Tesla Motors Inc (NASDAQ:TSLA) fans may be able to get their hands on a new Model S for less than ever before if they use the firm’s Certified Pre-Owned program. A 2015 version of the car, with a 60kWh battery is selling for less than $50k for buyers in the Los Angeles area through the CPO, which offers used Tesla units at lower prices.
The real benefit to the Model S that Tesla Motors has on sale at that price is the $7,500 federal income tax subsidy that drivers will be able to reap on purchase. Users who live in California will also be able to get a $2,500 rebate on their purchase, leaving the least expensive model on the site at $56k, an extremely low price for a 2015 Model S with 800 miles on the clock. There’s more, slightly precarious, math that can bring the price down even lower.
Tesla Motors drives prices lower
On its site to buy a new Model S, Tesla Motors include $10,000 in savings on fuel in the price of the car. That would bring the price of the CPO Model S down to $46k, and within range of many more customers than ever before. Using Tesla’s math drives the price from $66k down to $46k, an impressive reduction.
Tesla’s practice of including grants in the buying price has been criticized at times, but its use of a random “gas savings” number in order to make the sticker price appear lower has been attacked many times.
In a tweet on April 11 2015 Mr. Musk defended that practice, “We debated this, but there really is $10k gas saved by most owners over 5 yrs (avg ownership period). Since it’s true, we are sticking w it,” he wrote.
Tesla doesn’t advertise the gas savings on its CPO site, but if the firm estimates $10k in savings with a new car, the number should be the same for an unused 2015 Model S.
Tesla Motors is able to claim a $7,500 new EV tax credit on that Model S because it is likely a show room model. As the the car has a 60 kWh battery it’s out of date, and models with that kind of capacity are no longer in production. That means that only a lucky few will be able to get their hands on a car at that price point.
A new Model S 70 kWh starts off at around $55k including the Federal income tax credit, the California grant, and the $10k in gas savings listed on the Tesla Motors site.
Cars that come through the Tesla CPO program come with a four year new 50,000 mile warranty, and 24 hour roadside assistance.
Buying through the CPO program
The car in Los Angeles can be picked up at any time and can be bought after a deposit of $1,000 is placed with the firm through the Tesla Motors website. for a $1,500 fee the car can be shipped to other centers inside the continental United States, and for $3,000 the car can be sent to Hawaii and Alaska.
The CPO program has other features that make it better than buying a Model S direct from the firm. If you buy a used Tesla you can get your hands on it right away, or as soon as you can get financing and make your way down to the center that it’s sitting at.
The 2015 Tesla that’s on sales at the $46k price has all of the features that will allow the firm’s autopilot self-driving car tech to work, though it’s not a dual-motor version of the car.
In our interview with a recent buyer from the CPO program our subject David, who bought a 2014 Tesla from the firm, recounted a great experience. He said that those at the center were “great people who worked hard to get us everything we needed to complete the purchase. We took delivery in Las Vegas and Lynda made the experience awesome for us.”
David had his hands on his Model S less than a week after deciding to buy one, a much shorter time than one would have to wait for a new Tesla.
Tesla Motors reaps tax benefits
Showing the price of a car with fuel price savings included is controversial, but so are the price subsidies given by the federal and state governments for the purchase of an EV. After it emerged that firms ran by Elon Musk had received around $5bn in subsidies in recent years, there was a backlash, followed by a reaction from fans of Tesla Motors.
The US government has decided that it’s in its strategic interest to lower the amount of oil that US citizens require to go about their daily lives, and it’s decided to prop up the EV industry in order to make that more viable.
States, like California, have vied to become the center of the EV industry by offering different grants to firms who choose to operate there, and to people that wish to buy a car that runs on electricity rather than gas.
There is a lot of politics in deciding whether to support subsidies for EVs, but Tesla’s fame and success have brought out the most vitriolic on both sides of the argument. For now it’s clear what the state of affairs is, and it’s not worth arguing the morality or economic rightness of those supports if all you want is a low-priced high quality EV.
Tesla Motors gets into the mid market
Those decisions have allowed Tesla Motors to set itself up as a luxury car company and sell cars to the rich but Elon Musk soon wants to change that. He’s looking to sell a Tesla Model 3, which is primed to be priced at around $35k, in 2017.
Tesla Motors CEO says that the Model 3 will be priced at $35k before any Federal tax incentives are counted, though it’s not clear if he’s including the price of the gas savings in the final cost of the car.
Tesla has delayed the release of the Model X many times, and Wall Street is worried that the Model 3 may not appear when Tesla says it will. The launch of the Model X, which should happen before the end of the third quarter, is the next big test for Elon Musk’s firm.
For now a Model S with at $46k is the lowest price that fans of the firm’s cars can hope for. That’s much more easily reachable than the close to $60k that a new Model S costs today, and less than 50% higher than the 32k that an average new car costs in the US today.
That price is for the lucky few who are able to put down a deposit on a 60 kWh Model S before the version of the car disappears forever. There’s just a few models on the Tesla CPO site right now that are going to benefit from the $7,500 federal income tax support, and they might be the last models that are offered at that kind of price until the Model 3 appears in a couple of year’s time.