3 ms·

Oof, I thought resale value on Jaguars was bad ($70k to $15k in 5 years) but these are basically write-offs after the warranty expires. It's a grand experiment

by cc439 12y ago

Oof, I thought resale value on Jaguars was bad ($70k to $15k in 5 years) but these are basically write-offs after the warranty expires. It's a grand experiment but I don't think the market for $70k assets that lose 90% of their value in 5 years is going to be too hot.

bradleybuda 12y ago
Cars aren't really 'assets'. They are consumer goods that may or may not have some resale value, but it's a mistake to think of them as a store of value, or (outside of rare cases) as something that might appreciate in value.
- sliverstorm 12y ago
  Cars are assets. Depreciating assets, yes. But assets. They are an economic good that produces value (travel). Remember that an asset is not the same thing as a store of value. A store of value can be an asset, of course.
  - Goladus 12y ago
    Cars also have some value as shelter and storage.
DenisM 12y ago
You're making up the numbers, and then making up far-fetched conclusions about there being no market, which contradict the reality of the market - if I remember it right, Model S outsold every single luxury sedan in its price bracket.
- sliverstorm 12y ago
  Your parent is speculating about future sales backlash, if service life proves to be short or repairs too expensive. Initial sales isn't counter-proof to that.
crdb 12y ago
Actually, Singapore has proven it can be: http://en.wikipedia.org/wiki/Certificate_of_Entitlement http://en.wikipedia.org/wiki/Certificate_of_Entitlement The right to own a car for only 10 years has been bid up to about that. You can find cars with COE with less than 5 years remaining, that are still worth multiples of their non-Singaporean value. People will get into debt to drive a car.
- sliverstorm 12y ago
  Isn't that kind of a whole different kettle of fish?
- ddeck 12y ago
  I'm not sure what comparison you're trying to draw. Singapore has shown that restricting the supply of vehicles will drive the price higher. Yes, owning a vehicle is extremely expensive in Singapore and many in that economy are willing to pay the price (by definition since it's an auction based system). I believe your parent was pointing out that the depreciation of the Tesla appears to compare very poorly with alternative vehicles, and potential buyers are unlikely to choose such an expensive option when there are far cheaper alternatives available. Singaporeans have no alternative.
  - crdb 12y ago
    Well, it was a bit tongue in cheek, but I was specifically answering: "I don't think the market for $70k assets that lose 90% of their value in 5 years is going to be too hot". The COE loses 100% of its value in 10 years, but you still find plenty of buyers. Singaporeans have the alternative of not owning a car - both public transport and taxis are highly available, cheap and very pleasant to use. If you see a car as merely a means of transport in exchange for economic value, it makes no sense to own one at current market prices (it's cheaper to take a cab every day, for example - even if you live near the airport and work in CBD, a 15km commute, that's $40/day or $80,000/10 years). Why do some Singaporeans take out 30 year mortgages for the right to drive an average sedan for 10 years? What the COE taught me is the value of intangibles like status boost and the pleasure of driving for its own sake. This is more relevant to Tesla's target demographic than the considerations of the average second hand Toyota Corolla buyer (closer to where I would fit in, and why I'll never own a car in Singapore, no matter my net worth).
jonknee 12y ago
They actually seem to be doing great in the aftermarket. There's a wait list to purchase new, which is surely helping.
- Chronic29 12y ago
  But I don't see a wait list for expired Teslas.
- Cthulhu_ 12y ago
  Well at the moment, yes, but we'll have to wait and see until the Model S and co are > 5 years old, or even >8 years old and the warranty on the battery expires, or other age-related issues crop up. I'm thinking it'll be a very expensive used car to keep on the road, which will limit it to collectors or rich people and/or severely impact the resale value.
  - jonknee 12y ago
    > I'm thinking it'll be a very expensive used car to keep on the road, which will limit it to collectors or rich people and/or severely impact the resale value. I think $100k cars are already limited to rich people.
    - lttlrck 12y ago
      Not after 5 years of depreciation.

by cc439 12y ago

bradleybuda 12y ago

Cars aren't really 'assets'. They are consumer goods that may or may not have some resale value, but it's a mistake to think of them as a store of value, or (outside of rare cases) as something that might appreciate in value.

sliverstorm 12y ago
Cars are assets. Depreciating assets, yes. But assets. They are an economic good that produces value (travel). Remember that an asset is not the same thing as a store of value. A store of value can be an asset, of course.
- Goladus 12y ago
  Cars also have some value as shelter and storage.

DenisM 12y ago

You're making up the numbers, and then making up far-fetched conclusions about there being no market, which contradict the reality of the market - if I remember it right, Model S outsold every single luxury sedan in its price bracket.

sliverstorm 12y ago
Your parent is speculating about future sales backlash, if service life proves to be short or repairs too expensive. Initial sales isn't counter-proof to that.

crdb 12y ago

Actually, Singapore has proven it can be: http://en.wikipedia.org/wiki/Certificate_of_Entitlement http://en.wikipedia.org/wiki/Certificate_of_Entitlement The right to own a car for only 10 years has been bid up to about that. You can find cars with COE with less than 5 years remaining, that are still worth multiples of their non-Singaporean value. People will get into debt to drive a car.

sliverstorm 12y ago
Isn't that kind of a whole different kettle of fish?
ddeck 12y ago
I'm not sure what comparison you're trying to draw. Singapore has shown that restricting the supply of vehicles will drive the price higher. Yes, owning a vehicle is extremely expensive in Singapore and many in that economy are willing to pay the price (by definition since it's an auction based system). I believe your parent was pointing out that the depreciation of the Tesla appears to compare very poorly with alternative vehicles, and potential buyers are unlikely to choose such an expensive option when there are far cheaper alternatives available. Singaporeans have no alternative.
- crdb 12y ago
  Well, it was a bit tongue in cheek, but I was specifically answering: "I don't think the market for $70k assets that lose 90% of their value in 5 years is going to be too hot". The COE loses 100% of its value in 10 years, but you still find plenty of buyers. Singaporeans have the alternative of not owning a car - both public transport and taxis are highly available, cheap and very pleasant to use. If you see a car as merely a means of transport in exchange for economic value, it makes no sense to own one at current market prices (it's cheaper to take a cab every day, for example - even if you live near the airport and work in CBD, a 15km commute, that's $40/day or $80,000/10 years). Why do some Singaporeans take out 30 year mortgages for the right to drive an average sedan for 10 years? What the COE taught me is the value of intangibles like status boost and the pleasure of driving for its own sake. This is more relevant to Tesla's target demographic than the considerations of the average second hand Toyota Corolla buyer (closer to where I would fit in, and why I'll never own a car in Singapore, no matter my net worth).

jonknee 12y ago

They actually seem to be doing great in the aftermarket. There's a wait list to purchase new, which is surely helping.

Chronic29 12y ago
But I don't see a wait list for expired Teslas.
Cthulhu_ 12y ago
Well at the moment, yes, but we'll have to wait and see until the Model S and co are > 5 years old, or even >8 years old and the warranty on the battery expires, or other age-related issues crop up. I'm thinking it'll be a very expensive used car to keep on the road, which will limit it to collectors or rich people and/or severely impact the resale value.
- jonknee 12y ago
  > I'm thinking it'll be a very expensive used car to keep on the road, which will limit it to collectors or rich people and/or severely impact the resale value. I think $100k cars are already limited to rich people.
  - lttlrck 12y ago
    Not after 5 years of depreciation.