Asking for guidance for an S60 to 70D Trade-Up Scenario

ColoradoVoltage · Apr 9, 2015

Hi all, first time poster, happy S60 owner since Sep 2014. Tesla is amazing (this forum, too!). I'm working with some wonderful folks here in Colorado on the Tesla Motors side of things as well.

I would be grateful for any guidance you could provide for a potential trade up scenario I'm considering.

Background: Model S 60, Pano, Parking Sensors, Supercharger enabled, no autopilot hardware (just missed it), approx 2700 miles (don't drive a ton!).

Just had our first winter here in Colorado, and even with snow tires--there were some tricky spots and tricky days, some scary moments, and days when we wouldn't be able to drive (vs. the Audi Q5).

The 'D' came out, and is very appealing. In our case, the extra range from the 70 is also useful. Wo @hen the 70D came out, I was intrigued. What would a trade-up scenario look like? I got a trade value tonight.

This is where I'm hoping you could help. Here's how it works out. Rough numbers.

* S60, Original price, $80K, No Autopilot w/ Pano, paint, textile, supercharger, now has 2700 miles
* Identical 70D, $80K (same price!), AP enabled (and no power liftgate, let's not go there!)

* Rebates federal and state (CO): $13,500 -- just received from taxes, cash sitting here.
* Trade value from Tesla: $60K
* Amount owned from financing: $66K (note - resale value program) (note - 4% tax was included and financed)

So basically, from what I can tell:
* Depreciation was $20K in the first year offset by $13,500 in rebates (80K to 60K)
* I write a check for $6K negative equity (amount owed after trade, 66K - 60K)
* I start over with a 70D identically spec'd, AP-ready, stronger future resale etc.
* I get the rebates all over again next year
* I only pay sales tax on the difference, 80K - 60K = 20K * 8% = $1,600
* Registration amount is pro-rated and carries over
* Monthly payment and cash flow stay the same

The 'D' will be much better in the snow, I get to reuse my snow tires, the range is useful. Not for nothing, I think the resale value of the 70D relative to the S60 three years from now could be significant (given AP, AWD).

Is there any reason why I would not do this deal every day of the week?

ModelX · Apr 9, 2015

Sounds like a good plan for your situation.

Nevek · Apr 10, 2015

Seems to me that as long as your suppositions on sales tax are good and the trade amount works, you have a solid opportunity. It usually doesn't work that way on a replacement after only a year or so, as I painfully know from earlier ICE-capades with a Lotus.

Mnlevin · Apr 10, 2015

your cost of ownership/depreciation was still at least $20k (80k-60k) so lets not lose sight of that. There is no reason to believe that the 70D will have a better resale, it is all a function of what someone will pay and how that stacks up against what a replacement car would cost new. If you add up the $6k negative equity and the money you put into the car from new, from what you describe around $14k you are still at the fact that you spent $20k at least and now you have to start over, how much cash down, how much bigger payment and so on. IF that is worth it to you, then go for it, if not then just enjoy the car. The D model may have significant value to someone who drives in the snow a lot, but for someone who has had their car for 1 year and only put 2700 miles, those were very expensive miles.

David_Cary · Apr 10, 2015

This is a function of a very favorable TC environment. All states that have huge incentives encourage this. Tesla can sell the S60 in another state and that is why it works this way. $6k is not pocket change and you had your loan payments for the last 8 months so they are still pretty expensive miles.

But hey you are far better off living in Colorado than the poor sap who bought his S60 a month ago who has already lost more than $6k if he had to sell the car.

These are the risks of a Model S purchase and it does create a decent amount of ill will....

sandpiper · Apr 10, 2015

David_Cary said:
This is a function of a very favorable TC environment. All states that have huge incentives encourage this. Tesla can sell the S60 in another state and that is why it works this way. $6k is not pocket change and you had your loan payments for the last 8 months so they are still pretty expensive miles.

But hey you are far better off living in Colorado than the poor sap who bought his S60 a month ago who has already lost more than $6k if he had to sell the car.

These are the risks of a Model S purchase and it does create a decent amount of ill will....

