Buying new with the intent to sell soon-ish?

[IAmKai]

I'd appreciate any advice you all are willing to throw my way. I will soon be between a lease and my Model 3 delivery (Jan-Mar, but obviously not counting on that to be accurate). I live in Los Angeles. My consulting business has me driving an average of 120 miles a day, which has me willing to pay somewhat of a premium to have an MS with AP in the mean time and my current dilemma is trying to figure out the best way to go about that.

Of course, I think the standard idea would be to buy used to mitigate the depreciation hit, eat the sales tax, and sell the MS once I have my M3. That way, it only costs me sales tax and slight depreciation (at least, slight vs a new car's depreciation). However, acknowledging that I can't know exactly how the market or Tesla will treat the M3's introduction or the soon-to-be-declining federal tax incentive, it seems like it's not the worst idea to buy new. The large initial depreciation hit should be offset a good bit by the $10k in incentives, as well as the other tax benefits because it'll be a business car. I'm thinking I'd rent the car out on Turo once I get my M3 and use that to offset my payments until I find a good time to sell. I'd imagine the best time to sell will likely be in that pocket when the federal incentive is cut in half and the M3 is still hard to acquire without an old reservation.

I've put in quite a bit of research to all angles of this, but while I would like to think I've considered most of the pros and cons, I don't have the breadth of knowledge specifically about Teslas and how they have been and will be affected by the market to feel confident that I've considered every angle. Again, any advice from those of you with that breadth of knowledge would be much appreciated.

Cheers!

 

[kort677]

do you believe that you could escape that new car depreciation hit? most new cars are losing deals the minute you take possession of it. I would at least buy an inventory car that can cost thousands less than a new car.

 

[chillaban]

Buying used doesn’t exactly avoid the depreciation hit either. It might lower your total loss due to deprecation but that’s at the expense of having an outdated car right out the gate, especially on the Tesla time scale.

I don’t think there’s a free lunch here. If you’re acquiring a car with clear intent to sell it around a year down the road, it’s gonna cost you a nice chunk of change no matter how it’s done....


P.S. I just noticed you are in California too. You’ll also lose 9%+ sales tax on your first car since California does not do any sort of trade in tax reduction.

 

[IAmKai]

do you believe that you could escape that new car depreciation hit? most new cars are losing deals the minute you take possession of it. I would at least buy an inventory car that can cost thousands less than a new car.

Escape, no, of course not. But lessen, yes.

And, yes, I'll definitely be getting an inventory car. I'm not picky enough to need to custom order one.

 

[IAmKai]

Buying used doesn’t exactly avoid the depreciation hit either. It might lower your total loss due to deprecation but that’s at the expense of having an outdated car right out the gate, especially on the Tesla time scale.

Yeah, the idea is that buying used avoids the massive initial hit - not that's it's immune to depreciation completely.

I don’t think there’s a free lunch here. If you’re acquiring a car with clear intent to sell it around a year down the road, it’s gonna cost you a nice chunk of change no matter how it’s done....


P.S. I just noticed you are in California too. You’ll also lose 9%+ sales tax on your first car since California does not do any sort of trade in tax reduction.

Yeah, I gotcha. The question I'm trying to answer is: Is that chunk of change worth going new instead of used?

I don't think this is some kind arbitrage opportunity where I'm going to net some kind of profit simply by buying and reselling. I'm just trying to consider the possibility that I can find enough extra value in buying new vs. used. For example, I think some value can be found in buying new with the $7500 tax incentive and reselling once that tax incentives drops to $3650. I'd imagine the average Tesla buyer most likely looks at a used Tesla and thinks, "Is this price worth it considering I can get $7500 off a new one?" At some point next year, that $7500 will drop to $3650, making the used car more attractive. This is, of course, unless I'm missing something in my logic.

 

[HankLloydRight]

If you're thinking of getting an MS anyway, why not just get an inventory car now, and just keep it?

If you can swing buying an MS now (and grab the full tax credit) why even bother with a M3? Do you really need/want a smaller car?

I can imagine, once you get a Model S, you would question why you would need to sell it for an M3. At that point, the price delta between selling the used MS and buying a new M3 has to be close to marginal.

 

[hacer]

Another possible advantage of buying used is that you could get AP1. I have no experience with AP2, but some people on this board don't seem to like it, compared to AP1.