What do you think 2019 holds for the Model 3?

[suwaneedad]

My feeling completely. Times were, keeping a vehicle 8-10 years was perfectly reasonable. Now, they iterate and improve so rapidly, a 10 year old vehicle feels like a complete antique.

Hard to believe that only 6 years ago, the 80-mile Leaf was top of the line for electric vehicles. Here we are at 300+ mile range, which is right in line with ICE. We’re there - at the point where there are no downsides to electric drive for the average driver. For me, I never, ever go anywhere over 200 miles in one trip. Ever. If I do, it’d be in my wife’s Enclave anyway, because the likelihood is that we’re hauling either more people or more stuff.

So I’m pretty much the ideal candidate for a Model 3.... thing is, I don’t want to buy one today and be driving the same Model 3 in 2027. They’re changing too rapidly for that.

Leasing or bust!

You guys are getting to the heart of why Tesla has not yet offered a lease for Model 3...satisfy the purchase demand first, before succumbing to the lease demand as a subsequent demand lever. I tend to keep vehicles 15+ years, so was fine buying a 3 early, knowing at least the body style will be current for ~8 years (based on Model S). Once a Model 3 lease is offering, demand will spike, and resale values will tank 24-36 months thereafter, so there is an art to when Tesla first offers Model 3 leases...they'll want to be sure Model Y (and perhaps even Pickup) are producing at scale before the first Model 3 leases come off lease in volume, throttling resale values in the process.

 

[jjrandorin]

Without a captive finance company, tesla leases are not as compelling from a cost perspective of other luxury brands. Other luxury brands artificially inflate the residual on their leases (might be getting a bit into the weeds for some), so the monthly payments are lower, but the captive finance arm they lease through takes a hit on each car when its returned.

Since tesla does not have a captive finance arm, they do not have a "move expensive cars" reason to artificially inflate the residual, and banks will set the residual to a much more realistic number. Again, in the weeds here for some, but "more realistic residual value" = higher monthly payments = less desirable to lease that vehicle because the spread between purchase and lease payments is not large enough.

When I looked at model S leases the pricing was stratospheric... but they HAD to lease those vehicles to get people to give them a chance. I think leasing will come to model 3, but I also think when people sit down and calculate it out, its not going to be super compelling unless they are putting it under their business or something... or Tesla opens a captive finance arm, which I doubt,

 

[dmurphy]

You guys are getting to the heart of why Tesla has not yet offered a lease for Model 3...satisfy the purchase demand first, before succumbing to the lease demand as a subsequent demand lever. I tend to keep vehicles 15+ years, so was fine buying a 3 early, knowing at least the body style will be current for ~8 years (based on Model S). Once a Model 3 lease is offering, demand will spike, and resale values will tank 24-36 months thereafter, so there is an art to when Tesla first offers Model 3 leases...they'll want to be sure Model Y (and perhaps even Pickup) are producing at scale before the first Model 3 leases come off lease in volume, throttling resale values in the process.

Absolutely correct - it’s not a “we haven’t figured out how” it’s a “when will it offer us accretive value to do so?”

And I think the time for that is coming up shortly - first half of this year ... Possibly right before the Model Y unveiling. That’s actually the model I’m MOST interested in, which is another reason leasing a Model 3 makes sense for me. I really want a model y, but have to make a move this year.

To be fair - the XT5 has been a spectacular vehicle for me. I absolutely adore it. But it has a gasoline engine, and in my mind, that’s now a relic. If GM could get off their duff and produce a real electric drivetrain, I believe they’d give Tesla a very serious run for the money. And from what I’m hearing, they could be best poised to do so.

But back to Tesla... the win for me would really be a midsize SUV. The X is actually a little big for what I want, not to mention over what I want to spend on a vehicle. But something in the Cadillac XT5/BMW X5/Acura MDX/Lexus RX350 class - well, that’s worth waiting for.

So in an ideal world - I’d lease a M3 to bridge the gap to the Y. Maybe one more lease, and then buy a Y. Let’s see where this goes..

Either way, will be a very interesting year indeed.

 

[david_42]

I think much will depend on how fast the Singapore plant gets started. If they source batteries locally and ship in an assembly line or two from Germany, it could be third quarter. Yes, the German line requires more people, but skilled workers are abundant over there.

 

[suwaneedad]

Absolutely correct - it’s not a “we haven’t figured out how” it’s a “when will it offer us accretive value to do so?”

And I think the time for that is coming up shortly - first half of this year ... Possibly right before the Model Y unveiling. That’s actually the model I’m MOST interested in, which is another reason leasing a Model 3 makes sense for me. I really want a model y, but have to make a move this year.

