Apr 26, 2013
mcornwell This past weekend about 10 San Diego Tesla owners got together, and one of the local technicians came out and brought a white Roadster. I asked him if it was for sale, and he said no, that HQ hadn't asked them to prep it.
Makes more sense now...�
Apr 26, 2013
Majerus I wonder how the insurance on the loaner will work. If I have an s valued at 60K and then I total out a 115k car I am not sure how the insurance company will look at it. Also wonder if there will be an age requirement for a loaner.�
Apr 26, 2013
Owner I'm a bit confused if we even need to get our car serviced every year? I already bought the first four years. Can I stretch them out over more than four years?�
Apr 26, 2013
mnx Creating the World's Best Service and Warranty Program | Blog | Tesla Motors�
Apr 26, 2013
qwk This is very classy! I bet this move will spur sales more than anyone ever imagined. Confidence in your product and customers always pays off. Kudos, Tesla.
This makes me want to give them more money. Trust is a two way street.�
Apr 26, 2013
Discoducky Service contract still says you need to bring it in within 1K miles of 12.5K intervals
�
Apr 26, 2013
Owner Ah... so you still need to bring it in every 12.5K miles, they just dropped the 1 year part?�
Apr 26, 2013
ShortSlaver This is really good. Treating your customers right and having a "no questions asked" policy on things like the battery are the right moves. This will also create a larger market for Tesla to sell pre-owned Tesla's too, making their market share rise even more rapidly.�
Apr 26, 2013
gregincal At least it did say that. We'll see if that's still the case after this announcement.
I still wish they would clarify what is considered "damage" to the battery versus normal degradation.�
Apr 26, 2013
NuclearPowered 500 mile battery...
Pretty good chance of being able to upgrade battery after tech step change in 4-5 yrs...�
Apr 26, 2013
Jeeps17 If they offer to valet a loaner car to you if your car needs service (at no charge), is there a significant benefit to the unlimited ranger plan (unless you live very far away from a service center)?�
Apr 26, 2013
DJ Frustration Elon spoke as if they already had achieved the 500 mile range on a test battery.�
Apr 26, 2013
brianstorms Ha, "500 mile battery" will be the main thing taken from this conf call�
Apr 26, 2013
blaz Elon loves upgrades. Upgrades are awesome.�
Apr 26, 2013
mulder1231 What are the chances you like a loaner better than your own car? Loaners are usually beaten up, not well cared for. Would you take the risk?�
Apr 26, 2013
Clprenz Wow, get out your checkbooks in a couple years, time to get the newest biggest battery. If you got a 60, congrats you might be able to get an upgraded battery�
Apr 26, 2013
Owner Elon was implying he thought they would turn over every 2-3 months or so.�
Apr 26, 2013
gregincal The ranger plan is for them to come look at your car for things other than the annual service.�
Apr 26, 2013
bonnie The good news is that you make the decision for yourself, based on the loaner you've been given. It's a good offer, but not mandatory.�
Apr 26, 2013
Clprenz that last guy asked the best question�
Apr 26, 2013
ShortSlaver And I get the feeling an AWD S is in the works...�
Apr 26, 2013
J in MN This announcement creates way more questions than answers. I don't think Elon thought this through all the way. Some of these promises will come to bite him in the future, just like the supercharging for free for ever.�
Apr 26, 2013
brianstorms These conf calls are hilarious and exasperating at the same time. Elon is such a trip to listen to. Can you imagine what it must be like for Tesla's corporate communications director, with Elon running amok in these conf calls? 500 mile batteries, upgraded batteries, etc. What was the main announcement today again?�
Apr 26, 2013
Andrew +1! I wish there was a defined degradation percentage that would be covered under warranty. If they could say something like "Guaranteed to have at least 75% of your original range after 8 years" that would go a long way towards generating sales, alleviating long-term "range anxiety."�
Apr 26, 2013
GlennAlanBerry It is refreshing to hear some honesty from a CEO. I love Elon!�
Apr 26, 2013
Enadler Love the ease of trading in for the latest and greatest. Lets say 2 years from now when the 500 mile Ultra Performance model comes out then I can take it as a loaner try it and keep it and only pay the difference. The question will be what Tesla will pay for my car.
