Sudden Massive Depreciation In Used Value

[whitex]

My Tesla was 97k, I think plus about a 10k refund in tax credits. Sold it 4.5 years later for 50k, so 37k loss over 54 months, not too shabby.

The Taycan was 130k and about 8.25k in credits. I looked at KBB value and it is about 110k after 18 months. I've only done just over 8k miles so far. 12k depreciation after about 18 months is pretty good, I thought. Of course the reality of what someone might pay me could be different.

I just went through this a couple of months ago and will tell you that it seems KBB trade-in value is just meant to make you feel good about searching for a new car (which they can of course help you with). I went through the rest of the process on KBB, and actually got trade-in offers, which were significantly lower than the KBB estimated trade-in value. The car was in great shape, no accidents, so no issues exposed by adding pictures or VIN.

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[P0R5HE_UK]

A few points from my experience in the UK. I am a private buyer not company car owner so that does make a difference. Company car owners in the UK still benefit from very good tax incentives for electric vehicles including Taycans.

It seems that some combination of Tesla price drop, improved stock on the used car market, increased finance costs and bad press about electric cars / charging point contention is impacted prices hard on all used electric vehicles. In contrast, ICE vehicles are still seeing strong residual values.

I purchased a nearly 1 year old Taycan Turbo with 1,000 miles on the clock in November 2021 and there were about 100 for sale in the UK. I got the Turbo for £125k (approx. 95% of new price, including all options) and at the time 4S and RWD were selling at a premium to new! Part of the reason for buying the Turbo. At the same time, I put in an order for a new GTS to my own specification. I got notice in November 2022 that the GTS would (finally) be delivered in Jan 2023 and so decided to part company with the Turbo. I got zero interest from private buyers and was offered a few prices from dealers, the best was £108k. After a little thought, I took the hit and sold. The dealer told me that they need to make at least £5k + 20% VAT and so the car was marketed by them for £116k. By the time I took delivery of the GTS in February 2023, the Turbo was still not sold and was being offered for £96k!

So, a wise (lucky?) decision by me to sell early but indicative of very changing market. That said, I think there will be a small rebound in prices. But ... mostly we are back to more normal depreciation, slightly offset by inflation on the brand new ones. Have to focus on enjoying the car!

FWIW, I am extremely pleased with the spec. Approx. £15k options including leather interior, rear-wheel steer etc.

http://www.porsche-code.com/PPKU2W84

 

[DCYL725]

This ad would definitely not work nowadays.

Feminist, woke, twitter driven society.

But, my oh my, is it primal and true.

 

[tchavei]

This ad would definitely not work nowadays.

Feminist, woke, twitter driven society.

But, my oh my, is it primal and true.

I think there was another with the same idea but can't find it.

Yeah, not an ad that would be acceptable in the wild today.

Not far from the truth though

 

[Archimedes]

11k miles and my Taycan 4S is still working fine. Weird.

 

[Fish Fingers]

I just read an article about Tesla LH drive decision, which was quite interesting.

In particular regarding used EV prices. It suggests that in the UK, 12m old used EV values (across the board) are down 20% in a year, according to CAP.

Tesla’s announcement is the latest in a series of moves by the company that have rocked the market for new and used electric cars. In January, it slashed around £7000 off the price of the Model 3 and Model Y and then a further £4000 off the Model 3 two months later.

The cuts depressed the values of not only used Teslas but also many competitor models. By April, Cap HPI was reporting that, year on year, values of EVs at 12 months old and with 20,000 miles were down 20%, and at three years and 60,000 miles down 25%.

https://www.autocar.co.uk/car-news/...l-orders-after-rhd-model-s-model-x-sales-stop

Interestingly it also quotes a model S Plaid customer who immediately cancelled his order and booked a test drive in a Taycan TS.

 

[Cosmicblue]

An interesting thread.

Here in UK when petrol (gasoline) hit £2+ a Litre EVs seemed like a really sensible idea plus we were still in the micro-chip shortage era so used car prices climbed and depreciation fell away, almost to being negligible. Now fuel prices have fallen back to are £1.50/Litre and factory order cars are arriving with full specifications again residual values have been hit, especially for 12-18 month old cars. I'm currently sitting in the Audi camp with an ICE RS - pondering an Etron GT or a Taycan and note that the former seems to have lost around £30k in the last 6 months on less than 12 month old vehicles

An item to note on residual values and depreciation - from a trade price guide (CAP/Glasses) the factory fit options for the most part aren't valued and are mostly lost. A franchised dealer, i.e. the Porsche chaps will understand and are likely to be a little more generous - the rest just work of the trade price guide.

In addition, the UK VAT element of the original purchase cost isn't included in trade-in prices, the dealer only pays VAT on the profit element of a second hand car.

 

[Fish Fingers]

Well Tesla shares dropped 4% last night after Musk said he was open to cutting prices further.
Their profit margin is down (to a 4 year low) from 26% last year to 18% - even though they made record sales.

During a call with Wall Street analysts, Mr Musk signalled that he was open to cutting prices further if needed.
"One day it seems like the world economy is falling apart, next day it's fine. I don't know what the hell is going on," he said

Investors are concerned about the possibility of more price cuts at Tesla, Arun Sundararajan, a Professor at the NYU Stern Business School, told the BBC.
"This feels like a price war with no long term strategy to raise margins if Tesla wins the war," he added.

The problem is the war has only just started, as the Chinese are about to massively up their game (having taken the home market) exporting EVs, with much lower costs.

I can see Tesla getting into a race to the bottom with the Chinese.

