[UK] used value of their Tesla cars plummeting?

[Lord Farquad]

Looks like LRY AND PERFORMANCE Y have dropped by about 7k!

It’s a £5k drop isn’t it?

Plus an increase on finance rates (apr gone up to 6.9%).

Given the inflated trade in prices last year the difference between trading in then with the higher price/cheaper finance. Vs now with weaker trade in, lower RRP/higher finance %, the difference is probably less than you think.

Cash buyers with no trade in have been stuffed a little harder.

 

[sam481]

It’s a £5k drop isn’t it?

Plus an increase on finance rates (apr gone up to 6.9%).

Given the inflated trade in prices last year the difference between trading in then with the higher price/cheaper finance. Vs now with weaker trade in, lower RRP/higher finance %, the difference is probably less than you think.

Cash buyers with no trade in have been stuffed a little harder.

May be wrong but I thought they were 67k and 59k yesterday.

 

[Jason71]

If I remember correctly the MYLR launched at 55K then went up to 56K around June22 then up again to 58K in August. now it is back to 53K.
So its a 5K drop but only 2K less than it was this time last year.

Lets hope other makers go the same way EV's were supposed to be coming down to price parity with ICE so we were told. Been going the other way recently

 

[qwickshot]

I’d suggest the price drops have already been priced in by the trade, they have their ears to the ground at the end of the day.

 

[GlynG]

The hikes in prices were just Tesla being greedy, add those increases and the removal of stuff from the car they made a very profitable car even more attractive - in short they milked the customer base to the point they couldn't sell in the manner they had been accustomed - full order books 9 months in advance.
Other marques are offering a great choice, Tesla's reputation isn't what it was, though in my view its still the class leader, but the gap is closing much faster than I expected, this however is good news as they will be less likely in the future to remove stuff without having a replacement system in place.

 

[Jason71]

The hikes in prices were just Tesla being greedy

Tesla is a publicly traded company, its purpose, whatever its mission statement says, is to make as much money as possible for its shareholders. Any company that did not do what Tesla did last year, when they had the chance, would not have been doing justice to its shareholders ( not that it seems to have helped them much)
I am not a Tesla fanboi at all just a realist about the way that a free market economy works. Don't hate the player hate the game.

 

[Zilla91]

Not really bothered by the price cut, I might have been able to save a bit of money but I'd have no parking sensors

 

[CWT3LR]

Tesla is a publicly traded company, its purpose, whatever its mission statement says, is to make as much money as possible for its shareholders. Any company that did not do what Tesla did last year, when they had the chance, would not have been doing justice to its shareholders ( not that it seems to have helped them much)
I am not a Tesla fanboi at all just a realist about the way that a free market economy works. Don't hate the player hate the game.

I agree - profit is the prime driving force of a successful enterprise and has been the catalyst over centuries for massive innovation.

However, where I disagree is that most well run businesses trade off some elements of short term profit to secure longer term customer loyalty, repeat business and overall higher profit over the long run.

Tesla appears not to give a stuff about the long term. Or is it just that they are more price-transparent? We can see very readily when their prices go up and down, and the price seen is the price paid. Whereas more traditional car cos might not shift the list price, but increase or reduce the dealer price that in turn affects the ability to discount?

 

[Ricecooker]

It is more apparent now that Tesla don't care much for "customer loyalty". They make great products that speak for itself, arguably offering the best packaged EV on the market, and they do not need advertisements nor customer services in the sense of pleasing them. They just make "shut up and take my money" cars, arguably. They also pump out cars like candy, well margined, and are now priced very competitively. Elon Musk has recently stated that he cares about volume more than margins. This price cut, whilst anticipated, will cripple many if not all competitions. They are now forced to re-evaluate their pricing of their EV line ups, if they can still make money that is.

Luckily I am on my last day of my 14 days return window, which I will utilise.

 

[2020M3SR]

It is more apparent now that Tesla don't care much for "customer loyalty". They make great products that speak for itself, arguably offering the best packaged EV on the market, and they do not need advertisements nor customer services in the sense of pleasing them. They just make "shut up and take my money" cars, arguably. They also pump out cars like candy, well margined, and are now priced very competitively. Elon Musk has recently stated that he cares about volume more than margins. This price cut, whilst anticipated, will cripple many if not all competitions. They are now forced to re-evaluate their pricing of their EV line ups, if they can still make money that is.

Luckily I am on my last day of my 14 days return window, which I will utilise.

Its going to be interesting to watch how competitors react. VW have put nearly a £2k increase on their ID4 just in the last few days and the 52kw base spec Life model is just under £39k

What will Kia/Hyundai do with their EV6, ioniq 5 etc?

And what does it mean for residuals of OTHER ev's? What Tesla have done will not only impact the residuals of the Teslas on the used markets, but there is an argument to say it will impact other marques too.

Eg, if I've £30k to spend on a used EV, I'll be looking at ALL brands, so on the used market, Tesla residuals will impact on the ability to shift other brands used cars too

I'll be watching this play out. A 2020 Etron can be had for sub £35k before Tesla price cut. If people can get a brand new 2023 MY for £45k, who will pay £35k for a very inefficient and low range Etron thats 3 years old? We might see them dip to £30k soon. That would be an attractive proposition for those who don't need the range. I love the interior of that car and its a luxury cabin and drive, but I hate the efficiency.