The other item is that it establishes a market for certified used MS's very quickly. The used car market will be important. This will create more affordable MS's more quickly.�
Apr 26, 2013
NuclearPowered It very much did sound that way.:smile:�
Apr 26, 2013
Stoneymonster Well now I have no idea whether prepaying for the service plan is a good idea or not. I really really wish they would give some more concrete details on what they plan to do at those visits, especially now that they are not required. Convince me to give you my money, Tesla!�
Apr 26, 2013
Jeeps17 In today's blog Elon makes no mention that this free valet loaner drop-off and pick-up is only intended for annual service visits.
He says "if your car needs service".
Hence my query about a relative loss of value of the ranger program.
Yes, the work may not be done at my home, but if I do not have to drive to the service center and I have another Tesla I can use while it is being done, why would I bother with rangers (again, unless you happen to live very far away from a service center)?�
Apr 26, 2013
Banahogg What all this means for those of us who already chose and paid for a plan seems to be up in the air too. I may stop by the Santana Row store over lunch and see if they have more information...�
Apr 26, 2013
Grendal At the Kahn Academy interview Elon did mention that there were battery advancements that he was aware of that were very exciting. The 500 mile battery pack seems to be the result.�
Apr 26, 2013
qwk I just thought of something else. If you have a car with problems ie. body gaps that you are not happy about, trade it in on the loaner you like. Wow. This could become a game changer.�
Apr 26, 2013
andrewket I agree, but - if the service department's goal is 0% profit, that would imply that the service plans are a good deal for the customer, at least on the surface.�
Apr 26, 2013
Stoneymonster Well, in the case the problems are Tesla's fault, I would hope they would be extra "helpful".�
Apr 26, 2013
andrewket This may be a good reason to pick up an HPWC rather than a 2nd UMC. Higher amperage charging may be more desirable in the future.�
Apr 26, 2013
qwk Can you name any other auto manufacturer, that stands behind their product in the manner announced today? I sure can't. Not even close.�
Apr 26, 2013
Stoneymonster It strikes me that Tesla is trying to squeeze the car model into the consumer electronics model. I.e. lots of folks upgrade to the latest phone every year. I wonder if they are trying to make it easier to do that with cars.�
Apr 26, 2013
DriverOne The blog entry is pretty excellent. A Dutch Auction for the loaners - nice!�
Apr 26, 2013
Stoneymonster Nope. This is all very positive, didn't mean to give the impression I wasn't impressed. Just that if a car isn't up to factory specs, I would hope Tesla would make it right, not just encourage you to buy a new one.�
Apr 26, 2013
mitch672 "Trading" your car for the loaner isn't going to be as simple as Elon thinks... Here are the issues:
Registration: you need to notify your insurance company you "traded" your car, my new VIN is xxxxxxxx (and expect to pay more as well)
Sales Tax: you will be required to pay sales tax on the difference on your trade
Excise Tax: now that you have that nice shiny new car, you can expect a nice new excise tax bill as well. Of course you should file for an abatement on what you've paid this year, most towns will "prorate" your rebate based on how many months of the year you have used.
Titles: you will be required to supply Tesla with the title to your existing Model S, that will be interesting if you have financed it...
They sound like they will also value your trade the same way they value the loaner cars: %1 per month and $1 mile, so subtract that from your original purchase price to see what you'd get on your trade.�
Apr 26, 2013
Citizen-T Yes, this was my take-away.�
Apr 26, 2013
Discoducky I'm very interested to see that Elon/TM has essentially just dictated what the depreciation rate is for Model S.
