Used Tesla Model S Buyers Believe Elon Musk About Tesla's Valuation? #CleanTechnica Analysis
28. April 2019 by Michael Barnard
Recently, Elon Musk was interviewed by a MIT artificial intelligence researcher, Lex Fridman, and made a claim he previously made.
Essentially, buying a car today is an investment in the future … the bottom line is that if you buy a Tesla today, I think you buy a valuable asset, not a depreciated asset. "
On an investor event a couple of weeks later, Musk went on and indicated that Tesla owners could make a $ 30,000 this year gross profits from their cars. It was qualified with a million miles and 11 years of driving time, but it's not like Musk showed his math on this one.
We decided to look at this in some different ways to consider this claim. What is the reason for that? Which Teslas did it apply? And has the used car market picked up the signal?
Background
This is not news, Musk talks only more about it today. Designing a Uber competitor with owned Teslas who runs, has been on Musk & # 39; s radar for a while. Also paid $ 920 million in debt, started sending to other continents (which led to a delay that affected earnings), and spent a lot of money building their next Gigafactory in Shanghai for Chinese and Asian markets (leading to a Q1 loss and projected Q2 loss), it is quite likely that a positive note was needed.
One relevant October 2016 announcement was that all Teslas were produced from that point forward with all hardware, including sensors, neural yarns and actuators, being completely self-propelled when the software component was completed, and that upgrading to full autonomy would be an update over air. They have tweaked their processor side, but Musk has insured owners who buy full self-purchase capacity that the processors will be replaced for free. And new cars come with the new processors.
~ 6 months before it is in all new production cars. No change to sensors. This is easy replacement of the Autopilot computer.
– Elon Musk (@elonmusk) October 16, 2018
"Ordered" vs. "order new" may mean an additional upgrade fee for those who ordered full self-driving. those who do not commit, but we see how it works. In any case, it is not particularly relevant to the further analysis.
Assessment of Claim
When full autonomy is available, customers will be able to choose to have the cars used to share rides when they are not driving them. As the average car runs 5% of the year, there is a lot of time they could make money instead.
Let's assume 50% of the Uber prices because they don't have to pay the driver That's about $ 1 per kilometer. Let's assume a limited 10 pricing per day, averaging 3 miles each and operating five days a week. It will be $ 30 per day, $ 150 per week, ~ $ 600 per month and $ 7,200 per year.
30 miles takes about 10 kWh of power on average of $ 0.12 in the US, so it's $ 3.60 a day in additional spending at worst (most electrical appliances will charge in low-cost billing periods in the middle of the night or at no charge chargers available). It costs $ 18 / week, ~ $ 72 / month and ~ $ 864 per year.
You almost double your average daily US drive by 30 miles extra a day, so there will be extra wear, cleaning and tire costs. Call it another $ 1000 a year.
$ 7,200 – $ 1,100 – $ 864 = $ 5,336 gross profit annually for something you don't need to think about. Double rides for 60 miles a day, it's $ 10,000 a year. Draw them to 90 miles a day, $ 15,000. Etc.
Average New York taxis run 180 miles in every 12-hour shift, or 360 miles a day. Much of the time they travel to fares, not with paying customers, so let's assume 60% of the miles are under threat, leaving 216 miles per day of paid travel. Remove 5% of personal use and it is close enough to 200 miles per day under threat. It may net over $ 30,000 per year, provided that Tesla did not take a significant cut of the peak. Even that would be affordable with a reasonable upward adjustment of prices.
Tesla Model 3s comes with all the autonomous hardware in the $ 35,000 version. Let's call it $ 45,000 with autonomy turned on. Used Tesla Model S 60 and 70 vehicles built after October 2016 are in the low $ 50,000 range.
Most cars may drop by 30% when you ship them. Say Tesla has lost $ 15,000 in the first year, and probably another 10% a year after that. Let's work up some numbers to see if you are even destroying depreciation.
Yes, we could come before depreciation with a long shot pretty quickly with moderate car holding. And of course, these depreciation rates are affordable, but they will be affected by the larger tool.
If I could buy a used, one year old Tesla Model 3 for $ 30,000 and make it $ 30,000 a year, that's actually a fantastic deal. It is plausible that people would pay a premium for it. Even a used model S 60 or 70 for that price would be very interesting.
Does the used car market show any signals on this?
One of the places we expect to see some evidence that smart people see this opportunity is in the used car market.
In early January, CleanTechnica published two parts on the used car market and value for the Tesla Model 3s. The first discovered that the Tesla Model 3s was barely present in the used car market – through an Autotrader analysis, we compared Model 3 with their Audi and BMW competitors, and also compared it with similar volumes, cheaper cars.
