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Value of Model S in 5 or 10 years

My biggest concern is how much the car will be worth in 5-10 years. I plan to very carefully take care of the battery, but it seems that will be the main issue in value - does the battery lose 10%, 25%, 50% of its capacity over time. Outdated technology is also a potential trouble spot.

I don't mind a lower value than a car of similar price purchased in the same year, but I don't want it to be worth $0 like an old cell phone or computer.

And with Gen III coming over the next 3-4 years, will that further drive down the price of a Model S given the supposed superior batter of a Gen III?

Any insight is appreciated.

I also assume there might be a price floor at which cost conscious customers would enter as buyers for a used car that has dropped in value.

The "price" for the car will decrease but the "value" of the car for me will stay the same. (sort of like talking to my accountant about my "net worth"- always the same although I may have more or less money on any given year). The software is new with each update. I can have new batteries installed when needed (if needed). I am figuring on a long term relationship with my car. BMW, Volvo & Lexus were just brief affairs :o)

Well in 5-10 years the battery will still be working fine. However, when the car is much older and the battery is actually not really usable anymore, then you might have a problem.

Think about buying any run-of-the-mill 15 year old car (not a classic collectible or something like that). If it doesn't have a working engine, no one will buy it, right? Even if some guy will sell you the car for $500, but you have to replace the engine, most people would rather look somewhere else and pay a few thousand dollars for a working car.

It's a car, not a cell phone or a computer. In both of those cases, everything is better in a few years and the old one may not even run new software.

In this case the touchscreen may be outdated and the range decreased, but the car will still be just as fast. And if we're right there will be more acceptance of electric cars and increased availability of superchargers, so while it's quite possible it will depreciate more than other cars (but no means certain that it will depreciate more than similarly priced cars) I expect a robust used market. It should be a very practical car for lots of people (unlike the roadster) and the main thing stopping many from buying it is the price.

Let's see.

simple logic. 8 year unlimited battery warranty. If something happens between now and then, you get a replacement that will last longer than what you have. So ideally, battery dies in the 6th year, you get a replacements and you ride out hopefully another 6 to 8 years it could be only 2 years but that's highly unlikely. 8 years too lucky. Worst case, buy a new battery at 10k and get another 4 to 6 years?

Nobody really knows, which is why the lease rates are currently outrageous. If Tesla fails, the car won't be worth much because nobody wants to buy orphaned hardware. If battery technology vastly improves, the car will be worth a lot less.

On the other hand, it may be a collector's item.

Personally, I think if you are worried about the resale value, you probably shouldn't be buying the car.

I'm just guessing here but, the car is mechanically simpler than an ICE car so that part should hold it's value.

The batteries will depreciate the most but are certainly replaceable. In 10 years one could get a new battery pack with twice the range and half the cost. It would be like getting a new car.

Probably best to see how tesla will assess depreciation when leases start up.

I agree with LazMan. The lowest depreciating car will be the smallest battery car. Battery technology continues to improve both in density, performance and price. I debated getting the smaller battery as I suspect we may have aftermarket kits (or even perhaps offered by Tesla) to upgrade our batteries to 600 mile range. So I think the battery cost will be a right off and not in the distant future.

That being said - I suspect the rest of the car will retain its value very very well. Similar to that of hybrids and I expect far better than any luxury or exotic. I also agree that these cars are mechanically far simpler with far less maintenance requirements and far fewer moving parts. So that should bolster the resell value of the car.

I can also look at it from the other side and say that an ICE vehicle could potentially drop more in value if EVs really take off because they would outdated and expensive to operate.

I appreciate the feedback and I think that as long as a better battery can be installed a reasonable price, these cars may actually retain more value than non-EVs.

Resale value is also good for the company long-term. Most of America won't buy a car that becomes worthless in a relatively short amount of time. Tesla needs to maintain current buyer's interest but also attract naysayers over time.