To be fair - the XT5 has been a spectacular vehicle for me. I absolutely adore it. But it has a gasoline engine, and in my mind, that’s now a relic. If GM could get off their duff and produce a real electric drivetrain, I believe they’d give Tesla a very serious run for the money. And from what I’m hearing, they could be best poised to do so.

But back to Tesla... the win for me would really be a midsize SUV. The X is actually a little big for what I want, not to mention over what I want to spend on a vehicle. But something in the Cadillac XT5/BMW X5/Acura MDX/Lexus RX350 class - well, that’s worth waiting for.

So in an ideal world - I’d lease a M3 to bridge the gap to the Y. Maybe one more lease, and then buy a Y. Let’s see where this goes..

Either way, will be a very interesting year indeed.

I'm not sure when your Caddy lease is up this year, but seems to me you could lease one more Caddy SUV on a 2yr, consider it your farewell tour to ICEs, and then get a Y once they've been in production for 6-12 months with kinks worked out. Just skip the 3 altogether. I too have Y as my desired Tesla, with my 3 a stopgap measure that I will either keep alongside Y, or sell it down to my son when his RX450h reaches the end of its usefulness for his purposes. He's chomping at the bit to get into a (my) 3, but has the discipline to wait since financially his depreciated 2012 RX is clearly cheaper to own for the foreseeable future.

 

[jjrandorin]

I'm not sure when your Caddy lease is up this year, but seems to me you could lease one more Caddy SUV on a 2yr, consider it your farewell tour to ICEs, and then get a Y once they've been in production for 6-12 months with kinks worked out. Just skip the 3 altogether. I too have Y as my desired Tesla, with my 3 a stopgap measure that I will either keep alongside Y, or sell it down to my son when his RX450h reaches the end of its usefulness for his purposes. He's chomping at the bit to get into a (my) 3, but has the discipline to wait since financially his depreciated 2012 RX is clearly cheaper to own for the foreseeable future.

My wifes current replacement for her X5 is an ordered X3 M40i... that will be here in about 10 days. Its replacement will almost assuredly be a tesla medium sized suv as she likes suv's. I am thinking the model Y will fit the bill, and that by the time we are ready to get it (in 3 years) I will be ok with being an "electric only" family.

My model 3 is my first EV, and I have only had it a month, but (as I have said before here somewhere) driving it was an "iPhone moment" for me. I am in IT, and CLEARLY remember the first time I saw (and had to support) the first iPhone in 2007. Smartphones existed before, but it was clear that it was something special. Driving the Model 3 was the same thing for me, and I feel they are now at a point where people dont think they are "strange" anymore. I believe tesla has "weathered the storm" so to speak as a company.. but if I didnt think so I wouldnt have bought one.

There are enough of them on the road now that they are no longer a super novelty. Now that people can test drive them more will likely give them a chance. As long as Mr. Musk doesnt have a repeat of last year from a "making news" perspective... I think its an exciting time to jump on this bandwagon.

 

[dmurphy]

Without a captive finance company, tesla leases are not as compelling from a cost perspective of other luxury brands. Other luxury brands artificially inflate the residual on their leases (might be getting a bit into the weeds for some), so the monthly payments are lower, but the captive finance arm they lease through takes a hit on each car when its returned.

Since tesla does not have a captive finance arm, they do not have a "move expensive cars" reason to artificially inflate the residual, and banks will set the residual to a much more realistic number. Again, in the weeds here for some, but "more realistic residual value" = higher monthly payments = less desirable to lease that vehicle because the spread between purchase and lease payments is not large enough.

When I looked at model S leases the pricing was stratospheric... but they HAD to lease those vehicles to get people to give them a chance. I think leasing will come to model 3, but I also think when people sit down and calculate it out, its not going to be super compelling unless they are putting it under their business or something... or Tesla opens a captive finance arm, which I doubt,

So the question is this - what - realistically - is the resale value of a Model 3 after ~36 months?

I can tell you - my 2017 XT5 Platinum lease has a residual of 58%. So that’s approximately $34k residual after 39 months. Probably very close to what you’d see it for resale now; I don’t think that’s really an inflated number, but your point is very well taken. I guess it’s still too early to tell what M3 3-year values will be, but I guess it’s a strategic bet that resell will remain high.

I haven’t examined Tesla’s leasing options on the S/X, so don’t know what their going MF and residuals look like. I’m at a MF of 0.0006 on the Cadillac - can’t really complain there. Current is .0013 so it’s about double where I’m at, but that’s still reasonable(ish) given the current interest rates. Any idea what TSLA is leasing for right now?

