The Tesla Effect: How Tesla Is Changing the Used Car Game

[+SpiceWare]

Article by CapitalOne.  

 

Quote

In the first six months of 2019 alone, a 2018 BMW 320i lost nearly 20% of its value, dropping from $37,700 to $30,700.* While it’s true that newer vehicles typically depreciate at a steeper rate, it’s not usually that steep. But again, The Tesla Effect is changing the norm. At three years old, a 2016 Mercedes B-Class would ordinarily depreciate at a slower rate. For the same time period as the BMW above, though, the B-Class dropped from $18,500 to $13,250, nearly 30%.

 

Looking at their depreciation article, the link in the quote, that 2018 BMW should have taken about a year to drop 20%, not 6 months.  The 2016 Mercedes should have dropped 15% in a year, not the 30% in 6 months they're now seeing.

 

I see some serious repercussions ahead for ICE lease holders, they're going to lose out big-time as the leases end and the vehicles are now worth significantly less than originally expected.

[TrekMD]

This does appear to be true for other luxury brands as well.  My Lexus's value has dropped much faster than they usually dropped in the past.

[Flojomojo]

That makes sense, but what's going to happen to all those new Teslas when they're no longer the hot new thing? Will there be a hot market for off-lease electric vehicles? Fair or not, I'd be wary of such a car because of the battery technology, and would prefer a new one with full warranty.

 

Or are Telsa owners more likely to hang on to their cars for longer than a typical luxury car lease?

 

Sent from the perspective of an outsider: my spouse's Lexus was a bargain and I'm going to keep my dorky Subaru until it dies. 

[+SpiceWare]

I don't think this will be Tesla specific, I think it'll really be "The EV effect: How EVs are changing the New and Used Gas Car Game" as the rest of the automotive industry catches up to Tesla.

 

Cleantechnica wrote an article about it back in February - The Osborne Effect On The Auto Industry.  Basically once people become aware of the benefits of EVs such as lower operating costs, how much nicer charging at home is (for those who can) vs "crap, I'm running late but I need to stop for gas!", etc. that they hold off on buying a new car until they can get an EV that works for them(mostly price-wise, but could be "I need a truck for work" like my brother-in-law).  That holding off is already showing up in the downturn of ICE car sales^* that will accelerate over the next few years. Overall industry will see a major downturn until EV production can be ramped up enough to meet normal demand. Ramp up will take a while due to insufficient battery production, a key part of why Tesla built the Gigafactory in Nevada.

 

 

I'm a perfect example of this Osborne effect - used to buy a new car every 5 years or so, but once I decided to go EV I kept my last gas car for 13 years before buying my 3.

 

I don't foresee Tesla owners holding onto vehicles longer than typical, especially when considering how quickly the tech changes.  Tesla has the highest customer satisfaction, so it seems likely they'll get another Tesla - I know that's my plan.

After reading abut how poorly the early Nissan Leaf's battery faired I can definitely appreciate you being on the fence about a used EV.  Tesla's are seeing less than 10% degradation after 160K miles. My 3 had 310 miles when new, it's currently 309. I put 14K on my 3 in the first year, so after 11 years it should have 279 miles of range. The reality is I'll most likely return to buying a new car ever 5 years, so I'll never see that.

 

 

^* I've been seeing many reports like this about record inventory levels at car dealerships and the problems its causing them. Ironically the UAW Strike could be a major benefit to GM as it could get their inventory levels back to normal.

[jd_1138]

22 hours ago, Flojomojo said:

That makes sense, but what's going to happen to all those new Teslas when they're no longer the hot new thing? Will there be a hot market for off-lease electric vehicles? Fair or not, I'd be wary of such a car because of the battery technology, and would prefer a new one with full warranty.

 

Or are Telsa owners more likely to hang on to their cars for longer than a typical luxury car lease?

 

Sent from the perspective of an outsider: my spouse's Lexus was a bargain and I'm going to keep my dorky Subaru until it dies. 

Having grown up being raised by a mechanic dad who had a transmission shop (and helping him out occasionally), I'd trust a used electric car way way more than a used ICE car.  ICE cars are complicated -- just the transmission alone would boggle one's mind in how complex it is.  Plus the engine is a torture chamber of thousands of explosions per minute, 20 sensors, 10 computers.