[UK] used value of their Tesla cars plummeting?

[MadManMark]

Heard exactly this today. My 2020 M3P has CAP of 31.5-32.5 but with the flag for review affecting 3 as well as Y.
And here’s an example of why prices are dropping: I’m working away, drove my usual 144 mostly motorway miles 80%-10% this morning. Charged this eve ready to go home at the end of the week at MFG through Electroverse, 57kwh was £43. So for 500 miles, that’s over £150 at public rates. That’s worse than my wife’s diesel Defender.

Given the recent drop in energy costs that price (75p/kWh) is a rip off. Tesla currently 41p off peak/53p peak at my local charger.

 

[Durzel]

You know the actual reason why these cars are dropping in price don't you? It's nothing to do with electric prices (or every other electric vehicle would be suffering the same, they aren't), it's nothing to do with Tesla's recent price reduction lol.

It's literally because every man and his dog leased one of these for 3 years when they first came out. Deliveries of these leases started taking place properly in November/December. These have now nearly ALL gone to auction, thus flooding the market, flooding BCA and there are now an abnormal amount of Model 3's about in the for sale streams.

This is it

Do not panic. Think about logically, you can now pick up a model 3 performance for 30-32k. The same price as a 70 plate electric MG, it doesn't make sense and won't last.

This doesn’t make any sense, sorry.

Why would the current state of affairs get any better? You’re correct that 3 year leases etc began in 2019 (actually at the start of Q4, if I recall, not the end) but it’s not like that’s ever died down. People have been piling in to buying Model 3s since they became available, and Tesla have been selling as many as they can make - which has only gone up and up - hence the supply/demand price skew last year. There will be significant numbers of cars coming off lease every quarter at the very least, with many in between.

The reality of the situation is that whilst owners have cheered Tesla’s dominance of new car sales charts, they’ve neglected to realise what this ultimately means for them. That realisation has come home to roost.

Sadly for existing owners, myself included, Tesla have made it abundantly clear that they want to maintain and increase volume of sales, hence the price cuts. They don’t want to be reducing capacity at their Giga plants, and they’re not interested in protecting residual value (e.g. like how a boutique manufacturer would control the used car market pricing). As such we’re on our own, and should expect ever greater numbers of these to be built and sold, and possibly even further price cuts if these volume targets are not met.

So whilst I agree with “do not panic” (you can’t control used car pricing, and cars are a depreciating asset) the notion that used cars are going to appreciate from here, after the dust has settled, is silly. Comparing the OTR price of a brand new MG (or any car) to a 3+ year old M3P is a specious argument too.

I imagine older 3/Ys will find a price floor - the battery capacity and performance sortof guarantees that - but they’re not suddenly going to go back up in value significantly, not unless we have a generational event like COVID & knock on parts shortages again. The sheer volume of cars on and coming to market will ensure that.

The only glimmer of hope that I can see that makes Teslas slightly different to regular cars is that they are always improving in software, so people are less likely to change as often. It’s debatable how big of a factor that is, though, given there are plenty of finance customers - the majority of owners - who just rotate into a new car at the end of their term as a matter of course. Tesla are also adding lots of non-retrofittable hardware improvements as time goes on, my 2020 M3P is arguably less attractive than a 2022 one, even discounting the age difference.

All told I expect the revised used car pricing that we’re all going to come up against when we look to sell to be here to stay, no matter how sobering that might be.

 

[Utumno]

One might, in fact, view collapsing residuals on good quality reasonably new Tesla vehicles as being an essential part of Tesla’s strategy to electrify mobility worldwide.

Savvy owners need only look at the hawkish GFV figures baked into Tesla’s retail PCP finance agreements to be able to deduce Tesla’s attitude to residual valuation risk.

 

[Idk3]

This doesn’t make any sense, sorry.

Why would the current state of affairs get any better? You’re correct that 3 year leases etc began in 2019 (actually at the start of Q4, if I recall, not the end) but it’s not like that’s ever died down. People have been piling in to buying Model 3s since they became available, and Tesla have been selling as many as they can make - which has only gone up and up - hence the supply/demand price skew last year. There will be significant numbers of cars coming off lease every quarter at the very least, with many in between.

The reality of the situation is that whilst owners have cheered Tesla’s dominance of new car sales charts, they’ve neglected to realise what this ultimately means for them. That realisation has come home to roost.

Sadly for existing owners, myself included, Tesla have made it abundantly clear that they want to maintain and increase volume of sales, hence the price cuts. They don’t want to be reducing capacity at their Giga plants, and they’re not interested in protecting residual value (e.g. like how a boutique manufacturer would control the used car market pricing). As such we’re on our own, and should expect ever greater numbers of these to be built and sold, and possibly even further price cuts if these volume targets are not met.

So whilst I agree with “do not panic” (you can’t control used car pricing, and cars are a depreciating asset) the notion that used cars are going to appreciate from here, after the dust has settled, is silly. Comparing the OTR price of a brand new MG (or any car) to a 3+ year old M3P is a specious argument too.