Optioning out a M3 the way I’d order it is $60k on the button. Realistic buy price on a 2019 XT5 optioned the way mine is would be about $62k. No sales tax on the M3 here in NJ, so that’s $3,975 (+$3,750 fed) in savings relative to the XT5.

The big question, again, is what would resell look like in 3 years if I wanted to trade up to a model y? With a lease, I’m wholly unconcerned; it’s the financer’s problem. With a purchase, it becomes my problem.

But you might be giving me cause for reconsidering... it’s all about what the residuals and MF are on their leasing program.

Thank you!

 

[dmurphy]

I'm not sure when your Caddy lease is up this year, but seems to me you could lease one more Caddy SUV on a 2yr, consider it your farewell tour to ICEs, and then get a Y once they've been in production for 6-12 months with kinks worked out. Just skip the 3 altogether. I too have Y as my desired Tesla, with my 3 a stopgap measure that I will either keep alongside Y, or sell it down to my son when his RX450h reaches the end of its usefulness for his purposes. He's chomping at the bit to get into a (my) 3, but has the discipline to wait since financially his depreciated 2012 RX is clearly cheaper to own for the foreseeable future.

It’s due to go back in October. That’s the thing - with the fed incentive dropping again July 1, that’s $1875 to leave on the table. Works out to almost exactly 3 months’ worth of lease payments on the XT5. So if I get into a M3 at the end of June, drive it July/Aug/Sept, it’d net out to basically the same thing as getting into the M3 when the lease expires on the Caddy.

Of course that’s all moot if the federales change things up as they’ve threatened to do, but I’ll ride that out between now and May. (Since, realistically I’d place an order in May for June delivery.)

So much to think about. The biggest thing of all, of course, is whether I’d be happy going from the SUV size down to a 3. In practical terms, we’ll still have a (less than year old) Buick Enclave for any heavy lifting, so we’re covered for any big hauling. Just 1 kid, so I’m not schlepping huge families around either. He’ll be 12 this year. Maybe I buy the M3, and hold it for 5 years so he can drive it when he gets his license in 5 years. My goodness, that’s a crazy thought. Not ready to even think of him driving! Maybe buy the 3, then when the M-Y hits, my wife replaces her Enclave with that... although she’s determined to get 10 years out of the Buick. If I could buy 4 of them, shrink wrap them and just give her another one every 10 years, she’d be thrilled. The 2nd generation Enclave is really well done for a large SUV, if you haven’t driven one.

Sorry for rambling all over the place, but I really appreciate the thought provoking discussions! This is great stuff. Thanks again.

 

[jjrandorin]

So the question is this - what - realistically - is the resale value of a Model 3 after ~36 months?

I can tell you - my 2017 XT5 Platinum lease has a residual of 58%. So that’s approximately $34k residual after 39 months. Probably very close to what you’d see it for resale now; I don’t think that’s really an inflated number, but your point is very well taken. I guess it’s still too early to tell what M3 3-year values will be, but I guess it’s a strategic bet that resell will remain high.

I haven’t examined Tesla’s leasing options on the S/X, so don’t know what their going MF and residuals look like. I’m at a MF of 0.0006 on the Cadillac - can’t really complain there. Current is .0013 so it’s about double where I’m at, but that’s still reasonable(ish) given the current interest rates. Any idea what TSLA is leasing for right now?

Optioning out a M3 the way I’d order it is $60k on the button. Realistic buy price on a 2019 XT5 optioned the way mine is would be about $62k. No sales tax on the M3 here in NJ, so that’s $3,975 (+$3,750 fed) in savings relative to the XT5.

The big question, again, is what would resell look like in 3 years if I wanted to trade up to a model y? With a lease, I’m wholly unconcerned; it’s the financer’s problem. With a purchase, it becomes my problem.

But you might be giving me cause for reconsidering... it’s all about what the residuals and MF are on their leasing program.

Thank you!

I dont have the answer.. but historically EVs have had pretty poor residuals. There is an article right now on TMC talking about RVs rising for the first time. If I had to guess (and its seriously a guess), I would guess that RVs would be set around 49-52%.

Tesla's online leasing calculator does not give enough information for me to calculate the RV, but they assume a VERY large down payment in their website calculations on model S. On a lease (again, in the weeds here) any down payment / cap cost reduction is simply pre paying the lease. Putting a large down payment on a lease is not ideal (where it doesnt really matter on a purchase as you will own the asset at the end). Large down payments just tend to hide what you actually pay to the person leasing.

