Unlike Most Auto Purchases, Teslas Hold their Value

[RV_]

I was pleasantly surprised to find my Tesla may end up being an appreciating, not a depreciating asset!

Published 1 day ago

Excerpt:

"The average new car transaction price in the US continues to rise; in September 2020, it was $38,723. It’s no wonder that Teslas are holding their value over time.

Some analysts say that we are seeing one of the first appreciating assets for a car that isn’t an antique or collector’s edition vehicle. That asset is a Tesla. Teslas hold their value, that’s for sure, and many used Teslas are gaining value upon trade-in.

With the popularity and strong demand of the Tesla Model 3 and Model Y, the new car prices of Tesla models are increasing. It seems likely that this trend will continue as Tesla catches up with demand from customers, and even afterwards, as Tesla technology innovations generate even more excitement about being part of the Tesla family and as more “Full Self Driving” features roll out.

Right now, there are more people who want a Tesla than there are Tesla vehicles available. I know — my husband and I just ordered a Tesla Model Y, and the targeted delivery date is December. Sure, we’re hoping that the wait may allow us to benefit from legislation that reopens the Tesla tax credit. According to the New York Times, Democrats intend to build significant climate programs into a second infrastructure bill, including a provision that would include more tax incentives for consumers to buy electric vehicles. Subtracting $7500 from our upcoming 2021 tax payments would definitely be an added perk to buying a new Tesla.

Yet, in all likelihood, we would have chosen a Model Y from existing new car stock. We were ready to become buyers, right now. The problem was that there weren’t any ready-to-go new Teslas available when we looked at the Tesla website for existing stock.

We also looked at the inventory of used Model 3s online, hoping to expedite our Tesla purchase. It seems illogical, but a used Tesla seems to cost nearly as much as a new one. Keeping in mind that any used vehicle comes with an uncertain driver history, miles accumulated, and daily wear and tear, we weren’t convinced.

We decided to hold off and wait a few months for a shiny new Model Y. Our Tesla will be here soon enough, and we have waited this long to make this decision, anyway. There are consequences to delaying decisions, as we are now keenly aware.

The Paradox of  Logic vs. Emotion with Legacy Vehicles

There are many reasons that used Teslas are advertised at near or above their original sale price. Just look back to the last time you decided to buy a new vehicle.

Be honest — it’s happened to you. You got caught up in the emotion of buying a new vehicle and rationalized the monthly costs as one component of your larger lifestyle. But then, as soon as you drove it off the lot and down the road, you were seeing a car worth little more than wholesale value, and the wholesale value is always less than the original retail value of the car. For a brand new car, this initial depreciation can be in the thousands of dollars.

It’s happened to us all.

Some analysts say that we are seeing one of the first appreciating assets for a car that isn’t an antique or collector’s edition vehicle. That asset is a Tesla. Teslas hold their value, that’s for sure, and many used Teslas are gaining value upon trade-in.

With the popularity and strong demand of the Tesla Model 3 and Model Y, the new car prices of Tesla models are increasing. It seems likely that this trend will continue as Tesla catches up with demand from customers, and even afterwards, as Tesla technology innovations generate even more excitement about being part of the Tesla family and as more “Full Self Driving” features roll out.

Right now, there are more people who want a Tesla than there are Tesla vehicles available. I know — my husband and I just ordered a Tesla Model Y, and the targeted delivery date is December. Sure, we’re hoping that the wait may allow us to benefit from legislation that reopens the Tesla tax credit. According to the New York Times, Democrats intend to build significant climate programs into a second infrastructure bill, including a provision that would include more tax incentives for consumers to buy electric vehicles. Subtracting $7500 from our upcoming 2021 tax payments would definitely be an added perk to buying a new Tesla.

Yet, in all likelihood, we would have chosen a Model Y from existing new car stock. We were ready to become buyers, right now. The problem was that there weren’t any ready-to-go new Teslas available when we looked at the Tesla website for existing stock.