I understand the ill will but I'd be hard pressed to say what else Tesla should do. They really only have a few choices:

a) Go with the "model year" process where significant changes are only made once per year. This causes a problem with the "Osborne effect" that you're seeing right now with the GM Volt. GM's existing model sales have completely collapsed in anticipation of the new model. And the remaining inventory of current models are being sold off at a loss. GM can weather this because they have many other vehicles paying the bills. Tesla would have major problems in that situation. They need a fairly steady revenue stream from their one product line.

b) Introduce minor and more major changes scattered throughout the year. You are certainly going to upset some people who wound up on the wrong side of the line. When this happens try to be as accommodating as practically (and financially) possible to people who want to upgrade. Hopefully the upsets are minor enough that it doesn't damage the brand overall. In this case, the revenue stream is pretty steady throughout the year.

c) Never innovate. Obviously this would lead Tesla straight into oblivion.

I think b is the lesser of evils. As they mature and become more financially stable, I suspect that they will go more to traditional model year upgrades. But, for now, we can expect more of this. I'm sure, that within the next 2 years we're going to see a number of very significant upgrades that will cause a lot of consternation:

a) A major battery upgrade. This will be a big one.
b) A complete vehicle styling/cosmetics revamp.
c) A major upgrade to all of the AP sensors when it becomes obvious that the current suite of sensors are fairly limited in capability.
d) A major upgrade to the computer & display system and iphone style sunsetting of some of the earlier ones.

It should be very exciting and interesting to watch.

Seesaw · Apr 10, 2015

For me the $13,500 in EV incentives makes the trade a no-brainer.

in fact if I lived in a country with those kind of incentives I would probably trade in every year.

EarlyAdopter · Apr 10, 2015

ColoradoVoltage said:
Is there any reason why I would not do this deal every day of the week?

Not that I can see. With your state and federal rebates, your S60 only cost you $66,500 + sales tax, with the majority of that sales tax not having to be paid the second time. A $60,000 trade offer seems really good considering new cars typically depreciate 10% the moment you drive them off the lot.

For $6,500 + $1,600 in new sales tax you get more range, performance, autopilot, and AWD. The only feature you're giving up is a power lift gate. Seems worth it to me.

Also, I would think years from now a 70D with autopilot would have better resale value than a S60 without.

I'd say it comes down to this - would you have paid that extra amount last year for those extra features had they been available at that time? If so, then go for it!

ReddyLeaf · Apr 10, 2015

If you need dual drive, do it. If you live in the hills or on the west side, it will definitely be a plus. Tesla's offer is very generous.

As an example, I'm considering new vs used. With the 70D the landscape has changed dramatically. Since I already have a Leaf, supercharging is an absolute requirement since I would be only getting a Tesla for long-range driving. I've been watching used prices and priced a new 60+SC and auto suspension (also a requirement due to my steep driveway). The lowest "new" version has been right around $80k. Since WA state has no tax on new EV purchases until June 30th and with the $7.5k fed tax credit, I'm comparing ~$73k new 70D vs ~$66k used S60. To make it worthwhile for me, you would need to drop the price to at least $60k, probably substantially less (and have SC+suspension, other options just add cost and are of little value to me, since I'm price constrained). So, if I can get financing, I've pretty much decided on a new 70D, with new battery, longer range, exact specification, etc. If you (or anyone else selling used) want to convince me otherwise, then it has to be a very good deal for me (and thus a very poor deal for the seller). I definitely don't want to offend you or anyone else with a low ball offer, but that is the current situation with incentives. Once the incentives disappear, then the landscape will change again. My test drive is next week and I have about a month to make up my mind for a new 70D build. Until then, I'm still debating and it may mean waiting another couple of years.

Foodnut · Apr 12, 2015

In California, the $2500 rebate requires that you keep the car for 30months... not sure if Colorado has such a rule and whether it applies to you.

California's Clean Vehicle Rebate Project

- Rebate recipients who do not retain the eligible vehicle for the full 30-month ownership or lease period will be required to reimburse ARB all or part of the original rebate amount.