I wonder if the computer components will be updatable somehow - CPU, GPU, Retina display? The iPad 1 wasn't that long ago.

Residual value of the car is anyone's guess but as far as in car tech goes I would say you are much better off with a MS than anything else on the road. The tech is currently top of the class and all tech in cars gets old and can't be updated. At least this can get software updates. Yes the newer screens may eventually be retina, etc but that's the case with any car. Look at BMW, the first idrive was horrible and adopters were just stuck with it. At least with a Tesla you can get an update and the tech can be as good as possible for a 6,8,10 year old vehicle. The big question IMO is going to come down to Tesla staying afloat and battery life/technology. Everything else is similar to current ICE cars so should be valued fairly similarly.

+1 jat
I also think if you are really worried about that, then maybe you should buy a regular boring car, not an advanced technology super car like the Model S, which we all know is somewhat risky, but the reward is also higher if you can take the risk.

Who has a crystal ball anyway? Just enjoy the car if you have it already. You might not have to worry about what happens in 5 - 10 years for all kinds of reasons I won't name.

I was read an article in Wired Magazine about the Model S and one of the things they said was "Tired" about the Model S was that you had to take your eyes off the road to adjust the fan speed on the touchscreen. Guess what, now you can do it on the steering wheel as a software update (they haven't been able to do those fixes on my Range Rover). There was another article in Forbes, I believe, and they mentioned that they couldn't believe that there was no voice recognition, guess what, now there is.

I was concerned about battery life until I ran into a PHD in Lithium Ion batteries supercharging his Model S at the Hawthorne site. He works for Boeing and designs batteries for satellites. He said he ran the same quantitative model he does for NASA for the satellite batteries and based upon his 200 mile daily commute and miscellaneous driving his battery pack should last 20 years.

If my battery pack last 8 or 10 years and the car is worth $0.00 at that time, it would have been worth it.

Model S #84

Excuse the typos in my post, have to go chase my daughters around the house they were tugging on me.

Bill -- hear you my friend.

Good info Bill - thanks

Jat and Portia - you are naive if you think resale doesn't matter. Maybe it doesn't matter to you but the long-term viability of the company depends on it.

I don't think that's exactly what they're saying. It's not so much that Tesla depends on resale, but resale will eventually reflect how good a job Tesla is doing. At this point it's an unknown, and the best you can say is that if you really like the car, then you hope other people will want it when you sell it. But it's a risk, so definitely if resale is important to you financially in order to buy the car then it may be too risky.

Greg - i agree with your well-stated sentiment. However, exploring the topic is what these forums are designed to do. In my personal case, resale is not a deciding factor, but for the company and my ability to buy another Tesla more quickly in the future, it is an issue. Responding that someone concerned with resale should not purchase the car doesn't answer the original question of what resale will be.

@schoendp - I am saying that as a bleeding-edge adopter, you should know you are taking a risk. If you aren't comfortable with possibly taking big losses on the car should you decide to sell it, you probably shouldn't be playing the game.

I have bought all sorts of bleeding-edge electronic gadgets, and many of them were shortly paperweights. I am pretty confident that the Model S will be my daily driver for a decade or more, but if it turns out that it isn't I am comfortable with the risk I took to get the highest tech car on the planet.

I can easily answer this question with an analogy. 10 years ago, my rich neighbor bought a 42" plasma tv for $10,000. It wasn't even 1080P just 1280X720. 7 years ago, I bought 3 42" plasma tvs from costco (VIZIO) for 2000 each. I thought they were a steal. Today a 42" 1080p LED TV might go for $400 and is much better than the $10000 plasma just 10 years ago.

We are early adopters. We are the ones buying the 10000 plasma tv. If we don't then the 400 LED TV may never come.

I've accepted that possibility that my $110000 Model S may be obsolete in 2022, replaced by something faster, with better range and possibly better looking. However, there are probably only 3500 2012 Model S's and I have #2991. It's very possible that it may be a collectible down the road.

