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Tesla Motors (TSLA) Boasts Best Resale Value Among EVs – Here’s Why

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Tesla Motors Inc cars retain better resale value than any other automaker. There are chances that you will have to take a big hit if you trade an electric car not produced by Tesla. For instance, a 2013 Nissan LEAF is valued at just 22% of its original MSRP, as per Black Book. A five-year-old LEAF is only worth an 11% of its cost when it was bought new. In addition, a three-year old conventional car is valued between 45% and 65% of its real cost.

Tesla Motors Inc Model S (TSLA)

Why electric cars have low resale value?

Anil Goyal – Black Book’s senior vice-president of operations – said “to be under 20 percent is fairly telling.” He added that a lot of it has to with the demand, and the demand of the EVs is suppressed by many factors. One of them is range. A newly bought Nissan LEAF can drive about 60 miles only before range anxiety kicks in. The same theory is true of most other electric “compliance vehicles” like Volkswagen e-Golf, Fiat 500e and Mitsubishi i-MiEV.

The second factor behind suppressed demand is the pace of improvements. Battery range has hiked in recent years. As per Goyal, used car buyers are just not that interested in a vehicle that has less than 100 miles of range. The BMW i3 is also included in that group.

Another reason behind suppressed demand is the confusing nature of EV charging networks. Lack of consumer information, competing standards, and clutter of confusing charging plans cause anxiety for electric car drivers.

Why Tesla cars are better?

With Tesla Motors Inc cars, this is not the case. A Model S, that is three years old, is worth 62% of its original value, as per Black Book. This is because most of the fear of the buyers is removed with the updates. The buyers are not afraid that their car will be out of date in a year or two as Tesla makes constant updates. Another reason is the Supercharger network, which assures the Tesla owners that a free fast charging facility is nearby when they need to replenish their batteries.

The third factor is styling; mainstream buyers want mainstream styling, but with second hand cars they fear that they won’t get it. But, the Model X and Model S look like the premium luxury cars they are. The upcoming Model 3 is very pleasing with modern design that makes it stand out from other electric cars.

Many firms are planning to offer battery electric cars in the coming 3 to 5 years. But, how will they will perform in the used car market after the new one wears off, is only speculative as of now.

On Friday, Tesla shares closed up 0.31% at $225.61. Year to date, the stock is down over 5% while in the last one-year, it is down almost 7%.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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