Tesla Depreciation and cost to change

We plot the Tesla Model S and Model X depreciation curve over time for each car model we list, however there is an a different way to look at depreciation, and that is the relative cost to change for a give car segment. Going back 4 years the 'long range' Model S was originally a 85D becoming a 90D, a 100D, a Long Range and now a Long Range+. We look across all these cars to show the cost to change to maintain the current segment in the Tesla range.

How we calculate depreciation and the cost to change

Depreciation can be calculated in various ways. The classical way is to look at how much a specific car falls in value over time. Each used car we list has a profile for that cars model and year of manufacture and how the average advertised price has changed over time. This roughly equates to the specific depreciation of that car accepting that the advertised price does not equal the actual sales prices, and the prices reflect buying prices and not what you may achieve when selling especially to a dealer.

This approach is simple and is great for calculating the residual value of cars for things such as finance agreements where the lender want to have sufficient equity in the car to cover the money they have leant. It does not however support buyers who are looking to change their cars periodically where the cost to change is often a bigger consideration. If the list price of car prices increase or there is inflation, this can help reduce the perceived depreciation of the car, however the cost to replace that car with a newer car may be significant. Equally, as cars become cheaper, something that is expecting to happen with EVs as the technology advances, while the depreciation may appear to be large, the cost to upgrade to a newer car may be significantly less. A classic exam0ple of this is when Tesla dropped the prices of the P100D by around $40k. All existing P100D cars suffered overnight depreciation, however the cost to change from their current car to a new one of the same type actually decreased.

The alternative view on depreciation is therefore to look at the replacement cost, or the cost to change of a car for a newer but equivalent model. Models have not stayed the same over time but we have taken the Model S and Model X Long Range car and the equivalents over time, namely the 90D and 100D. We have done similar with the performance models. While these cars reflect essentially the same point in the Tesla offering, the cars have also become better equipped with longer range and more features bundled in as standard, however the point still holds that if you currently have a 2 year old 100D and wanted to buy a new model, you would need to buy the Long Range+, and its this comparative price that we are considering.

US depreciation charts

The date we are using is US data but this is principally because the US have the most cars for sale at any given point in time. The charts are similar for other countries however the number of data points do not make for interesting charts.

The data also represents only cars for sale by Tesla, either as Tesla used/cpo or new. The dates are the factory dates for the specific cars.

We have not tried to correct for mileage or features, and of course this can have a bearing on the results. A new MX LR+ can vary in price by nearly $20k depending on specification, however visually you can still see trends, especially on the Model S. Each chart goes back approximately 4 years.

MS Long Range

Model S Long Range cost to change

MX Long Range

Model X Long Range cost to change

MS Performance

Model S Performance cost to change

MX Performance

Model X Performance cost to change

Findings

In general the charts show a high volume of cars around 3 years old which would correlate with 3 year finance deals ending and the cars being returned to Tesla. While pre April 17 peaks could also be indicative of the removal of free transferable supercharging that occurred around that time, the data is looking at build dates not registration dates.

If we take a crude fit through the data, in each case a 4 year old car is currently worth about half the price of a new car. That is not to say those older cars have depreciated to half, but that the cost to change to the modern equivalent would only be half covered by the value of a 4 year old car.

Depreciation is otherwise relatively flat with if anything following the opposite to a classic depreciation curve. One would normally expect cars to depreciate fairly quickly from new, and the depreciation slowing down as cars get older. The data suggests there is good support for newer cars with older technology and/or the expiry of the 4 year warranty approaching resulting in a slightly accelerating depreciation.

Facebook LinkedIn This site uses cookies to deliver our services and to show you relevant ads. By using our site, you acknowledge that you have read and understand our Privacy and Cookie Policy. Your use of the tesla-info website is subject to these policies and terms. All data is provided on a reasonable endeavours basis but errors and omissions may exist. No data should be relied upon as being accurate and additional checks should be made if the information is material to any purchase or use of the car. We provide product listings on Amazon for which we will receive a small commission if you chose to buy.