I had lunch with a work colleague last week who was asking me about Certified Pre Owned Tesla Model S vehicles and if now is a good time to buy one?
Well year end clearance sales are well known in the auto industry and the last week of December is the biggest sales period of the year! So can you score a great deal on a pre-owned Tesla Model S before December 31st?
That all depends on your definition of a great deal. Tesla forums are exploding with stories of ‘cheap’ Certified Pre-Owned (CPO) Tesla Model S citing a few available for under $50,000. Considering the average new car price is $36,000 that’s still a hefty premium to pay for a 2-3 year old first generation Tesla Model S.
Here is the link to Atlanta pre-owned Model S vehicles. Tesla Model S Pre-Owned Atlanta. As of today, 18 vehicles are listed with the cheapest being a 2013 60kWh for $59,000 and the most expensive is a 2015 P85D for $105,000! A lot of choice for sure.
But none of the 18 listings look like a bargain to the author. Why you ask?
Autopilot MIA: Keep in mind that almost all of these vehicles are ‘pre-Autopilot’ capable vehicles (generally VIN below 50,000/production pre-September 2014). This is truly a Buyer Beware situation. Because these Model S vehicles cannot be retrofit for Autopilot (Tech Package is not the same – it must say Tech Package with Autopilot) these vehicles are consigned to a pretty steep depreciation curve.
Uncertain Used Value: Because Tesla does not typically go through the Manheim auctions, used values are almost impossible to peg and at this point, Tesla can set what they want for that value. So you have no real market data to base the value of the CPO upon. Tesla likely paid only 80% of the listed price as a trade in, locking in a 20% non-negotiable profit margin for the company so that’s a good place to start to get a sense of the true wholesale value of these CPOs.
Evaluate CPO vs. New: you should always make the comparison between a new vehicle and the CPO and factor in the still available up to $7,500.00 Federal Tax Credit. The first owner took that credit so it is not available to you as a CPO buyer. Take the time to go on to Tesla Model S design studio and price out a comparably equipped Model S, deduct the $7,500.00 tax credit and see how close you are to the CPO. Tesla Model S Design Studio.
Remaining Factory Warranty: check out the balance of the factory warranty (4 years/50,000 miles) which is extended for CPOs. Ask for details. Most importantly, look hard at the remaining battery life which typically has an 8 year warranty (ask about mileage caps which can vary by battery size and year of production). Along with the electric drive unit, this is the most expensive out of warranty repair to consider ($10,000+).
Some of the early Teslas were purchased with the extended warranty which should transfer to the CPO buyer – be sure to ask. Rim rash is common and should be repaired by the Tesla Service Center. Tires are replaced below 5/32 of tread life.
Lower Priced Entry Level Model S: you may want to wait and see what Tesla does with the Model S entering its fourth full year of production. According to this article from the Motley Fool, Tesla may continue to reduce the price/feature set of the Model S to attract more buyers. Tesla has been focused on the $70,000 entry price point but ‘de-contented’ Model S could reduce that price further. Motley Fool Less Expensive Tesla Model S?. Time is on your side as the supply of CPOs with Autopilot grow and Tesla moves to lower the entry price point on a new Model S.
Bottom line: So if you are just interested in a great car that may be worth 50% of what you paid for it 3 years down the road and can live without Autopilot and all other self-driving upgrades, you may find a great deal.
DO YOUR HOMEWORK before you commit to a Certified Pre-Owned Tesla Model S. Buy only the options/features you want. Try not to get swayed by the sub-$50,000 hype. God-speed finding the deal of a lifetime!