Jat - I agree with that. I was mainly curious what people think resale will be assuming Tesla makes it as a company. My assumption going in is that resale ability will be above $0 but maybe a little below a comparably priced ICE.

I will really be interested in the residual when the lease plans come out. Because of the design, it seems this car should age rather well.

However, as we all know when it comes to value perception is often way more important thancold hard facts. It will be very important that Tesla does all it can to maintain the value of the car from a perceived point of view as well as a practical one.

I have personal experience with Lexus along those lines. I had deal worked out for a new Acura to replace an LS400 coming off a Lexus factory lease. Part of the deal was Acura got to buy out the expiring lease. Lexus wouldn't sell to them. They wanted to keep the car so they had control over its pre-owned value. Worked out for me as I got a really good deal on a new LS.

My point is whatever the strategies there is more to keeping a good resale value than just having a good car. I am sure Tesla is well aware of this and no doubt have people working on plans to ensure the Model S holds its value.

@schoendp - if you want a guess, I would say slightly below a similarly priced ICE performance sedan, just on the basis that used car buyers are going to be more skiddish about something they don't understand.

Just remember the saying: Prediction is very difficult, especially about the future!

I am not saying it doesn't matter, I am saying you can not answer the question now, you can only give opinions, guesses, and if you think the resale value might be 0 and you don't like it then don't risk it. But you are going to get so much out of the car in 10 years, or even 5 years while you drive the car! And if you want guesses, I think mine is going to be a collectible, and I don't mind paying $10000 to buy another battery down the road and drive it another 10 years.

The Roadster resale is inline with other sport cars, even the 08s.

greg;
Yes, used Teslas will undercut new Leafs and drive them off the market!

PS
a 70% 85kWh battery is almost like a new 60kWh. Except that it will now degrade MUCH slower than a new battery.

This car is the first of its class/generation even more so than the first year Corvette, Mustang, E-Type, DB-6, etc. It will depreciate heavily over the first 10 years like all cars. It's value will flop around for the next 10 years as people scrap them and in 25 years, if you've maintained it well, it will be worth 3x+ what you paid for it (less for future model years). Guaranteed, whether EVs have 10,000mi range then and/or Tesla as a company is still around (which I hope it is) and/or we're flying in spaceships. Whether you can buy a loaf of bread for that sum in 2038 is a different question...

Schoendp. “Value of a Model S in 5 or 10 years.” The ‘S’ will likely depreciate 50% (of the MSRP) in the first 3-4 years – Which is is typical of most cars. At the end of 8-10 years, depending on condition (battery, mileage, body, paint, interior, accidents), your ‘S’ will likely be worth approx. 20% of the MSRP.

New automobiles, with few exceptions, are good investments. The only two ‘new’ cars that have been stellar are the Ford GT and the McLaren F1. Imagine being the owner of near -new 2008 $1.8+ million Bugatti Veyron EB 16.4, with 700 kilometers on the clock, and watching it sell for $933,814. Another 2008 Veyron sold in Las Vegas for $770K – also in pristine condition with under 12,000 miles. Personally,I would probably feel pretty good to be able to take that kind of hit and still feel my heart beating. By the way, a major servicing of a Veyron will set you back the price of a new Porsche Boxster, if repairs are needed add a 911 Turbo (thanks Colin Comer, SCM). $600 a year sounds pretty good.

Go check out cars.com or autotrader.com and see what a 3-10 year old BMWs sells for. You can buy 10 year old BMW 5 Series all day long for $10K!

I guarantee someone (if not TM) will make replacement batteries for the ‘S.’ Today, TM is using a commodity battery to keep costs down. I am sure laptops and other devices will see improved batteries and TM will adapt them. The big question will these new batteries be compatible with the early ‘S.?’

At the end of the day, what ‘jat’ said is true. The ‘S’ is the only 21st Century automobile on the market. I can’t wait to get mine in the next 2-5 weeks!


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