I imagine older 3/Ys will find a price floor - the battery capacity and performance sortof guarantees that - but they’re not suddenly going to go back up in value significantly, not unless we have a generational event like COVID & knock on parts shortages again. The sheer volume of cars on and coming to market will ensure that.

The only glimmer of hope that I can see that makes Teslas slightly different to regular cars is that they are always improving in software, so people are less likely to change as often. It’s debatable how big of a factor that is, though, given there are plenty of finance customers - the majority of owners - who just rotate into a new car at the end of their term as a matter of course. Tesla are also adding lots of non-retrofittable hardware improvements as time goes on, my 2020 M3P is arguably less attractive than a 2022 one, even discounting the age difference.

All told I expect the revised used car pricing that we’re all going to come up against when we look to sell to be here to stay, no matter how sobering that might be.

This has happened so many times, I follow car prices a lot and notice when there are spikes in pricing or huge drops. We had a similar thing for instance on BMW M140i cars. When first released they were given a ridiculous finance deal, around £0 deposit and £359/m

The used market became so saturated that they ended up costing less than the 135 (previous model). Same thing happened with M2. Both of these cars have rectified and are now more expensive second hand than they were 4-5 years ago.

All of the initial deliveries were made in Nov/Dec. Just check on the auction sites, or auto trader, you’ll be amazed at how many are “69” cars.

The initial spike of deliveries is now, and it will then slow to be a constant steady stream. This is genuinely the reason why the model 3 value has had such a hit over the last few weeks

 

[candida]

Given the recent drop in energy costs that price (75p/kWh) is a rip off. Tesla currently 41p off peak/53p peak at my local charger.

Needs must though…

 

[candida]

This has happened so many times, I follow car prices a lot and notice when there are spikes in pricing or huge drops. We had a similar thing for instance on BMW M140i cars. When first released they were given a ridiculous finance deal, around £0 deposit and £359/m

The used market became so saturated that they ended up costing less than the 135 (previous model). Same thing happened with M2. Both of these cars have rectified and are now more expensive second hand than they were 4-5 years ago.

All of the initial deliveries were made in Nov/Dec. Just check on the auction sites, or auto trader, you’ll be amazed at how many are “69” cars.

The initial spike of deliveries is now, and it will then slow to be a constant steady stream. This is genuinely the reason why the model 3 value has had such a hit over the last few weeks

If this were simply cars coming off lease it wouldn’t be a global phenomenon. Analysts are making a great deal about Tesla’s wild price rises of a year or so ago needing correction and killing the market.

 

[qwickshot]

The bigger question for me is why aren’t people buying these used like they used to. I’d never consider new (or any other EV) when you can pick up a 3 year old used one for half the price.

Perhaps they are being sold eventually, it’s just not that obvious unless you are tracking cars on auto trader daily.

 

[NewbieT]

Probably because the cheapest car on auto-trader is over £30k. If you couldn’t afford ‘new’ you probably haven’t had an EV before and will still have fear of the ‘battery life’. Not helped by stories of lease car drivers not caring about looking after the batteries.

 

[Jason71]

The bigger question for me is why aren’t people buying these used like they used to. I’d never consider new (or any other EV) when you can pick up a 3 year old used one for half the price.

Perhaps they are being sold eventually, it’s just not that obvious unless you are tracking cars on auto trader daily.

I have always bought used until my two Teslas neither of which you could realistically buy second hand at the time.
Will I go back to used vehicles in future? Quite probably but the idea of owning an EV out of warranty does make me nervous right now since most manufactures are so new to making them.

 

[Durzel]

This has happened so many times, I follow car prices a lot and notice when there are spikes in pricing or huge drops. We had a similar thing for instance on BMW M140i cars. When first released they were given a ridiculous finance deal, around £0 deposit and £359/m

The used market became so saturated that they ended up costing less than the 135 (previous model). Same thing happened with M2. Both of these cars have rectified and are now more expensive second hand than they were 4-5 years ago.

All of the initial deliveries were made in Nov/Dec. Just check on the auction sites, or auto trader, you’ll be amazed at how many are “69” cars.

The initial spike of deliveries is now, and it will then slow to be a constant steady stream. This is genuinely the reason why the model 3 value has had such a hit over the last few weeks

I was actually wrong, order book opened in May and deliveries started in June. Those cars would have been on 19 plates.

Tesla have sold more cars year on year in the UK. From Car Dealer Magazine:

It delivered 24,722 vehicles in 2020 versus 13,068 in 2019. Last year’s gross profit margin, meanwhile, was 7.4 per cent against 12.6 per cent in 2019.

They sold 25,171 Model 3s alone in 2021.

All of that is to say that there have been more and more Teslas (particularly Model 3s) being delivered, year on year, since they came out. The shock from Q3-Q4 2019 cars coming off lease and hitting the market is a phenomenon that is going to be repeated for every quarter from here on out.