1. Vehicle purchaser or lessee is required to notify the Administrator to arrange for early termination of vehicle ownership in advance of intent to sell or terminate a lease prior to the required 30-month ownership period.
2. ARB will periodically check vehicle identification numbers with vehicle registrations to ensure that CVRP applicants meet this requirement. If an applicant violates this requirement, ARB or its designee reserves the right to recoup CVRP funds from the original vehicle purchaser identified on the rebate application form and may pursue other remedies available under the law.

shadowinstallz · Apr 13, 2015

ColoradoVoltage said:
Hi all, first time poster, happy S60 owner since Sep 2014. Tesla is amazing (this forum, too!). I'm working with some wonderful folks here in Colorado on the Tesla Motors side of things as well.

I would be grateful for any guidance you could provide for a potential trade up scenario I'm considering.

Background: Model S 60, Pano, Parking Sensors, Supercharger enabled, no autopilot hardware (just missed it), approx 2700 miles (don't drive a ton!).

Just had our first winter here in Colorado, and even with snow tires--there were some tricky spots and tricky days, some scary moments, and days when we wouldn't be able to drive (vs. the Audi Q5).

The 'D' came out, and is very appealing. In our case, the extra range from the 70 is also useful. Wo @hen the 70D came out, I was intrigued. What would a trade-up scenario look like? I got a trade value tonight.

This is where I'm hoping you could help. Here's how it works out. Rough numbers.

* S60, Original price, $80K, No Autopilot w/ Pano, paint, textile, supercharger, now has 2700 miles
* Identical 70D, $80K (same price!), AP enabled (and no power liftgate, let's not go there!)
* Rebates federal and state (CO): $13,500 -- just received from taxes, cash sitting here.
* Trade value from Tesla: $60K
* Amount owned from financing: $66K (note - resale value program) (note - 4% tax was included and financed)

So basically, from what I can tell:
* Depreciation was $20K in the first year offset by $13,500 in rebates (80K to 60K)
* I write a check for $6K negative equity (amount owed after trade, 66K - 60K)
* I start over with a 70D identically spec'd, AP-ready, stronger future resale etc.
* I get the rebates all over again next year
* I only pay sales tax on the difference, 80K - 60K = 20K * 8% = $1,600
* Registration amount is pro-rated and carries over
* Monthly payment and cash flow stay the same

The 'D' will be much better in the snow, I get to reuse my snow tires, the range is useful. Not for nothing, I think the resale value of the 70D relative to the S60 three years from now could be significant (given AP, AWD).

Is there any reason why I would not do this deal every day of the week?

No brainer!

ColoradoVoltage · Apr 17, 2015

Following up (have been on travel), I wanted to say thank you to everyone who responded.

Have been double checking all the math, sales tax, understanding the depreciation hit, etc. While certainly trading up new cars after 9 months is not generally a financially sustainable behavior

, in this case, with all these considerations, the cost (loss) was minimal compared to the upgrades and longer-term value.

And so, yesterday, we went ahead and put down the deposit and moved forward.

We ended up adding premium sound (a 'regret' of mine from the original S60) and also did the premium interior package + snow package. Basically, getting a better fit for us for snowy Colorado.

Thanks again to all for their guidance! I really appreciate it.

Seesaw · Apr 17, 2015

ColoradoVoltage said:
Following up (have been on travel), I wanted to say thank you to everyone who responded.

Have been double checking all the math, sales tax, understanding the depreciation hit, etc. While certainly trading up new cars after 9 months is not generally a financially sustainable behavior , in this case, with all these considerations, the cost (loss) was minimal compared to the upgrades and longer-term value.

And so, yesterday, we went ahead and put down the deposit and moved forward.

We ended up adding premium sound (a 'regret' of mine from the original S60) and also did the premium interior package + snow package. Basically, getting a better fit for us for snowy Colorado.

Thanks again to all for their guidance! I really appreciate it.

Good on you. As I stated originally the EV rebates offered in the US certainly change the maths in trading cars early. Also having the original car for 9 months you now have a better feel for what options you do or don't want .

Did you end up changing the colour scheme?

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Asking for guidance for an S60 to 70D Trade-Up Scenario

ColoradoVoltage

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ModelX

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Nevek

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Mnlevin

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David_Cary

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sandpiper

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Seesaw

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EarlyAdopter

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ReddyLeaf

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Foodnut

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- Rebate recipients who do not retain the eligible vehicle for the full 30-month ownership or lease period will be required to reimburse ARB all or part of the original rebate amount.

shadowinstallz

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ColoradoVoltage

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Seesaw

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