We also looked at the inventory of used Model 3s online, hoping to expedite our Tesla purchase. It seems illogical, but a used Tesla seems to cost nearly as much as a new one. Keeping in mind that any used vehicle comes with an uncertain driver history, miles accumulated, and daily wear and tear, we weren’t convinced.

We decided to hold off and wait a few months for a shiny new Model Y. Our Tesla will be here soon enough, and we have waited this long to make this decision, anyway. There are consequences to delaying decisions, as we are now keenly aware.

New cars depreciate faster than used cars, believe it or not, with the value of a new car typically dropping by over 20% after only one year of ownership. A new car depreciates or loses value almost immediately after you drive it off a dealer’s lot. While different cars depreciate at different rates, it’s a commonly accepted deduction that a new car will lose approximately 20% of its value in the first year and 15% each year after that until, after 10 years, it’s worth around 10% of what it originally cost. Afterward, the value continues to depreciate by 10% or so each year after that. So, 5 years down the road (pun intended), your car could be worth roughly half of what you initially paid for it.

That hurts, considering the costs of interest tacked onto your personal car loan. Bankrate describes that total principal paid of $15,000 would incur an additional $1,172 of interest paid. And, let’s be honest: no one buys a new car for $15,000 anymore, so double those amounts. This means that a $30,000 vehicle will be worth $24,000 after the first year, $20,400 after the second year, and $17,340 after the third year.

In contrast, Teslas hold their value at an almost unheard-of level. In fact, data indicate that the Tesla Model 3 can retain its resale value over 5 times better than all other electric cars and about 4 times better than all cars in general.

Full Self Driving will Help Teslas Hold their Value

Tesla’s Full Self Driving (FSD) capability in the likely near future is another factor that sets it apart from other vehicles — EVs or otherwise. This is game-changing technology which will approach Level 5 autonomy. It will be truly unique in the original sense of that word, so that the value of so equipped Tesla vehicles is going to increase drastically.

Tesla Model 3 and Model Y vehicles equipped with FSD capability in 5 years may even sell for double what they cost now. That would mean around a $70,000 base Model 3 version and an $80,000 base Model Y version.

If you’re not ready for the $10,000 lift of FSD, don’t despair. Tesla’s new subscription plan is available for owners of Tesla models using the company’s Full Self-Driving computer 3.0 or newer hardware. Tesla started placing FSD computer 3.0 in its vehicles in 2019, and the company also offers a complimentary upgrade to the newer setup for older models equipped with the earlier FSD computer 2.0 or 2.5 hardware."

More in the article and hotlinks here: https://cleantechnica.com/2021/08/03/unlike-most-auto-purchases-teslas-hold-their-value/

[RV_]

Tesla Model 3 & Model Y Take #1 & #2 In World Record Month For Electric Vehicle Sales!

Excerpt:

"Global plugin vehicle registrations were up an impressive 153% last month compared to June 2020, scoring a record 583,000 units (or 8.7% share of the overall auto market). Add this record performance to the 700,000-plus hybrids and mild hybrids registered last month (their second best month ever) and we get over 1.3 million registrations in June with some some form of electrification … which is roughly 20% of the total market! Fully electric vehicles (BEVs) continue to outperform PHEVs (+154% YoY vs. +151%), with pure electrics representing 70% of plugin registrations. In total, there were some 407,000 registrations of BEVs, or 6.1% share of the overall auto market.

With the YTD tally now above 2.5 million units (and 6.3% share), and knowing that the second half of the year is traditionally stronger, we should be seeing the plugin vehicle (PEV) market easily surpass not just 5 million but 6 million units this year!

Still, while disruption is already happening in Europe and China, we should only see disruptive levels on a global scale next year, which should get a boost if the US market goes into warp speed due to the electric pickup truck wars.

Having said that, December should be the first month with double digits on a global level, as all 3 major markets (China, Europe, and USA) are expected to have record months.

The future will depend much on the development of the COVID pandemic, the following economic recovery, and how fast the chip shortage is solved, but whatever happens, expect plugins to continue increasing market share.

