Tesla Continues to Shine: All Vehicles Retain Exceptional Resale Value

by Eva Fox August 15, 2020

Tesla Continues to Shine: All Vehicles Retain Exceptional Resale Value

Featured image: Motortrend

The residual--or resale--value of a vehicle is an important criterion for buyers, carmakers, and leasing companies. Tesla's Model S, 3 and X all carry a high residual value, even after several years of ownership.

The residual value can be determined by taking into account various types of depreciation, as well as the initial value of the asset. And there of course also has to be sufficient demand for the product at a certain price-point. Once these calculations are done, you then have an approximate price for which you can actually sell a car.


The manufacturers themselves and their pricing policy have a big impact on the cost of a used car. If an automaker launches an objectively overvalued car on the market, you will see a rapid drop in its resale value. If the car company wants to occupy a large market share, then it produces a very affordable model. If you buy such a car, ceteris paribus, you also stand to take a smaller hit at resale.

The cost of used Tesla vehicles is incredibly high when compared to other vehicles. Barron's conducted an analysis showing the residual value of the Californian manufacturer's vehicles.


Source: Tesla

According to Kelly Blue Book and Autotrader, a midrange 2015 Model S in the used car market is valued at about 54% of its original retail price. A higher-end Model S is priced at about 46% of its original selling price. According to data provided to Barron's by Edmunds, cars lose 50-60% of their value in the first five years of ownership. Over that span, the average large luxury car—similar to a Model S—loses around 70% of its value. Tesla is doing better than average and much better than its competition.

For example, the 2015 BMW 750i, priced with options making it roughly equivalent to the 2015 Model S, maintains only about 25% of its original price.


Source: Tesla

The 2019 Tesla Model X SUV is priced at around 90% of its original retail price. The 2019 Audi e-tron is priced at around 80%, depending on mileage. The average gasoline-powered, luxury SUV loses between 20% and 30% of its value over its first year of ownership, according to Kelly Blue Book.


Source: Motortrend

A 2017 used Model 3 can sell for up to 90% of its original value, according to Cox data provided to Barron's. Losing only 10% of its initial value--after three years--is simply unprecedented. According to Cox, the average midsize luxury car loses half of its value in the same amount of time.

All Tesla cars have a number of characteristics that help buoy market value:

  • cars are not widely available in the second-hand car market;
  • fuel and maintenance economy ;
  • wireless software updates that provide cars with the latest features;
  • the company supports all of its cars regardless of the year of production, replacing the hardware.

Thoughts from the Editor:

Tesla vehicles continue to take the crown in safety, performance, technology, and in various sales statistics. It may now hold yet another: Teslas appear to hold some of the best resale values--if not simply the best--in the world.

One of the factors that may further support high Tesla resale value is that its new vehicles draw such high demand that the company's production has not been able to keep up--even despite constant manufacturing improvements. And so people are willing to pay closer to new prices for used Teslas. As gigafactories pop up at a blistering pace worldwide--with increasingly mindblowing manufacturing tech employed--theoretically, wait times could lessen.

Yet Given Tesla's aggressive roadmap for product launches--including Cybertruck, Roadster, Model S/X(?) Plaid, Long Range RWD Model Y + 7-seat option, and soon, we suspect a China-designed compact Model 2/C (see article here: )--production will have their hands full. This is without considering Tesla's massive Energy/Storage ramp, and we already know battery production speed is one of Tesla's most rate-limiting factors. We're looking forward to seeing if Battery Day has anything to say about that.

© 2020, Eva Fox. All rights reserved.

We appreciate your readership! Please share your thoughts in the comment section below.

Article edited by @SmokeyShorts, you can follow him on Twitter

 




Previous  / Next