Anyway I am way in the weeds here... I used to be one of the main people looking at dealer lease deals on a major bmw fansite so I tend to run on about leasing.

Model S leasing calculator on tesla's website assumes a 7k down payment. Of course tesla's website is pretty poor regarding purchases in general, as it prominently has stuff like "gas savings" and such showing in the price of the car, which is.. unfortunate and can be confusing to many.

@dmurphy I imagine you understand leasing pretty well, but if you have leasing questions you could PM me. I dont know tesla specifically though.

 

[Zcd1]

...My model 3 is my first EV, and I have only had it a month, but (as I have said before here somewhere) driving it was an "iPhone moment" for me. I am in IT, and CLEARLY remember the first time I saw (and had to support) the first iPhone in 2007. Smartphones existed before, but it was clear that it was something special. Driving the Model 3 was the same thing for me,..Now that people can test drive them more will likely give them a chance...I think its an exciting time to jump on this bandwagon.

Agreed 100% on all counts. Driving the Model 3P for the first time (on a whim) made me realize immediately that my next vehicle would be electric. I almost bought it right then (in September), but fretted over various things long enough that the $5K discount happened, and then when I texted my sales guy to ask whether they happened to have my preferred spec in stock and they DID, I was a goner.

I've only had the car for 4 days, but can already say that it's by far the best car I've ever owned!

(I bought my first car ~40 years ago and had driven exclusively Audis for the past 20)

As for what I expect from the M3 this year, I wouldn't be surprised to see an HUD added, nor to see an over-the air performance upgrade for the M3P, nor an air suspension option.

 

[ItsNotAboutTheMoney]

I wouldn't be so sure that $3750 will hold. US lawmakers as of today are in the position of subsidizing foreign automakers but not the largest American EV maker. By the middle of this year, they will be subsidizing solely foreign automakers as GM enters the phase-out period.

That's... Well, let's just say it's not a great look politically, regardless of where on the political spectrum you fall.

It's certainly possible that nothing changes, but I think it's at least as likely that we see a change to the law before the end of the year--either a change to a date-based phase-out across all manufacturers or the law ended soon.

The foreign manufacturers are in the South. Their Republican Senators won't vote to remove the tax credits. The attempted amendments last year disappeared quietly in the reconciled bill. And, since the House is going Democrat, I wouldn't expect the House to be aggressive in changing it either.

 

[Zaxxon]

Certainly possible. I'll stick to my guns, though, and say I view it as 50/50 that it'll change.

 

[Glamisduner]

Air Suspension, Sunroof, Cold Weather Package, Seat Improvements, Hud would be really sweet, and Cheaper variant with metal roof and cheaper seats and smaller battery. Panel Gaps will improve, paint will improve, more color options will be made available, more interior options will be made available.

 

[KD5MDK]

I dillied and dallied and didn't get an order in for 2018, so I'm going to wait until something changes to place my order. A HUD would very likely push me over the edge.

 

[Zaxxon]

I dillied and dallied and didn't get an order in for 2018, so I'm going to wait until something changes to place my order. A HUD would very likely push me over the edge.

Prices dropped $2k across the board this am. Does that count?

 

[jbcarioca]

I think much will depend on how fast the Singapore plant gets started. If they source batteries locally and ship in an assembly line or two from Germany, it could be third quarter. Yes, the German line requires more people, but skilled workers are abundant over there.

What Singapore plant?

 

[Zcd1]

Prices dropped $2k across the board this am. Does that count?

Not doubting, but source?

 

[Zaxxon]

Not doubting, but source?

Go configure a car...

 

[dsvick]

Let's assume that this is correct - that Tesla will end the year with a few thousand cars in inventory. Grand scheme, not a big deal. But it seems to suggest that they've already blown through the supposedly massive pre-order backlog they had, except for the people still holding out for the "$35k" version.

You say "except for" like it's a small number. There are likely at least as many, if not more, people waiting for the standard version as there have been for the previous ones. Also, regarding any left over inventory, keep in mind that these are cars that were built to match some spec that they came up with based on sales to date. Those specs may or may not match what current buyers want. And, for the ones that do match, the car may have been several states away with not way to complete the sale by year end.

Have they built enough of the premium versions to support a $35k version?

No, but they're pretty close. I expect to see the standard version available to configure in the US by the end of Q1.

With the loss of the tax credit, will it now be a $38.75k version?

Why would the price go up when the tax credit gets lowered? If it changes at all it'll go down.

Do you think there will be additional Model 3 variants, like Performance or AWD? Before or after the cheapest version?

They already have those ...

 

[Zaxxon]

Not doubting, but source?

Now there's an actual press release.