Although there weren’t surprises in the podium positions, with June replicating the YTD positions, there are some interesting things to comment on regarding the podium bearers. With the #3 Tesla Model Y still expanding, with a record 36,727 registrations last month and with the crossover yet to land in places like Europe and Australia, expect it to continue beating records throughout the year. It is probably going after the silver medal on the way.

The top two vehicles, however, look to have entered a different stage of their lives. Both the leader, Model 3, and runner-up, Wuling Mini EV, seem to have found their demand limits, with the sedan stabilizing at around 120,000 units per quarter (127,000 in Q4 2020; 127,000 in Q1 2021; 117,000 in Q2 2021) and the tiny city car hovering around 90,000 per quarter (87,000; 97,000; 86,000).

Still, these results will allow the Tesla to end the year at some 500,000. Although that should’t be enough to reach the category best sellers — the Toyota Camry had 711,000 registrations in 2019, while the Honda Accord and Volkswagen Passat ended at around 600,000 in the same period — it will be enough to beat the premium competition, as both the BMW 3 Series and Mercedes C-Class usually end the year at around 400,000–450,000 units per year.

The current Wuling Mini EV’s pace is also good news for the SAIC–GM joint venture, as current volumes allow the tiny EV to break even. So, SAIC is now at a point where it can contemplate exporting the Wuling EV without losing money. That could be interesting.

The not so big surprise just off the podium is the Volkswagen ID.4 ending June in 4th, with a record 12,262 units delivered. US deliveries are now adding to Europe’s large volumes, and China deliveries are finally starting to ramp up. So, expect the German crossover to continue expanding its sales in the coming months, allowing it to reach 4th position in the yearly table next month."

More data and tables in the full article here:

https://cleantechnica.com/2021/08/01/plugin-vehicles-have-record-month-globally-in-june-tesla-model-3-model-y-take-1-2/

Safe Investing!

[Chalkie]

My math says, based on charts you provided which does not include other EVs, that EVs are 1.1 percent of the cars worldwide. Now I have ridden in my SIL's Chevy Bolt and I like it but even he did not trust it to get him from Austin to San Antonio and back when he went for his citizenship test. 

Amazon (Whole Foods) at least near us is offering "free" charging. TANSTAAFL! I promise Jeff Bezos is not paying for that out of the goodness of his heart, in fact, I'll bet it is paid for by higher Whole Food prices. 

Until there is enough infrastructure to support an EV majority it is all pie in the sky. California is mandating the sales of nothing but EVs in the future but can't even keep up with electricity demands right now. Since California always seems to be the tail wagging the dog I just can't imagine how this would play out nationwide. 

I know you can come up with all kinds of stuff to tell us how well this going to work but until I see real life proof that it will work call me a major skeptic. 

P.S. - I am glad you that your Tesla might gain in value.

[RV_]

🤣😂

 

 

[noteven]

These Battery Electric Vehicles only fanboy media outfits are tiresome, like any media that relies on put downs and sarcasm vs good reporting. One wonders if stock positions are involved 🤔
 

Politicians seem mesmerized by the church of “battery electric only”.

Anything else is out of the question and must be heckled and ridiculed.

 

 

[TXiceman]

All electric vehicles do not help the environment unless they can be recharged by  a non-fossil fuel, renewable energy source.  Most of the power production in the US is from fossil fuel plants.  In addition, the battery packs on the electric vehicles consume a lot of energy and resources to produce.  Then there is the problem of disposal of the spent battery packs.

Some less than knowledgeable politicians have been fed lobbyist money to promote the electric vehicles. Remember that these politicians are mostly lawyer and not scientist.  We need to step up the renewable energy source power production well before the all sign on to electric vehicles.

Ken

 

[Kirk W]

I have never considered the purchase of an automobile of any kind to be an investment. 

[bigjim]

As poor as I mostly was, I considered a couple to be an investment due to popularity and likelihood of being considered collectors cars. I came our ahead on both but wish I had a way to hold on to them longer and keep them safe.

