Is a cash purchase risky, given how technology will change?

[wordsman]

I was thinking of ordering my Taycan cash. But I just spoke to a dealer who recommended lease or PCP, instead. His argument is that the technology is likely to change, so in 4 years current Taycans will be out of date. Obviously if costs more to finance, but at least the finance company takes the future value risk.

I’ve been talking to a battery electrochemist who says residuals are likely to be robust (they certainly are right now). Apparently a 2016 Mk1 Hyundai Ionia (28kw) is worth £14-18k today and would have been around £24k new. That’s not much depreciation for a non-premium brand.

We now know the batteries will generally outlast the car. They’ll lose a little range at big miles, but maybe 10%, which isn’t such an issue as you’ve already had many years of use from the car, if you still have it.

Any views on the best way to finance a Taycan?

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[Klepper]

Lots of good discussion in this thread:

https://www.taycanforum.com/forum/threads/thoughts-in-leasing-vs-purchasing.5888/

 

[wordsman]

Lots of good discussion in this thread:

https://www.taycanforum.com/forum/threads/thoughts-in-leasing-vs-purchasing.5888/

Thanks!

 

[PDACPA]

If buying cash, what are you earning on that $100k+ right now? If your rate of return is more than the interest rate the finance company offers you, you would be better off financing.

 

[riburn3]

Tough call. The current used car market makes buying a new car a much better prospect, but it's hard to say 3 or 4 years down the road. If you think used car values are gonna take a bath in two or three years, the lease might be a better prospect since you end up putting the risk on the finance company. Depending on where you live though, you could lose out on hefty tax savings. Someone getting out of a 2020 Taycan today is laughing his way to the bank as they are going near MSRP even with 10k+ miles on them, and the buyer loses on the tax savings.

Other things to factor are the Porsche badge, and whether this car is perceived as a sports car down the road, and depreciate like their 911 and Boxster/Cayman cars, or is it like the Panamera and Crossovers that take decent hits in value (although not so much lately). Production volume has been high enough over the last year that in 3 years we might see a glut of these hit the used car market if people don't hold onto them like they do a 911, but 3 or 4 years from now there are also likely to be many more potential EV shoppers than there are today.

Early on Tesla was so worried about residual value that they would guarantee the trade in value of your car a few years down the road. What ended up happening after everyone realized these cars can run for half a million miles, is they didn't need to keep doing this because their cars held their own values very well. And this is a brand that arguably doesn't carry the same sort of name recognition and respect of a Porsche. Today, people are willing to pay more for a heavily used Tesla Model 3 or Y, than wait several months for a new one, even if it costs them less money to wait.

I don't buy the "rapidly advancing technology" argument dealers and some folks make. Improvements in all cars, but especially EVs are usually incremental. We are going to see a few miles of range added every year or two and some mild creature comfort changes. If you bought a Performance Tesla Model 3 in 2018, your range has increased about 10 miles. An early Tesla S in 2012 had about 15 miles more range in 2016. A 2020 Taycan 4S has minimal differences to a 2022. With Porsche range numbers being so off to begin with, them hypothetically coming out and saying the 2022 4s PB+ has EPA 250 miles in reality means nothing since the 2020 models have been blowing past this.

TBH, I don't think there is a right or wrong here. I have always been a lease guy, but financed my 4S, and I'm so glad I did, as I am going to have an obscene amount of equity on it when I trade it in for my CT4. I've driven it a lot and I'm getting trade in quotes for only about $10k off it's original MSRP, and I have no doubt it gets turned around and sold for near what I paid for it.

 

[Kakatus10]

I was thinking of ordering my Taycan cash. But I just spoke to a dealer who recommended lease or PCP, instead. His argument is that the technology is likely to change, so in 4 years current Taycans will be out of date. Obviously if costs more to finance, but at least the finance company takes the future value risk.

I’ve been talking to a battery electrochemist who says residuals are likely to be robust (they certainly are right now). Apparently a 2016 Mk1 Hyundai Ionia (28kw) is worth £14-18k today and would have been around £24k new. That’s not much depreciation for a non-premium brand.

We now know the batteries will generally outlast the car. They’ll lose a little range at big miles, but maybe 10%, which isn’t such an issue as you’ve already had many years of use from the car, if you still have it.

Any views on the best way to finance a Taycan?

I chose to purchase and finance at 2.24% with 10% down, since I can earn more with the money in the market. However, I fully intend to use the Taycan as a bridge vehicle for when the next big jump in battery tech occurs, which seems like 8+ years out at the moment before it can even begin to scale up.

Not sure how often you like changing vehicles, but I fully expect it to have similar depreciation to the Panamera, Sedans don't fare well. But if it's any better than that, I'll be pleasantly surprised. Hope for the best, plan for the worst.

 

[W1NGE]

Pay cash and flip every two years. Next major change will most likely be batteries but guessing when is tricky. Mitigates perceived obsolescence risk.

