[Loot2309]

Hi all.

I am new on here. I used to have a Nissan Leaf but have been in a Diesel Passat for the last couple of years. I am hopefully in a position to order a Tesla Model 3 later in the year but I can't decide whether to go all out and buy it outright (I could just about do this) or to get it on a lease.

I am slightly nervous about buying outright because of the depreciation over 3-4 years. My Leaf was bought at 18 months old and I got it for a bargain because they depreciated like crazy. I know that Teslas supposedly hold their value better than a lot of Cars but the model 3 is so new we don't really know what it will be worth in three years.

Whats peoples views on this? Tesla's PCP suggests a value of £16k for the SR+ after 4 years so is it fair to say it should be worth about £20k after 3 years with 30-35k miles on the clock? If so then it might be better to keep the £40k earning some interest and lease?

On the subject of leasing does anybody here lease their Tesla? If so are there things that you lose out on such as access to various services in the app or any problems registering to use Superchargers?

Sorry for all the questions, I will get reading through the forum to see what else I can find out!

 

[h8ten]

If in Scotland you can get an interest free loan from the Energy Savings Trust in Scotland for up to £35k over 6 years and keep your money in the bank earning a wee bit of interest.

 

[Loot2309]

If in Scotland you can get an interest free loan from the Energy Savings Trust in Scotland for up to £35k over 6 years and keep your money in the bank earning a wee bit of interest.

That sounds great but sadly I am not in Scotland.

Thats a great deal, I might move there!

 

[firetrax]

I lease and this has no impact on supercharging, updates etc.

I suspect residuals will be strong over the next 3 years so buying may make sense. Do you own a company as it's tax efficient to buy through a company? Or can you pursuad your employer to offer it on a salary sacrifice scheme at no cost to themselves and bet tax effective for you?

 

[srichards]

Could do PCP instead of lease so you have ownership option or could just hand it back regardless?

 

[Loot2309]

Yeah a PCP may be the middle ground. Tesla set the residual at £16k after 4 years but I suppose that's just a figure isn't it, that doesn't mean it will be worth that. It could well be higher?

 

[DrEskimo]

Yeah a PCP may be the middle ground. Tesla set the residual at £16k after 4 years but I suppose that's just a figure isn't it, that doesn't mean it will be worth that. It could well be higher?

A GFV is not necessarily an accurate depiction of it's true market value. In fact, recent changes in how HMRC view VAT for leases and PCP means that finance companies are having to provide GFV's that are lower than expected market value (see here).

Therefore a PCP is only beneficial if you have strong reason to believe the car will be worth less than the GFV. At £17k, I think the chances are pretty slim....

Then you need to account for the cost of interest. Interest charges will be in the range of £4,000 on top of the £20k depreciation. As such, relative to paying cash, the car has to drop to a value £4,000 less than the £17k GFV before you get any economic benefit at all. So have a trade value of just £13,000....basically a scenario approaching zero probability of happening....

In short, the GFV is already too low to be of any tangible worth, and the cost of interest is so high that it becomes utterly useless. You stand a much greater chance of saving money by not paying interest, than saving money by some colossal level of depreciation...(certainly more interest you can ever hope for in a risk free savings account).

As for cash vs lease, well it depends on the cost of the lease. You are anticipating similar depreciation costs, but you also have to consider the other contractual obligations. Should your circumstances change, a lease is expensive to get out of. Should your mileage dramatically reduce, you will continue to pay for higher depreciation (I went for 15,000miles to 5,000 miles due to COVID. I am VERY glad I didn't sign up to a costly lease!!).

I suspect the car will be worth more than £20k after 3 years, so buying would be cheaper and mean you have zero contractual obligations on how long you can keep the car, or how much you can drive it.

Personally, I say the best half way is simply wait and get a used model.....will be substantially cheaper than any new car regardless of lease, PCP or cash, and will give you 99% of the same experience!

 

[h8ten]

That sounds great but sadly I am not in Scotland.

Thats a great deal, I might move there!

Also as a wee sweetener, you get additional funding for your home charge point over and above the OLEV grant. Plus most of our charging network (ChargePlaceScotland) is still free to use.