[RV_]

Germany’s Plugin EV Share More Than Doubles To 23.5% In July – Combustion Share At Record Low

Germany, Europe’s largest auto market, and the world’s 4th largest, saw plugin electric vehicle market share more than double year-on-year to 23.5% share in July 2021. Old-school combustion powertrains fell to a record low of 59.2%, with diesels under 20%. Overall auto volumes in July were down almost 30% compared to the pre-COVID July 2019 result.

https://cleantechnica.com/2021/08/05/germanys-plugin-ev-share-more-than-doubles-to-23-5-in-july-combustion-share-at-record-low/

OMG! The land of Mercedes and Porsche,  VW and BMW going electric faster than the US??

Edited August 6, 2021 by RV_

[RV_]

UK Plugin EV Share Almost Doubles To 17.1% In July, Combustion At Record Low

https://cleantechnica.com/2021/08/06/uk-plugin-ev-share-almost-doubles-to-17-1-in-july-combustion-at-record-low/

[RV_]

7 hours ago, Kirk W said:

I have never considered the purchase of an automobile of any kind to be an investment. 

Me either Kirk. This is crazy! I was thrilled to read that. And that was the point of the article. What a pleasant surprise. Also the Tesla plant in Texas has begun producing their initial test production of Model Y cars to fine tune the Gigafactory. I'm posting one about it next.

Edited August 6, 2021 by RV_

[RV_]

Why Is The USA Okay Being 5 Years Behind Europe & China On Vehicle Electrification?

Excerpt:

"The big electric vehicle announcement the Biden administration wanted to make today is that it has gotten GM, Ford, and Stellantis onboard for a 2030 electric vehicle target that, unfortunately, is actually quite lame. (Side note: the event was about much more than this weak target, but I’ll come back to that at the end.) The target is for 50% of US light vehicle sales to be “zero emissions” by 2030. However, there are a few particularly disappointing spots in the text. One is that they are including plugin hybrids, so it’s not really a “zero emissions vehicle” target. That’s quite irritating by itself, but let’s move on. They’re also including hydrogen fuel cell cars, which is weird, since even the hype around hydrogen fuel cell cars is clearly dead, let alone the cars themselves.

Another weak spot is that the target seems to be for the US as a whole, not each automaker individually. As plenty of Tesla followers have pointed out, Tesla alone could supply a large chunk of that target, meaning that the other automakers’ combined target is even weaker than 50%, perhaps much weaker.

One thing I found particularly irritating in the announcement is the word I’ve put in bold in the following statement: “Specifically, the President will sign an Executive Order that sets an ambitious new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles.” No, this is not ambitious, not even close to it — and claiming that it is ambitious is embarrassing if not shameful. 50% full BEVs by 2025 would be ambitious. That’s what Volvo is targeting globally. That would be BEVs approximately doubling their US auto market share each year till then. That would be ambitious. A slow climb to some mixture of true EVs and faux EVs accounting for 50% of US auto sales by 2030 is not ambitious. Ford plans to be 100% electric in Europe by 2030. Volvo plans to be 100% electric there by 2030 as well. Volkswagen plans to be at 70% by then."

Source:

https://cleantechnica.com/2021/08/05/why-is-the-usa-okay-being-5-years-behind-europe-china-on-vehicle-electrification/

[Kirk W]

"Why Is The USA Okay Being 5 Years Behind Europe & China On Vehicle Electrification?"

The answer to that is probably the same as the reason that the USA is the only industrialized country that still clings to the old English system of measurement? 

[noteven]

Why behind? 
 

Petrol in Leeds UK is USD$1.80/litre x 3.78 = $6.80 per gallon.

Electricity grid is well developed and dependable. 220volt.

 

 

 

[noteven]

18 minutes ago, Kirk W said:

"Why Is The USA Okay Being 5 Years Behind Europe & China On Vehicle Electrification?"

The answer to that is probably the same as the reason that the USA is the only industrialized country that still clings to the old English system of measurement? 

