NEWS that Tesla has slashed the prices of its premium cars by up to $87,000 in Australia has prompted analysts to attempt to get a handle on how the price cut might affect the resale values Teslas in the hands of current owners.
In Australia, Tesla readjusted driveaway pricing of its Model S sedan and Model X SUV by up to $87,000 on the back of its parent company’s on-again, off-again move to online-only global sales. Since then the price is apparently increasing by three per cent but the drop will still be catastrophic for current owners.
In Taiwan, the price of the top-level Model S dropped in half – by about $US100,000, according to some reports – sparking protests by Tesla owners who have seen the value of their cars decimated overnight.
Owners in Taiwan blockaded Tesla service centres and Tesla charging points in protest.
In China, protesters posted a large sign around the entire showroom window of a Tesla store warning people not to buy a Tesla.
Tesla Model S
One Chinese owner, who bought a Model X just a few days ago, complained on social media that he had seen $US26,000 evaporate on the announced price drop. “I’m probably the most unlucky new buyer. That’s unfair,” he said on social media.
According to Manheim Market Intelligence, there is no data in Australia it can match to the extent of the Tesla price activity so that it was unable to definitively determine the possible repercussions on Tesla resale values here.
But Manheim did say in a statement that historically “deep discounts have proven to be one of the most effective and immediate ways a car company can reduce the resale value of its models”.
“New-car prices are an important reference point for buyers of late-model and low-mileage used vehicles and the prices paid for these vehicles in turn affect pricing expectations buyers have for older vehicles,” the Manheim statement said.
However Manheim said that it had published research on the resale value of European electric cars where sales volumes were higher than in Australia and that data in Paris showed that EVs were not holding their values at all well.
Manheim chose to compare the Renault Clio and the Renault Zoe which are very similar cars except the Clio is petrol and the Zoe electric.
Renault Zoe
The data showed (see chart) that prices advertised for Renault Zoe’s located within 10km of Paris are clearly lower than its ICE equivalent, the Clio, in spite of the fact that the new-vehicle price of the Zoe is roughly twice the price of the Clio.
It also found that dealers are reporting much high price volatility for EVs compared to ICE equivalents. Advertised prices for the BMW i3 showed that the lowest price offered for a vehicle with between 20,000km and 40,000km was €16,400 and the highest was €28,900.
Manheim said that anecdotally remarketers were complaining that not only were resale values lower, the time to sale was also longer for EVs. Remarketers report that it takes an average 50 per longer time to sale than ICE equivalents.
One of the “biggest pain points” is that buyers are having trouble getting finance for used electric cars with some banks refusing loans for EVs.
Customers were also worried about buying older EVs with fears about battery replacement costs and there was a lack of salespeople trained to confidently answer customer questions on topics such as battery leases and wallboxes.
Alternatively, there were plenty of ICE alternatives available to customers, particularly when customers express concerns to salespeople about EV ownership.
The Manheim report said that Kelley Blue Book carried out a survey of US consumers in September 2016 which sheds light on some of the preconceived notions consumers have towards EVs.
It indicated significant knowledge gaps exist on fundamental topics like battery life and recharging times.
The survey found:
● The most popular answer to the question “Which vehicle first comes to mind when you think of EVs?” was the Toyota Prius – a hybrid! The second most popular was the Chevrolet Volt – another hybrid.
● Two hours was the median response to the question “How many hours should it take to restore full charge to a vehicle using a high-speed charger?”. BMW claims the recharge time on its i3 with a range of 260km is four hours and eighteen minutes. Renault claims its Zoe with a real-world range “up to 300km” has a recharge time “as little as three hours”.
● Five years was the median response to the question “How many years should a battery last before it needs to be replaced?”. Tesla guarantees its batteries for eight years!
By John Mellor on 15th March 2019 Comment, Free Access Articles Comment, Pricing, Tesla
NEWS that Tesla has slashed the prices of its premium cars by up to $87,000 in Australia has prompted analysts to attempt to get a handle on how the price cut might affect the resale values Teslas in the hands of current owners.
In Australia, Tesla readjusted driveaway pricing of its Model S sedan and Model X SUV by up to $87,000 on the back of its parent company’s on-again, off-again move to online-only global sales. Since then the price is apparently increasing by three per cent but the drop will still be catastrophic for current owners.
In Taiwan, the price of the top-level Model S dropped in half – by about $US100,000, according to some reports – sparking protests by Tesla owners who have seen the value of their cars decimated overnight.
Owners in Taiwan blockaded Tesla service centres and Tesla charging points in protest.
In China, protesters posted a large sign around the entire showroom window of a Tesla store warning people not to buy a Tesla.
Tesla Model S
One Chinese owner, who bought a Model X just a few days ago, complained on social media that he had seen $US26,000 evaporate on the announced price drop. “I’m probably the most unlucky new buyer. That’s unfair,” he said on social media.
According to Manheim Market Intelligence, there is no data in Australia it can match to the extent of the Tesla price activity so that it was unable to definitively determine the possible repercussions on Tesla resale values here.
But Manheim did say in a statement that historically “deep discounts have proven to be one of the most effective and immediate ways a car company can reduce the resale value of its models”.
“New-car prices are an important reference point for buyers of late-model and low-mileage used vehicles and the prices paid for these vehicles in turn affect pricing expectations buyers have for older vehicles,” the Manheim statement said.
However Manheim said that it had published research on the resale value of European electric cars where sales volumes were higher than in Australia and that data in Paris showed that EVs were not holding their values at all well.
Manheim chose to compare the Renault Clio and the Renault Zoe which are very similar cars except the Clio is petrol and the Zoe electric.
Renault Zoe
The data showed (see chart) that prices advertised for Renault Zoe’s located within 10km of Paris are clearly lower than its ICE equivalent, the Clio, in spite of the fact that the new-vehicle price of the Zoe is roughly twice the price of the Clio.
It also found that dealers are reporting much high price volatility for EVs compared to ICE equivalents. Advertised prices for the BMW i3 showed that the lowest price offered for a vehicle with between 20,000km and 40,000km was €16,400 and the highest was €28,900.
Manheim said that anecdotally remarketers were complaining that not only were resale values lower, the time to sale was also longer for EVs. Remarketers report that it takes an average 50 per longer time to sale than ICE equivalents.
One of the “biggest pain points” is that buyers are having trouble getting finance for used electric cars with some banks refusing loans for EVs.
Customers were also worried about buying older EVs with fears about battery replacement costs and there was a lack of salespeople trained to confidently answer customer questions on topics such as battery leases and wallboxes.
Alternatively, there were plenty of ICE alternatives available to customers, particularly when customers express concerns to salespeople about EV ownership.
The Manheim report said that Kelley Blue Book carried out a survey of US consumers in September 2016 which sheds light on some of the preconceived notions consumers have towards EVs.
It indicated significant knowledge gaps exist on fundamental topics like battery life and recharging times.
The survey found:
● The most popular answer to the question “Which vehicle first comes to mind when you think of EVs?” was the Toyota Prius – a hybrid! The second most popular was the Chevrolet Volt – another hybrid.
● Two hours was the median response to the question “How many hours should it take to restore full charge to a vehicle using a high-speed charger?”. BMW claims the recharge time on its i3 with a range of 260km is four hours and eighteen minutes. Renault claims its Zoe with a real-world range “up to 300km” has a recharge time “as little as three hours”.
● Five years was the median response to the question “How many years should a battery last before it needs to be replaced?”. Tesla guarantees its batteries for eight years!
COMMENT by John Mellor
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