I'm not sure the BMW comparison is valid because the BMW M140i was around for 4 years and ceased production in 2019. Cars that drop out of production can sometimes appreciate (depending on volume), particularly if they are better in some ways than later cars (M3 CS and CSL pricing makes me sad - I missed out on picking one of those up).

There is no "slowing to a constant steady stream" with Tesla. They are all about volume.

 

[Casss]

I was actually wrong, order book opened in May and deliveries started in June. Those cars would have been on 19 plates.

Tesla have sold more cars year on year in the UK. From Car Dealer Magazine:


They sold 25,171 Model 3s alone in 2021.

All of that is to say that there have been more and more Teslas (particularly Model 3s) being delivered, year on year, since they came out. The shock from Q3-Q4 2019 cars coming off lease and hitting the market is a phenomenon that is going to be repeated for every quarter from here on out.

I'm not sure the BMW comparison is valid because the BMW M140i was around for 4 years and ceased production in 2019. Cars that drop out of production can sometimes appreciate (depending on volume), particularly if they are better in some ways than later cars (M3 CS and CSL pricing makes me sad - I missed out on picking one of those up).

There is no "slowing to a constant steady stream" with Tesla. They are all about volume.

Yep it doesn’t compare at all. The M140i was also a very special car in one regard - it’s not “rare” like the 1m, but it was the last inline 6, RWD, turbo hatchback that BMW were making. That’s it. BMW made no noise about it, but the B58 in that chassis was special and people who knew, knew.

Coincidentally, people were wrapping them around trees at a startling rate (for obvious reasons) and this probably helped the perceived scarcity. My dealership wanted to buy mine back from me to sell to someone else.

 

[UrbanSplash]

I’m getting a Porsche next. Can’t be doing with the way Tesla go on….. crazy

 

[ringi]

The bigger question for me is why aren’t people buying these used like they used to. I’d never consider new (or any other EV) when you can pick up a 3 year old used one for half the price.

I expect few normal people yet know how cheaply they can get a year old Model 3 for if they huggle with a few dealers. I expect no one needs to pay as much as they are listed for on autotrader.

 

[Zilla91]

Yep it doesn’t compare at all. The M140i was also a very special car in one regard - it’s not “rare” like the 1m, but it was the last inline 6, RWD, turbo hatchback that BMW were making. That’s it. BMW made no noise about it, but the B58 in that chassis was special and people who knew, knew.

Coincidentally, people were wrapping them around trees at a startling rate (for obvious reasons) and this probably helped the perceived scarcity. My dealership wanted to buy mine back from me to sell to someone else.

I loved that car, still regret selling it to this day. That engine in that shape and sized car was class.

 

[colt033]

Tesla list prices are still comparatively high and the falling residuals make them look like a bad purchase. Just wondering how this is going to affect their sales in 2023. Maybe we'll see further price cuts.

 

[MashinBenzin]

I loved that car, still regret selling it to this day. That engine in that shape and sized car was class.

I had that engine in a rwd 440i, it was (and is) a gem. Had a memorable traffic light GP with a M140i on a curving road and the lack of traction/sudden break of traction in the 1-er was very noticeable, not surprised they met trees! Other than that, I imagine they handled a whole lot better than the 440i.

 

[UrbanSplash]

Tesla list prices are still comparatively high and the falling residuals make them look like a bad purchase. Just wondering how this is going to affect their sales in 2023. Maybe we'll see further price cuts.

They look like an extremely bad purchase currently. I wouldn’t touch one for now. It’s still winter, high energy bills… food price increases etc, and we are only into mid Jan. If Tesla have slashed prices so drastically now, where will we be in 3-6 months? Even less demand? I would wait it out if I was buying now. You might see extremely cheap nearly new 3/Y’s also.

Tesla are mental

 

[debrooker]

Lets not forget Tesla hiked their prices up around 10 months ago, the new LR price is still more than I paid for my first M3 LR in 2021. This reduction in price in my eyes is a correction back to the price they should be at.

Wasn't the reason for the hike, due to lead times reaching 12 months

The sudden crash in used prices is shocking but not surprising seeing every man and his dog has one.

 

[Zilla91]

I had that engine in a rwd 440i, it was (and is) a gem. Had a memorable traffic light GP with a M140i on a curving road and the lack of traction/sudden break of traction in the 1-er was very noticeable, not surprised they met trees! Other than that, I imagine they handled a whole lot better than the 440i.

Yes, it kept you on your toes which was a huge part of its charm

 

[qwickshot]

I’m going to shamelessly quote my own post in the price cuts thread but if you haven’t seen it, here is some sensible straight talking about the current residual values of Tesla cars.

The TLDR is that they are about where you would expect them to be if COVID hadn’t of happened. The analysis is about spot on IMO.

Some straight talking common sense thoughts on the price discussion, I can't say I disagree with anything he said. The most interesting TLDR is that EVM predicted his SR+ would be worth about £28k after 3 years, that's exactly what its now worth on a private sale after 3 years.