1% per month of age and $1 per mile�
Apr 26, 2013
ShortSlaver Which is pretty smart. Many of those that can afford a Model S right now would probably be OK with spending considerably less to get the latest and greatest version next year. Tesla maintains a customer base that keeps the factory creating more and more cars and then also creates and controls a used car market which will let other people get a Model S sooner than they thought they could.
And providing the best service around will keep people coming back.�
Apr 26, 2013
Stoneymonster Well, since the "lease" terms are similar and he is backing the residual value of those, that makes sense.�
Apr 26, 2013
SteveG3 Disco, this program will certainly be part of establishing the market value of used Teslas. Remember that cars rate of depreciation is highest the day it is purchased and slows thereafter... i.e. that depreciation rate is for the 2-3 month old cars would be improved over time. (just run the numbers announced today on an $80M car over 3 years and you'll see it well outstrips (value down to about $14M based on 12M miles per year) the depreciation in in the "lease" program, value about $35M).�
Apr 26, 2013
mikevbf Tesla's new blog entry says,
"However, even if you never bring in the car, your warranty is still valid."
and they are NOT just talking about the battery. So, you can bring it in on any time interval you wish.
http://www.teslamotors.com/blog/creating-world�s-best-service-and-warranty-program-0�
Apr 26, 2013
ElSupreme Does anyone else think this battery warranty announcement has any hint that Tesla's battery pack costs are lower than we already are speculating?
I was fairly certain Tesla had the lowest battery pack costs out there before ($/kWh). Now I think they are even lower than speculation. And Tesla has very good reason (i.e. known variables) to expect them to drop even further.
If they are paying much less than we would think, this type of statement gets easier and easier.�
Apr 26, 2013
gregincal Actually in California you are going to pay sales tax on the full value of the new car. There's no sales tax advantage for trade-ins. You're buying a new car here, I would think all the things you note are expected. It's just an easy way to get a deal on a fairly new service loaner.�
Apr 26, 2013
Slackjaw I think they did the same for the Roadster didn't they? i.e. demo cars would get $1 discount per mile driven... But maybe not the age aspect.
I'd like to know, if I take in my Roadster... sorry - I mean if they come to collect it, (which they *always* have anyway, albeit using a flatbed or trailer), will they lend me a Model S? That would be cool. I can synchronise the Roadster service with our annual family road trip (800 miles round trip) and use the S for that by hitting the SuperChargers all the way. Maybe that's pushing it. Gotta love Tesla though. Very impressed with this latest improvement to service.�
Apr 26, 2013
SteveG3 I think they really got this right, not the least of which, it shows their intent to really do right by customer (while having a viable business).
As mentioned, Elon did not go over existing customers who already purchased plan, I hope (and am optimistic) for you guys they hold true to the due what's right for customer and offer option of canceling contract. Afterall, he did specifically say requiring service contract for warranty to be valid was a mistake.�
Apr 26, 2013
manitou820 Now Tesla just needs to define a guaranteed trade in value similar to what they are quoting for the Loaner cars (the three year deal doesn't count. It needs to be similar to the 1% per month and $1 per mile. Let someone trade it in at any point) That way people who enjoy leasing or buying new cars every couple of years could easily take their car in for service, know ahead of time what their car is worth, and quickly trade up for the loaner car. It would make for a very slick way to keep upgrading to a newer Model S.�
Apr 26, 2013
mikevbf This from Elon:
and the wry smile that was palpable over audio when he said,
"why not 500?" [while referring to future battery pack range]
were my favorite parts of the announcement.
This announcement had a little of that Steve Job's, "just one more thing" quality before he would announce a sweet set of hardware upgrades. Somehow it's better, though, because it is more spontaneous.�
Apr 26, 2013
AnOutsider ...or was it?
Very happy overall. THIS is the Tesla I invested in.�
Apr 26, 2013
Curt Renz In the conference call today Elon noted that the first time someone buys a type of car, the salesman can be given credit. Afterward, the car owner�s decision to purchase again from the same company or recommend the car to others is largely dependent on the level of service received.
