Should I care about the Tesla Resale Value Guarantee when picking financing option?

Vigile · Nov 12, 2015

So I have a 2.85% offer from Tesla and a 3.0% option from my local bank, and I was thinking about using my local bank just for familiarity and that my friend is a VP so payments are simple, etc. blah blah.

However, Tesla offers Resale Value Guarantee: http://www.teslamotors.com/sites/default/files/blog_attachments/tesla-resale-value-guarantee.pdf

Essentially, they will let you sell the car back to Tesla in the 36-39 month range for 50% of the base car price, adding 43% of any options you added. So for my car that would be....

$85,000 x 0.5 = $42,500
$12,500 x 0.43 = $5,375
Total: $47,875

Obviously the goal is that after three years the car would be able to be sold at MORE than that. But is it worth going with Tesla financing for this extra reassurance? Or is it so low that its kind of not worth considering?

benf · Nov 12, 2015

If it were me, I would go with Tesla. Whatever they are doing with their battery technology/manufacturing to actually be able to make a $35k model 3 in two years is going to change things in a big way. Either the price of a 2017/2018 Model S is going to be lower or (more likely) the range will be significantly increased. Either way, there is going to be a big disruption in battery technology/prices, and it can't be good for the used market of the Model S. Even with the relatively crappy rates, I chose to lease for this reason. Maybe I'm just paranoid, but it seems like the writing is on the wall.

Vigile · Nov 12, 2015

benf said:
If it were me, I would go with Tesla. Whatever they are doing with their battery technology/manufacturing to actually be able to make a $35k model 3 in two years is going to change things in a big way. Either the price of a 2017/2018 Model S is going to be lower or (more likely) the range will be significantly increased. Either way, there is going to be a big disruption in battery technology/prices, and it can't be good for the used market of the Model S. Even with the relatively crappy rates, I chose to lease for this reason. Maybe I'm just paranoid, but it seems like the writing is on the wall.

That is a very interesting mindset and angle to take. Good input!

brkaus · Nov 12, 2015

I believe they consider the base price as the lowest possible configuration price (s70 rwd).

S4WRXTTCS · Nov 12, 2015

I went with the resale guarantee simply because there are so many unknowns.

Personally I think it was one of Tesla's best moves to get fence sitters like me off the fence.

benf · Nov 12, 2015

S4WRXTTCS said:
I went with the resale guarantee simply because there are so many unknowns.

Personally I think it was one of Tesla's best moves to get fence sitters like me off the fence.

I agree. The resale guarantee (or lease) is what got me to jump in. I love the car because of the technology and I love Tesla because of how quickly they innovate and improve that technology. But that rate of improvement and innovation makes it basically impossible to predict what a car will be worth in 3 years, unlike most cars. Again, I could just be paranoid

. But with the guarantee I get to be paranoid and still be happy...win!

Max* · Nov 12, 2015

benf said:
If it were me, I would go with Tesla. Whatever they are doing with their battery technology/manufacturing to actually be able to make a $35k model 3 in two years is going to change things in a big way. Either the price of a 2017/2018 Model S is going to be lower or (more likely) the range will be significantly increased. Either way, there is going to be a big disruption in battery technology/prices, and it can't be good for the used market of the Model S. Even with the relatively crappy rates, I chose to lease for this reason. Maybe I'm just paranoid, but it seems like the writing is on the wall.

Doubt both points. EM stated that he expects battery technology to grow at 5% per year. As for reduced price, I think they'd just increase profits. Do you think a $100k ICE has the same profit margins as the Tesla?

benf · Nov 12, 2015

Max* said:
Doubt both points. EM stated that he expects battery technology to grow at 5% per year. As for reduced price, I think they'd just increase profits. Do you think a $100k ICE has the same profit margins as the Tesla?

If I'm right, you have a guarantee from Tesla and give it back. If I'm wrong, you sell it for more than you thought you would. Why would you not want the guarantee, especially if the rate is lower than with his bank?

shokunin · Nov 12, 2015

brkaus said:
I believe they consider the base price as the lowest possible configuration price (s70 rwd).

Base price is the base price of the car you purchased. In the OP's instance, it's 1/2 of $85K for a 85D.

Max* · Nov 12, 2015

benf said:
If I'm right, you have a guarantee from Tesla and give it back. If I'm wrong, you sell it for more than you thought you would. Why would you not want the guarantee, especially if the rate is lower than with his bank?

I didn't mean my post to say you shouldn't take the guarantee, more along the lines of based on what we know, don't get his hopes up.

benf · Nov 12, 2015

Max* said:
I didn't mean my post to say you shouldn't take the guarantee, more along the lines of based on what we know, don't get his hopes up.

Gotcha. Yeah, I certainly hope I'm wrong. Either way, I'm looking forward to owning two Teslas when the Model 3 comes out

.

Max* · Nov 12, 2015

benf said:
Gotcha. Yeah, I certainly hope I'm wrong. Either way, I'm looking forward to owning two Teslas when the Model 3 comes out .

You and me both.

My wife wants a Model 3. And I don't like big cars, so I'm hoping to convince her to take the S, so i get the 3

brkaus · Nov 13, 2015

shokunin said:
Base price is the base price of the car you purchased. In the OP's instance, it's 1/2 of $85K for a 85D.

Not according to the linked contract. It specifically says the base is the 60kWhr model and upgrade to 85kWhr battery is considered an option.

Personally, I would probably still do it as a safety net. But make sure to understand all of it going in.

supratachophobia · Nov 13, 2015

Vigile said:
So I have a 2.85% offer from Tesla and a 3.0% option from my local bank, and I was thinking about using my local bank just for familiarity and that my friend is a VP so payments are simple, etc. blah blah.

However, Tesla offers Resale Value Guarantee: http://www.teslamotors.com/sites/default/files/blog_attachments/tesla-resale-value-guarantee.pdf

Essentially, they will let you sell the car back to Tesla in the 36-39 month range for 50% of the base car price, adding 43% of any options you added. So for my car that would be....

$85,000 x 0.5 = $42,500
$12,500 x 0.43 = $5,375
Total: $47,875

Obviously the goal is that after three years the car would be able to be sold at MORE than that. But is it worth going with Tesla financing for this extra reassurance? Or is it so low that its kind of not worth considering?

Only if you can stay within the mileage.

Vigile · Nov 13, 2015

supratachophobia said:
Only if you can stay within the mileage.

It's 15,000 / year. Seems reasonable for me.

_TTT_ · Nov 13, 2015

Keep in mind you will need to do all the annual services as well (regardless of whether or not you find them worth the cost). From the T&C:

"The Vehicle is maintained by Tesla Motors or its subsidiary according to Tesla’s recommended service schedule."

shokunin · Nov 13, 2015

brkaus said:
Not according to the linked contract. It specifically says the base is the 60kWhr model and upgrade to 85kWhr battery is considered an option.

Personally, I would probably still do it as a safety net. But make sure to understand all of it going in.

Interesting, my contract was different, but then again it was for a S40, which was the base model. Then I wonder if anyone who bought in mid 2013 got hit with the base S40 being $57,499 as the base price?

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Should I care about the Tesla Resale Value Guarantee when picking financing option?

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