Member
Honestly, I’m not sure. This is the first brand new car I’ve bought, so perhaps I’m looking at it with unreasonable expectations.
I was obviously aware that it would depreciate, but I thought that this would be “better” than financing. Everyone says that cash is the “cheapest” way to purchase a car, or the least expensive. As mentioned previously my monthly depreciation based on purchase price vs trade price works out to be £841.09. I’m not 100% certain but I think my finance quotes back in late 2019/early 2020 were better than that.
I would also say that most of my previous cars have been “special” and the manufacturers have managed residuals by constraining supply, not reducing prices much if at all. I probably underestimated just how much of a “stack em high ,sell em cheap” car the 3 was, from Tesla’s perspective, and how significant their margins were as well as their zeal to cut prices significantly and frequently.
Apocryphally I’ve heard stories of dealers refusing to take Teslas in PX because they don’t feel it is safe to, i.e. they could offer a reasonable price one minute and an adhoc price cut would basically leave them making a loss. I do think Tesla’s price cuts have created an uncertain landscape both in terms of finance companies re-evaluating premiums, and traders erring on the side of caution and offering less than they might otherwise do.
That wasn’t what I intended that to mean. I took your post as suggesting that the purchase of a car from Tesla is essentially “buying into the mission to make EVs as widespread as possible”, i.e. that one should be accepting of disproportionate depreciation on the car for the greater good. In that respect, I was saying that this outlook recontextualises the car purchase as an investment of sorts, and I was saying that buying Tesla shares would achieve the same goal at a much higher ROI.
Perhaps that a misread of your opinion?
I’m not bothered in the sense that I lose sleep over it. I expected depreciation, I just didn’t expect to be worse off than if I had financed it.
I was a bit irritated by the fact in your previous post you said you weren’t mentioning anyone by name, but it was patently obvious that you were replying to what I said specifically because you mentioned “crushed residuals” which - as far as I know - no one else had.
Anyway, it’s all good debate.
I don’t give a *sugar* about Tesla’s mission. Don’t care how many people buy into electric cars. Family finances are far more important than the ‘greater good’. I’m shedding my Y now before the arse falls out even further like 3’s. Pick up a nice cheap second hand EV that’s taken an even bigger hit. Maybe a 3 haha. Besides the Y’s suspension is god awful and will be pleased to see the back of it.
Similar threads