Most dealers depend on service charges to make a profit. Elon says that his service division�s monetary goal is to only break even. This makes it even less likely that someone would want to become an independent Tesla dealer. But it is designed to make consumers lifetime Tesla owners and the providers of enthusiastic recommendations to their friends.
As Elon tweeted yesterday, (the stock) �Market follows eventually.��
Apr 26, 2013
vfx This is a cool deal for is Roadster owners too. Now we can use the superchargers!
How about this? So if you have a Roadster or a 60kWh car with no twin chargers and no supercharging, could you bring you car in for service an take the loaner 85P with all the bells an whistles and drive 2000 miles for a few days? The value of your car would not be reduced and then you could buy the loaner at a discount.�
Apr 26, 2013
JakeP Thanks Elon, I am pleasantly surprised with these announcements! Now I would like to request a silver P85 loaner with CF or obeche matte trim and tan or black leather be sent on over, as soon as the 500-mile battery is installed...and please bring the title, because it's not coming back!!!�
Apr 26, 2013
mitch672 I think there is one more hidden jewel in this announcement that was not verbalized:
If they are willing to trade your car for the loaner on the spot, it likely also means if you walked in the door with $115K (or whatever the price is for the loaner Model S), they would probably find a way to sell you the car. It's not specifically spelled out, but that's the implied meaning. It means if you are a rich dude, and you don't like waiting, just show up at your nearest Tesla service center ready to spend some money (they prefer wire transfer from my experience)�
Apr 26, 2013
jcstp dealer and franchiseproblem solved :-D�
Apr 26, 2013
adiggs lol vfx. I can see it now - "do I want a $2k discount, or a $5k discount? $5k is going to take a lot of effort :biggrin:"�
Apr 26, 2013
Rifleman You are 100% on the money on this one. This gives them a way to have a little bit of inventory available to make the sale to the person who wants or needs a car right away, without having millions of dollars in inventory sitting around doing nothing. They are very effectively killing two birds with one stone.�
Apr 26, 2013
ckessel Wow, I have to say I'm totally blown away by the quantity of cool things in their service announcement. Impulse buys for people, no required service. I'm totally going to ask for the Roadster loaner�
Apr 26, 2013
Citizen-T Really good point. Thank you.�
Apr 26, 2013
mitch672 Your welcome�
Apr 26, 2013
Johann Koeber Now if they have a lot of people trading in their used MS,
how are they going to market those.
Considering the planned turn around of the loaner cars
(they might even have underestimated that)
they will have quite an inventory of used, older
Model Ss.�
Apr 26, 2013
anticitizen13.7 Certified Pre-Owned for those of us who can't afford a new one:smile:�
Apr 26, 2013
Calisun That is true but the service loaners will likely have to be registered to Tesla thus making them used cars, even with only 1000 miles on it. I got a deal on an Infiniti because the test drive was exactly what I was looking for and technically it was 'used'.�
Apr 26, 2013
adiggs As a nice side benefit, I think this does positive things for the Roadster resale market. Heck - if I wasn't already driving a Roadster, I would for sure want a day or 2 in a Roadster just to try it out. (now I'm looking for an excuse to get some work done on my Roadster, so I can drive a Model S for a day).�
Apr 26, 2013
SteveG3 It will be interesting to see how it plays out, but I don't think this will turn into a Pandora's Box. For one thing, having to fork over taxes on the purchase of loaner would seem to keep the volume of these transactions more manageable. More basically, if they are having a hard time selling the used Model S's turned in, it means they over-estimated the trade-in value to the original owner, will adjust downward going forward so they can lower price on the used Tesla inventory. Yes, for in the short-term they may misjudge market value and get hung up with used inventory, but over time it seems supply/demand will price the car to where the program functions.�
Apr 26, 2013
voidptr An interesting possible side effect of using Roadsters as service loaners to Model S owners... You can't currently loan a Roadster to a Model S owner for any length of time, since they can't charge it at home. I wonder if they're going to retrofit the Model S charge port on the Roadster loaner fleet, and if so, if they're going to make that option available to current Roadster owners as well.�
Apr 26, 2013
mulder1231 It's a great announcement for state and local government, they will be able to collect sales tax on the same vehicle multiple times. And with Tesla's new trade-in program, I expect their cars to transfer ownership much sooner.
