Tesla: case study on depreciation vs demand

Depreciation in the used car market is one way to read demand for a manufacturer’s vehicles. Vehicles that are more in demand depreciate less. To compare the depreciation of the Tesla Model S with competing in class vehicles, we collected data on used cars and constructed an ordinary least squares (OLS) regression model. Here are the takeaways:

  • After 50k miles, a Tesla Model S will have depreciated 28% vs the in-class competitor average of 38%.
  • A Tesla Model S holds 7% more value than its competitors regardless of variables like model year, miles driven, and initial sale price.
  • In a stable economy, the used car market is a proxy for new car sales. This study is a sign that Tesla continues to gain share vs. comparable in-class vehicles.

Of course, if you haven’t a clue about the value of your ride – and don’t care – there are plenty of Buicks available.

4 thoughts on “Tesla: case study on depreciation vs demand

  1. 实事求是 says:

    (New Atlas 2/9/19): “The Tesla killers that could? Ten cars gunning for a slice of the EV pie”] https://newatlas.com/tesla-ten-rivals/58393/” Tesla’s Model 3, originally billed as a vehicle for the masses with a US$35,000 sticker price, though the company has only sold more expensive versions at higher price points so far. For now, it is priced between $42,900 and $60,900, before optional extras such as Enhanced Autopilot and performance upgrades.
    In spite of this, the vehicle brought in more revenue than any other US car in the final quarter of 2018 according to CleanTechnica [link], outstripping perennially popular cars like the Toyota Camry and the Honda Accord. It was also the best-selling premium car in the US for all of 2018 with 146,000 units sold. The Lexus RX came in a relatively distant second with 112,000 units sold.”
    (Seeking Alpha 2/25/19) “Chinese electric vehicle maker Nio has ticked up after hours, +0.7%, after a promo for CBS newsmagazine 60 Minutes teases a positive mention for the company on this upcoming Sunday’s program.” https://seekingalpha.com/news/3436352-nio-gets-boost-60-minutes-promos-positive-piece
    (CBS News “60 Minutes 2/24/19) “China’s drive to dominate the electric car industry” https://www.cbsnews.com/news/electric-cars-chinas-drive-to-dominate-the-industry-60-minutes/ (This year, China will build half of the electric vehicles in the world – Nio is one of nine Chinese electric vehicle—or EV—companies to set up shop on the West Coast where they can entice the world’s best engineers, programmers and software developers. Nio has hired more than 600 of them.)
    [Mashable 1/31/19] “Few people outside of Apple really know what the end goal of its top secret “Project Titan” [link] car development project is. Is Apple building a Tesla killer? Just further developing CarPlay? [link] Experimenting with autonomous driving technologies and sensors? One thing we do know: Chinese auto companies really want to steal any information from Project Titan. According to NBC News Bay Area [link], the FBI arrested a Chinese national accused of stealing Project Titan trade secrets. Jizhong Chen was arrested prior to flying to China after another Apple employee caught him photographing Apple-classified information.” https://mashable.com/article/fbi-arrests-apple-employee-stole-project-titan-information/#65W8xrEu7uqs

  2. Henry J. says:

    Tesla stock tanks after Elon Musk unveils cheaper Model 3 (NY Post 2/1/19) https://nypost.com/2019/03/01/tesla-stock-tanks-after-elon-musk-unveils-cheaper-model-3/ Shares of the electric-car maker tumbled almost 8 percent Friday after Elon Musk unveiled a long-awaited version of the company’s mass-market Model 3 sedan that costs just $35,000.
    Musk, who previously had been charging north of $42,000 for the cheapest Model 3, likewise slashed prices on the Model S and Model X — including an $18,000 price drop for the models in Ludicrous mode. But to pay for the discounts, Musk said late Thursday, Tesla will be shuttering most of its stores, laying off employees and moving worldwide sales exclusively online.
    …the earlier-than-expected arrival of the $35,000 Model 3 might be related to Musk’s scrap with the Securities and Exchange Commission. Earlier this week, the SEC demanded Musk be held in contempt of court for a tweet about Tesla production numbers the watchdog deemed misleading.

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