Hopefully Porsche (Merc / BMW) will improve their products and keep prices up for a premium product (but will it be?).

Interesting that's for sure.

https://www.bbc.co.uk/news/business-66253044

 

[whitex]

Well Tesla shares dropped 4% last night after Musk said he was open to cutting prices further.
Their profit margin is down (to a 4 year low) from 26% last year to 18% - even though they made record sales.

During a call with Wall Street analysts, Mr Musk signalled that he was open to cutting prices further if needed.
"One day it seems like the world economy is falling apart, next day it's fine. I don't know what the hell is going on," he said

Investors are concerned about the possibility of more price cuts at Tesla, Arun Sundararajan, a Professor at the NYU Stern Business School, told the BBC.
"This feels like a price war with no long term strategy to raise margins if Tesla wins the war," he added.

The problem is the war has only just started, as the Chinese are about to massively up their game (having taken the home market) exporting EVs, with much lower costs.

I can see Tesla getting into a race to the bottom with the Chinese.

Hopefully Porsche (Merc / BMW) will improve their products and keep prices up for a premium product (but will it be?).

Interesting that's for sure.

https://www.bbc.co.uk/news/business-66253044

Profit margin is just one metric. If you want to invest in high profit margin, Rolls Royce, Rimac, Ferrari - somehow I don't see them being values anywhere where Tesla market cap is today. Tesla market share is growing fast, and they are also the pioneers in recurring (subscriptions, insurance) and/or post sale supplemental revenue (new features, service/repair). Just the direct sales model lets Tesla tap the profit centers unavailable to traditional automakers - dealer sales and service (and it gives Tesla a monopoly on those too, so no competition).

I’m not one to make excuses for Elon, but when it comes to Tesla he seems to know what he’s doing. Notice that Tesla is not just a car maker either, they are big in batteries and growing fast in energy market (think superchargers and power walls, solar to small extent). I don’t get investor obsession with profit margin. Would they rather invest in some teenager or ebay who has a 50% profit margin on the one or two items they sell a year?

Full disclosure, drove Teslas for 10 years, don't regret it in the least. Sold my last one yesterday as their current car offering is not to my (or my wife's) taste, but is sure appealing to a lot of people out there. I am no longer their target market. Model Y was the most sold new car in the world in Q1 this year, dethroning Toyota IIRC. Even my retired parents bought a Model Y and they love it (worth noting, they switched out of an 12 year old Toyota, not a luxury brand). Tesla is not competing with Porsche exclusive cars, they are competing with Ford mass market cars, and Ford knows it too.

 

[f1eng]

Well Tesla shares dropped 4% last night after Musk said he was open to cutting prices further.

The stock market is really just a gambling platform IMO and Musk knows how to manipulate it.

The stock market value of a lot of companies bore a weak relationship to their real value last time I looked and I leave my investments to the professional gamblers who specialise in that sort of thing.

 

[Hanny]

Reading the various opinions and thoughts to this thread, I must admit I’m a little bemused…..were people honestly thinking that their Taycan purchase would not loose money or that an EV would depreciate less than an ICE comparible vehicle?

My view/expectation with ANY car is 50% retained value at the 3 yr point - with good condition, manufactures full service record and average of 10k miles per year……you’re in a good place. If 60% and the above - that’s a bonus! Anything above that…..you’ve won the lottery of sorts.

 

[whitex]

Reading the various opinions and thoughts to this thread, I must admit I’m a little bemused…..were people honestly thinking that their Taycan purchase would not loose money or that an EV would depreciate less than an ICE comparible vehicle?

My view/expectation with ANY car is 50% retained value at the 3 yr point - with good condition, manufactures full service record and average of 10k miles per year……you’re in a good place. If 60% and the above - that’s a bonus! Anything above that…..you’ve won the lottery of sorts.

A lot of people get used to, then feel entitled to good things quickly. Not all people, but definitely not a small percentage. This is perfectly illustrated in the fairly famous book titled “Who moved my cheese”

 

[rich_r]

Reading the various opinions and thoughts to this thread, I must admit I’m a little bemused…..were people honestly thinking that their Taycan purchase would not loose money or that an EV would depreciate less than an ICE comparible vehicle?

My view/expectation with ANY car is 50% retained value at the 3 yr point - with good condition, manufactures full service record and average of 10k miles per year……you’re in a good place. If 60% and the above - that’s a bonus! Anything above that…..you’ve won the lottery of sorts.

Yup. Totally agree. I'm surprised too by the amount of people who seem to think that cars shouldn't depreciate. With any expensive luxury sedan, you're very lucky if the residual after 3 years is > 50%.

 

[gnop1950]

I've never been one to worry about trade-in values since I tend to keep my cars for a long long time. I traded in an 18 yo Acura SUV when I bought my Taycan. I always pay cash and figure any car is a write-off. The only time I trade in/sell early is if I really don't like the car. That isn't a problem with my Taycan, I love it.

Now it is a fun car and not a daily driver for me so would I consider trading it in early for a Porsche 718 EV, hmm, let me get back to you on that one

 

[whitex]

I've never been one to worry about trade-in values since I tend to keep my cars for a long long time. I traded in an 18 yo Acura SUV when I bought my Taycan. I always pay cash and figure any car is a write-off. The only time I trade in/sell early is if I really don't like the car. That isn't a problem with my Taycan, I love it.

Now it is a fun car and not a daily driver for me so would I consider trading it in early for a Porsche 718 EV, hmm, let me get back to you on that one

How much did you get for the 18yo Acura? That’s less 6% a year depreciation unless you paid a bunch to dispose of it (negative tradein value).

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