How many of you thought before the announcement that you were going to keep your car at least for 8 years? And how many still feel that way? Would be an interesting poll question...�
Apr 26, 2013
mitch672 That brings up another point: if mr impatient wants to plunk down his $115K to buy the top end Model S, he's not going to be eligible for the $7,500 Federal tax credit, because the loaners will be "used" vehicles. That's probably ok for the truly rich "I can't wait I need instant gratification" types, but it won't result in a huge volume of new sales to worry about... Most of them will probably wait the 4-8 weeks for factory delivery (they didn't get wealthy by squandering their money).
Also Tesla will have taken that $7,500 Federal tax credit, since they will be the registered "owner" of the loaner cars.�
Apr 26, 2013
jcstp smart thinking!�
Apr 26, 2013
bonnie You can plug a Roadster into a 110 outlet, a 40amp outlet, a J1772 and all sorts of things with adapters ... so probably isn't an issue. But it would be nice to have a retrofit. Or an adapter. Just unlikely in the near term.�
Apr 26, 2013
SteveG3 Indeed, it is great for states... states that allow Tesla to do business. cough, Texas :wink:�
Apr 26, 2013
mcornwell For those living in a sales tax-free state, this could be a pretty sweet deal...�
Apr 26, 2013
ElSupreme Hmm this is an interesting question. I would probably expect that Tesla might be able to sell those cars as 'new'.
When my dad brought his VW Passat in for service (fix some stuff before he traded it in) he was given a 'loaner' Audi TT. He at the time was actively in negotiations to buy the same Audi 'TT'. He drove it as a loaner/test-drive for 3 days then bought the TT. And sold the Passat privately.
He bought the car 'new' from the Audi dealership. I would be wondering since Tesla is a dealer/manufacturer if them titling the car in required for test drives? And even if they were required to title the car, would it count as a first sale?�
Apr 26, 2013
mitch672 If they are issued "dealer plates" they don't need to title it, the original "manufacturers certificate of origin" could go to the buyer, but I somehow doubt they will be able to handle it that way, because you'd have non-employees driving the loaner cars around - dealer plates are for the dealer to use while a vehicle is unsold for test drives, etc.
Also, if you are trading in your Model S, I doubt the Feds will be happy with giving you a 2nd $7,500 Federal tax credit, although technically I guess they'd have to. If this happens, expect to see the language change on the Credit to having to keep the car for a minimum number of years, or a "recapture credit" would likely need to be done...�
Apr 26, 2013
K Hall That is incorrect. All demo cars are sold as new cars as they have never been titled. And your trade in now makes the MS available to a whole new set of buyers to purchase at a lower price.�
Apr 26, 2013
mcornwell If the car has not been sold to a private party yet, and no one else has claimed the tax credit(s), I would bet you would not have a problem claiming them yourself.�
Apr 26, 2013
Stoneymonster That's what California does with the $2500 energy credit (not a tax credit). You state that you will keep the car for 36 months or they get back a portion of the credit.�
Apr 26, 2013
manitou820 The should be able to keep the loaner cars under "demo" registration. I bought my Volt with 5500 miles on it. It was a dealer demo that had for 9 months. I received the $7500 tax credit.�
Apr 26, 2013
mitch672 In my state (MA), you can't have cars driving around with no plate, you can't use "dealer" plates, they are intended for the dealerships employees (test drives), so they will have to title the loaners in MA...�
Apr 26, 2013
PopSmith I think this is a great announcement and helps improve Tesla's advantage. Having annual service be optional (while keeping the warranty intact) is great, especially since BMW and Audi bundle some maintenance with their cars.