Supply is tight and demand high and so values are likely to be stable.

I expect desirability will be for quite some time and I would frown at any sales person pushing a finance scheme - commission at play.

Not much to be earned at the bank either.

Look at all options - finance vs purchase vs opportunity cost of putting the cash to use elsewhere vs company and personal tax benefits (and conditions thereto).

Buying a car is a mugs game at the best of times but heart rules the head on this one.

 

[Fish Fingers]

I think regardless of what might happen in the future, which will no doubt make our Taycans somewhat outdated, it's probably a much smarter move than buying a petrol or diesel car right now.

I also assume finance companies don't do business for the love of it.

Lastly, there are some issues which may make electric cars a desirable purchase now e.g;

Governments will have to work out how to tax them in the future.

Shortage of materials for Li-ion batteries in the very near future.

Electricity supply issues if large parts of the population start fitting home chargers.

ISA (for UK and EU) 'Black box' technology being mandated next May.

Etc

Personally, I think it may be a very good time to buy a Taycan.

 

[Kingske]

I bought mine cash with own funds without giving it too much consideration. Yes, the risk of obsolete technology crossed my mind, but the real-life impact of it is unpredictable, as are the future return on investing the same amount in stock, or the evolution of the used car market, or …. Way too many unpredictable variables to develop a rational strategy, so I went with the most simple approach.

 

[atebit]

TL;DR I wouldn’t worry about it. IMHO the lease deals (at least in the US) are shite. In my case I would’ve come out even after three years in terms of lease vs loan payments, so I decided I might as well have an ownership interest for the same $$.

I was pleasantly surprised when I was offered “ICE-like” depreciation on my 2018 RWD Model 3 when I bought the Taycan. Pretty much the same when I traded the 2014 Model S for the Model 3 (though that was all via Tesla so kind of a bubble unto itself).

Net-net it will always be the same experience if you trade, the dealer will detail all the reasons they can’t allow above X for your car, then tell prospective buyers why they can’t sell them your “cream puff” for less than Y, where Y >> X.

If you can find someone on the open market with enough cash for a viable deal, they may/may not have their notions about how outmoded your car is, but you’ll likely still get more that way then through a trade.

 

[Fedex77]

Depends on your cash opportunity cost. Financing in the USA dirt cheap (0.9-1.9%) so I wouldn’t use cash at all. Leasing a Porsche makes no sense to me as I do not own a business and have no ability to gain a tax advantage from it. Even if technology changes I do not think my purchased Taycan will depreciate lower than PCNA’s residual.

 

[wordsman]

If buying cash, what are you earning on that $100k+ right now? If your rate of return is more than the interest rate the finance company offers you, you would be better off financing.

When I say ‘cash’, I mean not dealer finance. I have a business loan at 2.5% plus cash that otherwise I‘d leave in the business for a rainy day. One friend said buy a rental property instead. Now that would make sense, but it wouldn’t be fun?

 

[wordsman]

Tough call. The current used car market makes buying a new car a much better prospect, but it's hard to say 3 or 4 years down the road. If you think used car values are gonna take a bath in two or three years, the lease might be a better prospect since you end up putting the risk on the finance company. Depending on where you live though, you could lose out on hefty tax savings. Someone getting out of a 2020 Taycan today is laughing his way to the bank as they are going near MSRP even with 10k+ miles on them, and the buyer loses on the tax savings.

With the UK banning the sale of ICE vehicles from 2030 (in theory) more and more people will be after electric. But because volumes have been low there’ll be a shortage of good used stock. Clearly that’ll make ordinary electric used cars popular, as they’re proving to be now. But what of Porsche? Ex demos with low miles in the UK are currently selling for list or more. But as you say, can that last?

 

[wordsman]

I chose to purchase and finance at 2.24% with 10% down, since I can earn more with the money in the market. However, I fully intend to use the Taycan as a bridge vehicle for when the next big jump in battery tech occurs, which seems like 8+ years out at the moment before it can even begin to scale up.

Not sure how often you like changing vehicles, but I fully expect it to have similar depreciation to the Panamera, Sedans don't fare well. But if it's any better than that, I'll be pleasantly surprised. Hope for the best, plan for the worst.

2.24%, blimey, not sure you can get anything close at a UK bank. The dealers are offering 5.9%! My plan was to finance over 4 years but maybe keep it after that. I‘ve leased a few cars over 2 years, but before that bought used and keep 6-10 years.

 

[wordsman]

Pay cash and flip every two years. Next major change will most likely be batteries but guessing when is tricky. Mitigates perceived obsolescence risk.

Supply is tight and demand high and so values are likely to be stable.

Interesting thought. In the UK we’re looking at 1yr old cars with demo mileage selling for list or above. So a 2-yr hold makes some sense. Prices aren’t likely to drop that dramatically while the chip shortage continues, and Porsche have a flooded factory. I’ve been quoted April for delivery on a RWD?

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