 

[Jason71]

I agree - profit is the prime driving force of a successful enterprise and has been the catalyst over centuries for massive innovation.

However, where I disagree is that most well run businesses trade off some elements of short term profit to secure longer term customer loyalty, repeat business and overall higher profit over the long run.

Tesla appears not to give a stuff about the long term. Or is it just that they are more price-transparent? We can see very readily when their prices go up and down, and the price seen is the price paid. Whereas more traditional car cos might not shift the list price, but increase or reduce the dealer price that in turn affects the ability to discount?

I think the SuC network was a pretty smart long term investment.
And yes I think you are right that other makes do this just as much but they are able to be more subtle. Tesla 100% use trade in price to manipulate demand but beyond that there is not much they can do behind the scenes

 

[DeejUK]

It is more apparent now that Tesla don't care much for "customer loyalty"

Tesla understandably cared a lot more about customers in the pre-M3 days. There were thousands of customers in the UK, not tens/hundreds of thousands. It was quite nice having spent £108k on a car and having staff act like not only they, but company policy, really cared about keeping us happy. There are some really nice Tesla staff that I've met recently, but sadly the customer care can't scale with the increased volumes.

Tesla appears not to give a stuff about the long term. Or is it just that they are more price-transparent?

I'm pretty sure Elon is a fan of just-in-time and theory of constraints. Customer satisfaction won't be a problem until it's the main problem. There are plenty (maybe fewer these days!) of new customers who haven't yet gotten the message about the sucky service. Once they get that message and stop buying, or the majority of the customer base is buying second vehicles, I expect they'll do something about it. Don't fix what isn't the most broken thing, I suppose.

I'm half fatalistic about this, half disappointed.

 

[UrbanSplash]

And it looks like Tesla has just dropped prices on new cars. That’s not going to help resell prices on used cars either.

My car would now be approx £2k cheaper now than it was in March (MYLR)

Mine too. But in the context of the massive price reductions, it’s not too bad. Plus we have parking sensors!

 

[Sean.]

Tesla understandably cared a lot more about customers in the pre-M3 days. There were thousands of customers in the UK, not tens/hundreds of thousands. It was quite nice having spent £108k on a car and having staff act like not only they, but company policy, really cared about keeping us happy. There are some really nice Tesla staff that I've met recently, but sadly the customer care can't scale with the increased volumes.

Yes experienced it first hand.

It was VERY apparent how much attitude to customer service changed from 2017 to when the Model 3 began taking off here. Another year later and they had "survived" production hell - but Tesla HAD become mass market like Toyota and Hyundai. That was the plan and they executed it.

I don't think it's a question of "scale"- it's a question of the importance they place on customer service / experience / call it what you will. The fact it (the customer service model) keeps changing every 18 months or so is also rather frustrating. Maybe they want to move fast and keep breaking that too and don't think customers will notice or care.

 

[Js1977]

It’s a £5k drop isn’t it?

Plus an increase on finance rates (apr gone up to 6.9%).

Given the inflated trade in prices last year the difference between trading in then with the higher price/cheaper finance. Vs now with weaker trade in, lower RRP/higher finance %, the difference is probably less than you think.

Cash buyers with no trade in have been stuffed a little harder.

Personally I dont begrudge not paying the 6.9 or even to 4.9% (or whatever it was back then)...paying interest is wasting money.

 

[SR-Plus]

Personally I dont begrudge not paying the 6.9 or even to 4.9% (or whatever it was back then)...paying interest is wasting money.

Even Ferrari owners lease their cars. If you can beat the interest rate in property or stock market etc then that’s the better place to put your money.

 

[Sean.]

Even Ferrari owners lease their cars. If you can beat the interest rate in property or stock market etc then that’s the better place to put your money.

Yeah both of those seem to be performing amazing well.

 

[gangzoom]

Even Ferrari owners lease their cars. If you can beat the interest rate in property or stock market etc then that’s the better place to put your money.

The richest person I know drives a 15 year Ford Fiesta, I suspect they have never leased a car in their entire life. If you can 'beat' 6.9% interest rates with no risk go for it.

Tesla cars are still overpriced compared to 2015. The S started at under £50k, and X £64k.

 

[gangzoom]

Yeah both of those seem to be performing amazing well.

You can never really predict anything we took out additional borrowing for a house build which still hasn't started. So right now we are 'earning' 4% interest on a loan via cash ISA/premium bonds that cost us 1.5% APR, so literally 'free' money. With all the price cuts coming its now very tempting to 'cash in' on things, but equally with interest rates still going up, we are earning more and more from the loan for doing absolutely nothing with zero risk.

One thing is for sure, if your main interest is to earn/make a return on money the last thing you want to do is waste it on any new car, lease, PCP, cash, however you pay for it you are burning money essentially.

 

[Js1977]

Even Ferrari owners lease their cars. If you can beat the interest rate in property or stock market etc then that’s the better place to put your money.

It's all good unless the credit bubble bursts or if you can put it through as a business expense. Sure, I could go lease/pcp a Ferrari or a or tesla etc but personally I cant deal with to many outgoings and cant afford to haemorrhage that sort of money. For me being a bit old school its the difference between having asset or an expense and not worrying about recessions... This is not financial advice