The most surprising part for me was that they are enhancing the battery warranty to cover improper maintenance and/or keeping it at a low SoC. I think it's great to see this as it shows great confidence in what they are building. :biggrin:�
Apr 26, 2013
gregincal Except during test drives by definition they aren't driven by dealership employees.�
Apr 26, 2013
JRP3 This trade in/trade up program also basically takes care of the "40kWh" market with a supply of Tesla certified used vehicles, that are actually better than the 40 ever could have been. Once again, well played Elon.�
Apr 26, 2013
4sevens.com maybe they're working on a pack that also works with the X that has extra capacity�
Apr 26, 2013
CapitalistOppressor People already routinely do that with cars, but usually after 2 or 3 years, and usually through lease programs.
- - - Updated - - -
Yes, I keyed into that as well. I doubt Elon wants to encourage the market to set a high depreciation rate on the car a few weeks after he personally guaranteed its value.
Beyond that, my analysis of depreciation last year convinced me that the Model S is likely to depreciate much slower than a comparable ICE vehicle because of the relationship between depreciation and marginal operational costs.
Especially if batteries degrade as slowly as I expect, a new Model S being built 10 years from now should hold its value amazingly well. Unfortunately, current year Model S's will depreciate far faster than they should from an economic standpoint because the market will price the car compared to existing competitors (all of which are ICE) because of the complete lack of historical data on a Model S class of vehicle. As a result, the used car market for the next few years was likely to result in some amazing bargains for used Model S's.
Linking the value of the car to the Mercedes S Class, and pricing loaners according to this depreciation schedule both seem to be a conscious effort to peg the depreciation rate to a reasonable target until the market manages to figure out the true higher value of the car.�
Apr 26, 2013
MikeC I expect the Model S to hold its value well. There are plenty of people who want one but can't afford to buy it new, and there is no other competition once used ones start becoming available because there is no other car in its class. I think a lot of people waiting for Gen III would jump at a Model S under $50k.
I also expect the earlier ones (first 10,000?) to become classic collector's items, as the car that sparked the EV revolution.�
Apr 26, 2013
Robert.Boston I had the honor of being the first person to have a Model S loaner while mine was getting repaired. The car had Massachusetts MFG plates. Not sure if this is the long-term plan, but that's one data point.�
Apr 26, 2013
mulder1231 Well, let's do the math for a $100K car: if you were to buy a 3 month old service car, and 100 miles per day average put on the car, that would be $100K - $3K - (100x90x$1) = $88K purchase price, or a 12% discount from new price for a 3-month old car.
But you'll miss out on the $7500 federal tax credit, so you're only saving $4500.
If you apply the math to a one year old loaner, it gets more interesting: $100K - $12K - (100x356x$1) = $52.4K purchase price, or a 48% discount from new price.
100 miles average per day is not unreasonable, because they have to valet drive the loaner to your home first. So, let's say you live 25 miles from the service center and 25 miles from your work, that's 100 miles put on the car if its a one-day service appointment.�
Apr 26, 2013
vfx I'm not convinced but these moves of guaranteeing the Mercedes value and -1 miles and -1 month might help.
What we saw with the Roadster early resales (before the market was glutted) was that the traditional used car market forces pushed the price down. I don't follow Leaf prices but I just read the volt resale prices are similar to ICE resales.
I do believe that the better EV propulsion system will show it's superiority and garner higher resale value eventually but when like we saw with Roadster, when someone wants to sell their car, they can only get what the market will bear and eventually just take the highest lowball offer so they can move on.
This might take another 6 years for the resellers to have the ability to assert themselves with real world used EV data.�
Apr 26, 2013
brianman That's a very good point. I'll give you another example.
- Owner: I'd like to keep the loaner.
- Tesla: But it's the same model and options as yours.
- Owner: I'm aware.
- Tesla: And it actually has more miles on it than yours.
- Owner: I'm aware.
- Tesla: I have to ask. Why do you want it?
- Owner: The loaner has a spoiler. Mine is still on back order.