Yabut Kirk… the US fluid volume system isn’t English (Imperial) unless it is based on gallons that are older than me before imperial gallons (10lbs of water)😁

[noteven]

Is there much talk of how and where battery materials will be mined, under what regulation, what legal system vs generating hydrogen for combustion engines where that makes more sense?

[RV_]

2 hours ago, bigjim said:

As poor as I mostly was, I considered a couple to be an investment due to popularity and likelihood of being considered collectors cars. I came our ahead on both but wish I had a way to hold on to them longer and keep them safe.

Jim,

I made money on pretty much all my cars by restoring and customizing all my life because I was a poor airman. I could not afford the full coverage insurance in my 20s as a young Airman making very little with a two year old and a baby on the way. That set my tone for used cars only and buying them cash with a network of friends and others who bought the ones I had to pass by because I could only do one at a time.

For example, in 1988  I found a silver 1973 Porsche 911 Targa, first year for the K-Jetro0nic fuel injection, with grass growing through the floorboards and the interior ruined. But it had five Porsche cookie cutter alloys that were worth ~$350 each in good condition which they were. I bought it and found it ran?? It needed a then $500 air box, all new vacuum lines and two timing chain tensioners. So my upholstery guy put new carpet and seat covers in vinyl the same pattern as the stock ones and rebuilt the vinyl and fabric Targa roof for $200. Another friend did a color sanded five coat Porsche Guards Red Imron Paint job on it for $500. I paid $900 for it and had $4500.00 in it and drove it for two years then sold it for $13,500.00 because it was a 55mph US spec and I had orders to Germany. I took a Little Red Express truck to Germany I bought for $4k and drove there for a couple of the seven years I was there. Sold it to a German collector for $22k. They only made two years 78 and 79 but the 79 had Smog control. My 78 held value. I built MGs, about 50 Hot VWs including convertible Beetles and Ghias, a Thing, Fastbacks, Notchbacks, Squarebacks, Buses/vans, and 8 super-stock Westphalia pop-up camper vans. About 25 Motorcycles including a Triumph Daytona 500, two 1975 Norton 850 Commandos we bought in San Antonio and brought to Colorado when assigned here in 78. That was the last year they were made, and the first and only year with the shifter on the left and the brake on the right like in the US. I call it inherent value, having the cash to buy them and restore/customize immediately, enjoy for at most three months usually less, with the exceptions above, then deciding I wanted a different build and did another. I did them right for me, not profit. That was only a means to build the next one. I have only bought three new vehicles in my life. A 1996 Electra Glide Classic while in Germany, the Forester in 2019, and the Tesla in 2020. I made money on the Harley I sold in San Antonio in 1997 because I could not figure a reasonable way to take it full time with a 1 Ton diesel and a 36 foot HitchHiker. 

Jim my electric car Mania started in 1992 when we did a week ski vacation in Zermatt Switzerland. Since the 70s Zermatt where the Matterhorn rises, has not allowed any Internal combustion engines in their valley. You have to park down at the base of the mountain or the next village over and take a cog rail up. Then in town all the taxis are free and even the trucks are electric. I was so impressed with their instant torque considering they ere little but felt like they had a V-8 in them. https://en.wikipedia.org/wiki/Zermatt

Finally in 2003 Musk got into Tesla as CEO and started Space X. Finally! I could get an electric car! It took me another 17 years but I got one. And my Tesla stock made that and our move to Colorado possible. BTW I had only liability, uninsured Motorist, medical for passengers only we were military then retired and covered medically,), and non collision comprehensive (Fire theft glass hail coverage etc.) even for the new Forester. I finally broke down and got full coverage n both the Forester and the Tesla because of the many accidents from crazy drivers here. Previously I said if I can't afford to replace it, I can't afford to drive it. We do the same with our houses buying cash, so we can live fine on my small military pension. Besides they take ~50% of  the value of the loan over a 30 year mortgage. $300k loan at 3.5% charges about $150k in interest alone! Boy have we saved some dough.

If the incentives for new EVs passes we will buy another Tesla this year.