 

[Kram]

It’s a screaming buy for the reasons given above but also because depreciation is not linear, so running costs are a much bigger proportion of total annual car costs for a second hand buyer than a new car buyer. As running costs are so much lower for electric vs ICE: fuel costs, maintenance , and road tax, second hand buyers will be willing to pay more for the vehicle = lower depreciation.

This didn’t happen for early EVs like the leaf as their short range when new and significant range degradation over time meant they weren’t really practical for most 2nd hand buyers. Also within 5 years there will likely be many low emission zones in UK cities which are likely to make EVs preferable over ICE in the 2nd hand market, and as EVs are still a small proportion of new sales, there won’t be many to choose from.
For example, mayor of London is targeting a zero emission zone by 2025 for the current congestion charge zone.

 

[Dan223]

You pretty much pay the amount the car will depreciate within the lease, plus some interest on top. Remember lease companies need to make money, so you will pay more over a lease vs purchase unless there was for some reason a massive drop in resale value. The majority of the time paying in cash will be cheaper over any lease or finance deal.

 

[LeeSco]

Depreciation... I’m selling mine to WBAC on Saturday for just over a 10% loss in one year. Less than the VAT?!!! It makes me think I’m missing something, but also just what the market supports right now. Reckon it will be a feature for the next 2-3 years.


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[NeilO]

Mines gone up £1000 since last week, shall I 😂

 

[Riz_Neo]

I believe that the Tesla Model 3 hasn't been out long enough in the UK for the used values to settle down.
In the US, the Model 3 retains the best resale value compared to many other manufacturers over a 3 year period.

 

[cah197]

Depreciation... I’m selling mine to WBAC on Saturday for just over a 10% loss in one year. Less than the VAT?!!! It makes me think I’m missing something, but also just what the market supports right now. Reckon it will be a feature for the next 2-3 years.


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I think so. Year old M3 SR+ are asking for close to new prices. What they actually get I don’t know.

There aren’t many Teslas on sale second hand. Compare for example how many used iPaces are available for sale today.

 

[JWilde]

I'm hoping this might result in some amazing PCP deals soon.

 

[cah197]

I'm hoping this might result in some amazing PCP deals soon.

Haven’t you heard that the bottom is about to fall out of the used Tesla market once ALL the new BEVs from competitors start deliveries? 🤓

 

[Riz_Neo]

Haven’t you heard that the bottom is about to fall out of the used Tesla market once ALL the new BEVs from competitors start deliveries? 🤓

Yeah the Volkswagen ID.3 will wipe the floor with Tesla's lol

 

[Biffa]

Yeah the Volkswagen ID.3 will wipe the floor with Tesla's lol

Yep, once that bloke with the USB stick and the laptop has managed to get around the 40,000 of them that they have built and updated all the software that is, not before.

 

[Jon G]

Depreciation... I’m selling mine to WBAC on Saturday for just over a 10% loss in one year. Less than the VAT?!!!

Don't start that mistaken belief that VAT has anything to do with depreciation. VAT is just a new car cost in the same way shipping and manufacture is. A dealer may be able to buy a car from the factory pre VAT for less than a part ex price, but they can't put it on the road without paying VAT which is already paid on the part ex car - ie they're not comparable. Sales people try the VAT line all the time and its a lie.

Moving on from that pet hate of mine, depreciation is generally low at the moment for most EVs that I track, no discounting new cars help visibility on Tesla but its really hard to tell what the genuine starting price is for other makes - if look at a BMW i3s 120 ah, a 2019 car a year ago was around 33k, today the average is 30k (10% down) so I think a lot of EVs have fairly slow depreciation if you buy sensibly. I doubt WBAC would offer that though admittedly.

 

[LeeSco]

I was just using VAT as a rough guide. I bought my car cash and sold it for cash, so not entirely daft.

Just for info I sold white M3P to WBAC for £48k- 19 plate, 12k miles, white interior, no FSD. So a 12% hit in Y1. Happy enough with that. Although not happy at being Teslaless now!

Dealers were offering £46k.


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