For the record, I have my spoiler; please don't hate me for it. I was channeling the spirits of some recent posts.
- - - Updated - - -
If I had bought a low or moderately optioned non-Signature vehicle, I certainly would be thinking much < 8 years about now.
- - - Updated - - -
Elon's SWAG was 2-3 mo. is how old the loaners will get (i.e. they come out of the rotation or they get bought up). So I doubt we'll see that big of a discount.
That said, I'm looking forward to seeing how this plays out. I'll definitely be considering a used X whenever I can find one around $20K.�
Apr 26, 2013
FVO In Belgium Mercedes-Benz has a specifically dealernetwork set up just for selling almost new cars. Nearly New Car�
Apr 26, 2013
mitch672 Tesla uses pickup trucks with trailers to deliver cars, no reason to think they will be doing this any differently.
They have to assume the Model S they are picking up could possibly be immobilized/undrivable, so they have to plan for that situation. In this case no miles are put on the loaners during delivery or pickup, since they are trailered. Of course the ICE truck used to tow the trailer is getting a lot of mileage put on it...�
Apr 26, 2013
tdiggity Why is it assumed that Tesla would take the federal rebate? Since they can't claim it till taxes are due, it's not unreasonable to think that they'd let it ride until the last possible moment, right? or am I missing something here.�
Apr 26, 2013
jkirkebo Oh, I'm quite sure they will use the amount of miles on it when you got the loaner, not when you delivered it back�
Apr 26, 2013
SCW-Greg That's not what I was told at our Tesla store. The eligibility of the $7500 still applies. And real world test drive unit's daily usage (here at least) is closer to 50 - 60 miles driven per day.�
Apr 27, 2013
twinklejet Highly unlikely. They would probably record the odometer upon passing you the loaner and if you decide to keep it, you pay based on the odometer recorded at the point where you took the key regardless of how many miles you drive thereafter...�
Apr 27, 2013
yobigd20 I'm sure the fine print will read 'the mileage when we gave the car to you' , not the mileage after you return it. That would make a lot more sense.�
Apr 27, 2013
desiguy Brilliant move by Elon and team on service! It is difficult to scale up service and is easier to just produce more cars. By making service optional he just lowered the cost of ownership and they'll making a lot more money just selling more cars. Unlike other cars they can just remotely check to make sure everything in the car is OK and u don't have a lot of broken cars. Kudos to Tesla!�
Apr 27, 2013
yobigd20 I guess by this math it means if I have 100,000 miles on my P85 (actually, less due to 1% per month and however long it takes me to get that many miles) at some point i'll reach a $0 value for my "trade-in". At the rate that I'm racking up miles, I'll have 100,000 miles in < 3 years. So my 30 month (2.5yr) old car will be "worth $0 on trade in". I think they need to rework the formula a little bit. By his own saying, expect to see their new battery tech is every 4-5 yrs, so I don't expect a 500-mile range Tesla Model S to come out for another 4 years at least. A 2.5yr old P85 Tesla with 100k miles (still just a "baby") should still be worth at least $40k on trade in.�
Apr 27, 2013
Robert.Boston Yep, I just did that math on that, too. Using $85k as a ballpark value, delivered in Dec '12, and driving 1,000 miles/month, my car has zero return value (to Tesla) after Oct '16. Yikes! That's a world different than the guaranteed buy-back rate under the financing program. In Dec '15, the 43% residual value is $36,550 in Dec '15, but the formula value is only $18,400. Therefore I'm guessing that the loaner-swap program will only be used by people trading in fairly new cars.�
Apr 27, 2013
Zzzz... Service center network still had to be expanded. And $600 annual fee would have paid for network expansion. One thing as to why it was a smart move- Model S not exactly targets price sensitive customers. Another one - seeing service department actually brings in profits would have ensured high quality of customer service, helping with Tesla brand build up.
