Tesla Pre-Owned Program Means Lower Prices, Higher Profits

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At over $71,000, the starting price of the Tesla Model S is well beyond the means of the average American. In a bid to lower the cost of its premium electric sedan, Tesla is developing a certified pre-owned program that will make the Model S more affordable, and put a lot of profit into the automaker’s bank account, reports Automotive News.

Last spring Elon Musk announced the Tesla leasing program, which charged customers $5,000 down and as little as $580 (though really more like $1,021) a month for a 36 month lease as well as an official buyback program designed to retain the value of used Teslas. Musk personally guaranteed customers could recover 40 to 50% of the value of their Model S if they returned the car after 36 months and next summer the eldest Teslas will start turning three years old. Owners ready to trade in can bring the cars back to the Tesla-owned stores where they will enter a pre-owned fleet, which will give the automaker more floor models that can be sold on the spot, as opposed to placing an order and waiting months for delivery.

Typically new car dealers make most of their profit on trade-ins and used car sales with fat margins which the parent company is cut out of. Tesla’s factory-owned store model means those used car profits will go right back to the mothership, and some analysts estimate that the electric automaker could earn $10,000 or more on the second sale. If Tesla is paying 50% of the price back to buyers after three years, and then upmarking them another $10,000, then you could get into a a base 60 kWh Model S for as little as $45,000, depending on mileage. Even a used 85 kWh Model S could come in under $60,000 under this pre-owned planned, making the electric car available to a wider audience and putting a lot of money into Elon’s wallet. Meanwhile, franchise car dealers are also being cut out of the fat margins used Teslas fetch right now.

Given the premium price used Teslas are fetching on the market though, don’t expect to snatch one up until late 2016 at the earliest.. There is however a glimmer of hope for those of us of lesser means that we may one day own a Tesla Model S, albeit a pre-loved one.

 

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.