We have just updated this review, three months later, to look at only 2019 model cars from other manufacturers and to see if people did not sell their model 3s partly due to potential tax card loss in a sale before 2019. With a more apple-to-apple comparison, Tesla Model 3s is still heavily under-represented in the used car market. The data point may indicate that owners are thinking about the value of the car, especially as many buyers of model 3 extend to acquire the more desirable car. The several hundred thousand pre-orders for Model 3 showed that they wanted to be commendable, as Tesla projected it on, and the same as the status of the 6th best-selling car in the US over the last three quarters combined.
When CleanTechnica pointed out that the scratching Kelley Blue Book takes on Model 3 resale value. The Kelley Blue Book termed the best of any electric car for expected resale value, but their own published number made it clear that Model 3 would keep its value better than any other car period but did not have the title road. The second best electric car was model X in that assessment. Per thesis, this may indicate that the people in KBB saw the value of autonomy, but when you read KBB's actual comments, there is no indication of that. It does not seem like resale analysts are considering this in the same way that Musk claims it should be or the previous numerical work suggests that it should be, at least not yet.
Another data point that is worth considering is the recent release of iSeeCars.com analysis of the resale of the Tesla Model S versus other cars. They found that model S was the fastest-selling used car in its class with a significant margin, almost 10% faster than the much cheaper Audi A7 and A8, and with almost half the Maserati Quattroporte. BMW's valued 7 Series takes almost two weeks longer to move, and the cheaper 6 Series is in the same boat. It is clear from this analysis that Tesla's used cars are also highly valued in the market, but does this send a signal on how buyers consider them based on autonomous taxi service?
Phone Support iSeeCars.com
We reached out to iSeeCars to get ready on several points to see if there would be anything more interesting to see if something else was being asked.
The ISeeCars team made a point in the report that the Model S was the most discounted car, but it was unclear how they had come to that claim from the actual text itself. What they had done was to look at the average of all used cars of that model to look for exclusives. Tesla Model S had the largest variance in usage price per it.
But this seemed potentially adjusted, as the Tesla Model S has come in a huge selection of new price points for different configurations, from the under $ 60,000 original model S 60 to up to $ 135,000 P100D. It is a much larger MSRP area than its competitors, which has much more narrowly segmented product lines and thus more offers covering the same range. Could it have been the cause of the variance that iSeeCars saw? They looked deeper and gave this interesting insight:
"P100d has the lowest percentage of all trimmer to 10% or more below market value. 60D had the highest percentage of entries that are 10% or more below."
This seems to mean that the 60D had the largest number of cars that were less desirable. This may have been an age thing for the potential owners, but the P100D wants to fight this. In the used market, buyers want as much Tesla as they can get.
Finally, there was the question of whether the underlying data showed anything about vehicle values with full driveability. If so, there would be a visible change in the statistics for cars between 2016 and 2017. Again, we asked the specific issue of iSeeCars.
"Our analysis shows a breakdown of the model year or year produced in Tesla's case. 2016 and 2017 are almost identical for days on the market: 2016 is 35.8 days, while 2017 is 35.9 days. 2018 is 29.0 days . "
Once again, the used car market shows that buyers clearly consider the potential for full self-driving, but only that they want the latest, best Teslas.
Where are we going?
Musk's claim seems correct. It would be possible to get a Tesla with full self-drive, and a Tesla robotax autonomous ridesharing service gives a great deal of money annually to Tesla owners. However, there is no clear signal from the underlying used car market that everyone cares about it yet.
Will everyone choose for rideshare? Of course not. But will everyone get a family car that can deliver every family member anywhere they need to go without the mother or father running all the time? Yes, and it's worth a lot too. In fact, it is quite possible that many sailor's families with children will be able to have a single autonomous car and get the same tool. As US government estimates point to an annual cost of $ 9,576 a year, Musk may need to be touting families instead of Tesla Taxi!
Teslas are highly desirable used cars, which sell faster than competitors and non-competitors, and hold resale value longer in many cases, but it does not appear to be adjusted to make money on the future Tesla Taxi capability. Of course, this is like Henry Ford in the early 1900s and says, "If I had asked people what they wanted, they would have said faster horses."
Most people have not internalized the idea that their Teslas will be money spins instead of costs yet. When it starts to sink in, the data can change. But at that time, other cars will probably also have full self-sufficiency opportunities, and companies like Uber will exploit them at competitive price points, leading to the same valuation on the used car market. Maybe.
Michael Barnard is Chief Strategist with TFIE Strategy Inc. He works with startups, existing businesses and investors to identify opportunities for significant bottom line growth and cost cutting in our fast-paced world. He is the editor of The Future is Electric, a medium publication. He regularly publishes analyzes of low-carbon technology and policies in areas such as Newsweek, Slate, Forbes, Huffington Post, Quartz, CleanTechnica and RenewEconomy, and his work is regularly included in textbooks. Third-party articles about their analysis and interviews have been published in dozens of news sites worldwide and have reached # 1 on Reddit Science. Much of his work stems from Quora.com, where Mike has been a top writer annually since 2012. He is available for advisory engagements, chatting and board positions.