Making $600 commitments optional do help to lower true cost of S ownership. But will make service expansion investments come from money that would have otherwise spend on faster X/Gen3/... introductions.�
Apr 27, 2013
JRP3 I wonder if the value floor tied to the Mercedes depreciation that they use for the loan program would come into play here.�
Apr 27, 2013
Johann Koeber
The math (1% per month and 1$ per mile) only in the short term. Do not extrapolate for
the term value of used car. Unless you are unter the personal guarantee given by Elon, price will depend on supply and demand.
Unless I missed something the above formula applies only to the purchase price of the loaner car. The trade in value of your used MS is unknown.�
Apr 27, 2013
lolachampcar I think it is a simple way for Tesla to stock cars for immediate delivery without being a stocking dealer (at the same time they provide nice "demo" loaners on the service side). There is no desire to have inventory on the lot but loosing a loaner every now and then in a sale is not a problem and is not inventory carried on the books (service books maybe but not sales).�
Apr 27, 2013
Blurry_Eyed I think you are right on that Johann. I believe in the Q&A session of the conference call, Elon mentioned something that the value of the trade-in car would be determined by an industry standard pricing guidebook. I'll see if I can listen to the replay and find the section where he talks about how Tesla will value the cost of the car someone is trading in. I also believe it was different from the formula they will be using the value the loaner cars.�
Apr 27, 2013
PopSmith This is correct. Elon is referring to the "Automotive Leasing Guide" (ALG). I believe he said that in the Tesla Guarantee video as well.
ALG has a blog post about the Tesla Guarantee:
On Teslas Guarantee - ALG�
Apr 28, 2013
brianman It will be interesting to see the curves to see if there is a cashless trade-in intersection, though I somehow doubt it.�
Apr 28, 2013
lolachampcar I wonder what percentage of MS owners opt'd for the four or eight years of on site maintenance. I did to remove an unknown. If most have (and new owners continue in that direction) this change will not cost Tesla much of anything.�
Apr 29, 2013
gregincal I think the point is that the loaners become an increasingly good value, and Tesla believes the point at which they become an attractive enough proposition to buy is only at about 3 months old. By this formula they eventually become a ridiculously good value, but they'll get sold long before then.�
Apr 29, 2013
adiggs My question for Tesla - if I get a loaner while my Roadster is in, and I take somebody out for a drive, can that somebody keep (buy) the loaner? In a related question - could somebody swing by the local service center, see what's lying about, and drive off in their new Model S? Or is this "keep the loaner" method of acquisition only available to current owners?�
Apr 29, 2013
DonPedro On the one hand I think that making this available to third parties could be a very smart move - spontaneous purchases without the inventory. On the other hand: If a guy drives off with the loaner car, what are they going to give to the next guy coming in for service?�
Apr 29, 2013
lolachampcar like the chips..... go on, we will make more.�
Apr 29, 2013
adiggs I'm thinking the solution to this problem (the loaner car was bought and now it isn't available the next day) is a problem that Tesla will enjoy solving�
Apr 29, 2013
gaswalla in these scenarios, it sounds like the service centers are acting more and more like traditional dealerships.. yuk�
Apr 29, 2013
mitch672 Who have been instructed by their CEO, to "not make a profit, the customer is king". How does that sound ANYTHING like a traditional dealership? This precise model will have all of the traditional dealers who wanted to sell Teslas running for the hills, and that's Elons brilliant strategy in a nutshell�
Apr 29, 2013
JRP3 I think some people are overestimating how many will be grabbing the loaners.�
Apr 29, 2013
mitch672 Yes, most likely true, considering the "just keep it" upgrade is likely to cost you $20-30K (for many of us), or more...�
Apr 29, 2013
DonPedro Not at all. The depreciation algorithm ensures they will never grow old. So either someone buys it on impulse for close-to-full price, or it gets picked up within a few months when the discount becomes too tempting. Assume that the average loaner turns around in 1 month, that means annual sales of 800 loaners. That is 4% of annual production, thus not insignificant. And of course there will be much more than 80 loaners as new service centers open.�
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