What's your prediction of the effect of a renewed tax credit on resale? [of model 3]

[SkepTeach]

Loads of discussion on the potential for a renewed tax credit for Tesla, but I'm curious to see your speculation about the effect on resale values. Let's say Congress passes BBB and most Teslas begin receiving a $7500-8000 incentive as of 1/1/22. For the 2022 tax year, this credit will only be realized in spring of 2023.

What do you think this will do to Tesla's currently nutball resale values?

I could see a couple of different outcomes:
1. Practically speaking, people will be receiving (the next year) upwards of $8k off their car, so that could drop the resale value. Why would anyone pay MSRP or higher for a car they could order and "get" for far less?
2. But, the renewed incentive would likely increase the demand for Teslas, which is already high enough to put SR M3s out nearly a year from now. This could have the opposite effect on values, as many people will be too impatient to wait for giant lead times and will eat the exorbitant prices these cars are already fetching. This increased demand could further increase the price in the used market.

Full transparency: I'm hoping for BBB to pass and for the #2 to be true. I have a SR I ordered in July that is finally being delivered next week, I locked in at a price $5k cheaper than they are now. I am very tempted to get it and immediately place an order for a LR with the hopes of flipping the SR shortly before the LR is delivered and using the possible "profit" to make the difference in cost between the two cars a wash.

 

[golfcart]

Probably depends how new Tesla pricing responds to the credit and to what extend the supply remains constrained and delivery times are pushed out into the future.

If new Tesla prices remain the same then it seems like resale would have to drop in response to a $7500 net discount applied to all brand new Tesla.

You could certainly try to flip your car but just keep in mind you are paying sales tax each time and destination charges etc... plus private party sales aren't always so easy. They take time and you have to deal with lowballs, tire kickers, and all kinds of other nonsense. It would be cleaner to sell to Carvana, CarMax or Vroom but you won't get quite as much.

It is a calculated risk that could pay off but I wouldn't consider it a guarantee given all the unknowns. It's too bad you can't push that delivery out until January then you'd really be getting a deal on that SR (assuming the credit happens).

 

[Jeremy3292]

Well as of early Nov Carvana was going to give me $57k for my M3...today $49k. Ouch

 

[SkepTeach]

Probably depends how new Tesla pricing responds to the credit and to what extend the supply remains constrained and delivery times are pushed out into the future.

If new Tesla prices remain the same then it seems like resale would have to drop in response to a $7500 net discount applied to all brand new Tesla.

You could certainly try to flip your car but just keep in mind you are paying sales tax each time and destination charges etc... plus private party sales aren't always so easy. They take time and you have to deal with lowballs, tire kickers, and all kinds of other nonsense. It would be cleaner to sell to Carvana, CarMax or Vroom but you won't get quite as much.

It is a calculated risk that could pay off but I wouldn't consider it a guarantee given all the unknowns. It's too bad you can't push that delivery out until January then you'd really be getting a deal on that SR (assuming the credit happens).

All excellent points to consider, especially in states that don't allow sales tax incentives. Here in AR, we get a sales tax incentive if we sell or trade a used vehicle for a new or another used one. If you sell or trade your car for half of what a new car is worth, you pay 50% of the sales tax. If the sale is for the same or more value than the new one, you 0% sales tax. In my case, I sold my Ford MME for $54k a few weeks ago, so I won't pay sales tax on my SR. If I could manage to sell the SR for the same or similar price to the LR, I would pay little to no sales tax on it.

Incidentally, I offered my MME to Carvana and Vroom, and then heard about GiveMeTheVIN either here or on the MME forum. Carvana and Vroom both offered $50k, and GMTV came back with $54k. If I try this, I'll definitely give them another crack at it.

 

[SkepTeach]

Well as of early Nov Carvana was going to give me $57k for my M3...today $49k. Ouch

Oof, that stinks. I assume it has to have something to do with the current delivery timelines. LRs can, in some cases, be delivered within a week or two of placing an order, whereas SRs are way out.

 

[afadeev]

Loads of discussion on the potential for a renewed tax credit for Tesla, but I'm curious to see your speculation about the effect on resale values. Let's say Congress passes BBB and most Teslas begin receiving a $7500-8000 incentive as of 1/1/22. For the 2022 tax year, this credit will only be realized in spring of 2023.

Correction - the cash flow transaction (tax refund) will take place in 2023, but the credit amount will be realized on the day of the transaction.
If you are cash starved this may matter to you, otherwise, the gap in dates makes little difference.

What do you think this will do to Tesla's currently nutball resale values?

First of all, all used car values are artificially high right now, due to the shortage of new vehicles on the market.

The new tax credit will grow the value gap between new and used vehicles by exactly the amount of the tax credit ( * probability of realizing it, subject to income limitations, MSRP limitations, fine print exclusions, etc, etc).

I don't see the tax credit effecting demand all THAT much, since Tesla has been jacking up the prices on all of its vehicles, and the wait times have hardly budged.
If anything, Tesla might just use this as another opportunity to jack up the MSRP prices yet again!

Not that it makes any differences to any of us, unless you were teetering on the point of listing your used Tesla on the market, or buying a new one and taking delivery in 2021. In which case, you may have just taken a hit.


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[PartyBoy]

My prediction ...wishful thinking. This is not going to happen.