Tesla Model 3 retains almost 90% of its value over three years

According to a new study (link here), Tesla Model 3 retains almost 90% of its value over three years, which is five times better than other electric vehicles.

They came to the conclusion that the average vehicle depreciates 39.1% after the average car lease term of three years. For other electric vehicles, the average depreciation goes up to 59.2%."

One of the key reasons we bought our Tesla Model3 was its outstanding resale value, and why, on a Lease payment basis for our situation, it was the cheapest EV out there, bar the Nissan Motor Corporation's Leaf with 40 kWh battery.

It was also better than almost any other sedan on the market in percentage of value retained.

However, a quick look at online car classifieds reveals its closer to 75-80% after 2 years. As well, SR+ seems to be better than Performance, and those with FSD suffer more. Still excellent, but definitely not 90%.

Overall, one thing we should remember - well regarded, durable cars with strong demand and relatively tight supply will always do well on the used market. There's plenty of buyers who want an EV and can't afford new.

This is a massive shift in economics. All fleet managers now have the opportunity to shift their accrued depreciation to this new schedule saving loads of cash for businesses. This is a tipping point for the automotive industry, electric vehicles will become the top auto propulsion technology within this decade. Fleets dictate a lot of what happens in the auto/trucking industry.

9 comments:

AnonymousJuly 22, 2020 at 9:07 PM
I don't know that I buy 90% but I wouldn't be surprised if it levels out at about 70% for 3 years. Virtually all ICE vehicle are below 50% after 3 years. Let's think about why that is. Primarily (I think) it's because the buyer of a used ICE vehicle is scared there is some big engine or transmission problem the seller doesn't tell them (or perhaps doesn't know themselves). How many horror stories have we all heard of someone buying a used vehicle and a month later have to fork out boku $$$ to repair something? Electric vehicles have so fewer moving parts there is little risk of that. Plus the OTA updates makes a buyer feel like... while it is a used vehicle... somehow, it continues to feel like it's not... like you're in on a secret deal that makes your used car feel like it's new. One other note... ever notice how Tesla doesn't have yearly models? There is no "2020 Model 3". So if I sell my Model 3 that I bought in 2018, it's still described the same way... it's just a Model 3. It's not a "2018 Model 3". It was brilliant to get away from labeling them by year. If I sell... I'm just selling a Model 3. Who cares when it was made?
Matt DJuly 22, 2020 at 9:08 PM
One challenge I’ve faced looking for a used EV on any of the standard used car online platforms is a lack of knowledge about the range and different options for Teslas and other EVs across the board. Fast charging capability, actual range with battery degradation, and of course all the fancy Tesla stuff etc.
Bart V GoelJuly 22, 2020 at 9:08 PM
until which State of Health we keep the battery in a car? Is it widely aknowledged that it would be around 80% SoC? Would someone drive an EV with 70% SoC?
Also, good link James that you shared - how can we (as users) check that? We don't have access to any recorded data of charge/discharge with the car, so, how can we know it's SoC at anytime? If I am not mistaken, The battery contains a 10% buffer that is actually being consumed over time, giving us the illusion that we hold a higher SoC on the long run.
Dave CarterJuly 22, 2020 at 9:09 PM
I find this assertion dubious at best. Most vehicles depreciate more than 10% the minute you drive it off the lot, let alone 3 years later (the whole reason for GAP insurance). Given industry (bankers) and consumer uncertainty on battery life and the lack of data on long term durability (not to mention real residual estimates) there is probably not enough data yet. But i will eat James Carter's hat if the residual value is 90% at year 3. A current 2018 Model 3 (mid range) can be found on KBB for about $37-41. The average transaction price for a new Model 3 (mid range) is around 52k...that around a 21-28% depreciation.
AnonymousJuly 22, 2020 at 9:09 PM
Can’t believe this Model 3 tale, as Tesla is often reducing the price of it’s products. You cannot take the state purchase help in consideration in the depreciation as it can change any day.
Micheal RajkumarJuly 22, 2020 at 9:10 PM
Remember that the software doesn't depreciate but actually adds value to older Model 3 or all Tesla.

These EV's actually improve with age from new features that are upgrades to the software and cameras within each vehicle.

Compare Tesla's internet upgrades with any other EV or ICE vehicle. Oh, no EV or ICE vehicles to compare.

What's the resale value of better performance, braking and safety features?
AnonymousJuly 22, 2020 at 9:10 PM
Cannot trust that, why would someone buy a 3 years old Model 3 at 41k when a new one costs 45k? When looking at the table at least. Complete non-sense ... Maybe a Tesla can loose 30 to 40% in 3 years compared to 40 to 60% of another car, but well, 10 % ...