A Brand New Tesla Might Be the Best Depreciation Hedge— An Analysis of Tesla’s Incredible Resale Value
Tesla’s average resale value is over five times better than industry average
Due to a convergence of market factors, electric automobiles are among the best deals in the used-car market. To start, all used electric cars were offered with a $7,500 federal tax credit, essentially reducing the resale value by that amount from the outset. Furthermore, pre-owned battery-powered vehicles, particularly older models with a very short range on a charge, are in short supply. On used-car lots, you can readily find pre-owned electric vehicles like the Ford Focus Electric, Nissan Leaf, and Volkswagen e-Golf for $10,000 or less.
The Teslas are the exceptions to the rule. They cling to their values so well that buying a new one rather than a late-model one from the resale market can be a better deal in some situations. You might think it’s a good idea to hunt for a used 2018 Tesla Model 3 small sedan in the hopes of saving money over getting a new one, but you’d be wrong.
Though there aren’t many available right now, a dealer in the Chicago region would generally seek $47,323 for a 2018 Model 3 with average kilometers and in good condition or better, according to Kelley Blue Book. On Carfax.com, several are listed for between $40,000 and even $50,000.
A brand new Model 3 may be acquired for $39,480, less the $1,875 tax credit that is still valid until the end of 2019. That implies a pre-owned model with several thousand miles on the odometer may cost up to $10,000 more than a brand-new model. The Model 3 Performance fared better, with a new model outfitted with improved Autopilot costing $63,990, compared to $52,150 at a dealership. When you account in the tax credit, the only 2018 Vehicle 3 Performance we located on Carfax within several hundred miles of Chicago was selling for $58,800, which is only $3,340 less than a new model.
Let’s take a look at the larger Tesla Model S sedan, which has been around for a few more model years. For $79,990, you can get a new basic Long Range model with dual-motor all-wheel drive and a 373-mile range on a charge, plus a $1,850 federal tax credit. The top Performance model, which can travel 348 miles on a single charge, costs $99,990.
According to KBB, a base 2018 Model S 100D with a range of 335 miles would normally be offered for $76,911. When you add in the tax credit, the difference is only $1,229, and you get 25 less miles each charge. With the tax credit, the 2018 Performance model with a 315-mile range would be advertised for $99,459, which is actually a little more than a new car that can go more than 30 miles farther.
If a 259-mile range is enough, KBB estimates that a 2018 75D model, which initially sold for $74,500 but is no longer in production, would list for $60,889.
What about a Model S from the past? A 2016 Tesla Model S P100D with a 315-mile range is expected to list for roughly $85,000 at a dealership when comparing apples to apples. That’s more than a brand new Model S in its base configuration, which has a range of 370 miles on a single charge. Meanwhile, a 2016 P1000 Performance model with a range of 289 miles is listed for $71,562, which is almost $6,500 cheaper than a brand new one with a much longer range.
The Tesla Model X crossover SUV, with its spectacular gull-wing doors, presently outsells the sedan, albeit the increased demand may not translate to resale value. A new Model X with a 328-mile range costs $84,990, or $83,115 once the federal tax credit is deducted. According to KBB, the comparable 2018 100D version with a 295-mile range would sell for $78,022 at a dealership, a difference of about $5,100.
Fortunately, older Tesla vehicles with significantly less miles per charge than newer models are more affordable on the used-car market. The now-discontinued 2014 Model S 60D, which initially retailed for $71,000, would now sell for $51,328, but it only had a 218-mile range when new. For a base 2014 Model S with a 208-mile range that initially listed for $69,900, a dealer would seek $40,044. A 2016 Model X 60D with a 200-mile range is normally priced around $52,600.
According to a survey undertaken by the used automobile website iSeeCars.com, the color of a used Model S matters if you’re searching for a better-than-average value. Discounts of 10% or more off the book’s worth were shown to be 25.6 percent easier to come by for brown versions. Price reductions on a red Model S, on the other hand, were 11.2 percent more difficult to achieve than the average.
The final line is that buying a pre-owned Model S or X, even one that is older, can be costly, with a pre-owned Model 3 being a losing proposition at this moment. It may not be worth the savings to forego all or part of the factory warranty (4 years/50,000 miles) and deal with a reduced operational range, not to mention some battery capacity degradation. Plus, in terms of exterior colors, wheel designs, interior treatments, and so on, you’ll have to make do with what’s available on the used automobile market. Those who purchase a new Model S or Model X will receive free unlimited charging at any of Tesla’s public Supercharger stations to sweeten the bargain.
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