Tesla Preparing To Enter CPO Market By 2016
Always wanted to own a Tesla Model S, but couldn’t get past the $71,070 base price? CEO Elon Musk has a plan to make it easier to bring one home: CPO sales.
Automotive News reports the automaker is working on a certified pre-owned program that would be offered through its stores, competing against similar programs by the likes of BMW and Mercedes-Benz, as explained by Tesla’s vice president of communications, Simon Sproule:
With the Model S fleet now heading toward the first cars hitting three years old, we are looking at CPO and how best to structure.
In addition, Musk himself proclaimed in 2013 that he would personally honor the buyback guarantee his company issued to owners at the time of purchase, allowing them to recover 43 percent to 50 percent of the sticker price after three years. Should this group take him up, the first trade-ins would arrive for refurbishing in the spring of 2016 — if not earlier for those offloading their Model S for a Model X — with more to come the following year.
Just like with Tesla’s new cars, the CPO models would be sold at its stores, with the potential to capture as much as $10,000 per used model sold, much more than when the models first left the showroom according to TrueCar president John Krafcik.
Challenges for the company’s entry into the CPO market include: budgeting for model refurbishing and sales; more legal battles to be allowed to directly sell used models; the potential for depreciation to be lower than benchmarked — the Mercedes S-Class’ trade-in value formed the basis for Tesla’s buyback program; owners taking their vehicles to other used-car dealers or the private market; and the upcoming Model III.
It will be interesting to watch this unfold. The car made a fool of it's critics at every turn and it's entrance into the used market will give a clearer message as to it's long term sustainability. If the car does well with it's 2nd and 3rd owners, people will be even more open to buying a new one. Much like the normal car market.
Well, a CPO Model S still has more range left in its battery than any other EV when new, not to mention the performance. CPO Leafs and other BEVs - if they exist - not so much. But if you're buying the Model S just because of its range (unlikely, but it's a factor), then there will be significant competition to CPO Model Ss in the form of the Model 3 and the mythical long-range EVs allegedly coming from GM and Nissan.
The key question: how long is the battery warranty on a used Model S?
CPO programs at BMW, MB, etc. typically add 2 or more years and 20,000 or more miles to the new car warranty. Thus to match this Tesla would seemingly need to extend the battery warranty, but the question is whether there is any margin to profitably extend it beyond 8 years, particularly if the 1st owner has made frequent use of the supercharger networks which tend to reduce battery life.