Published on October 1st, 2013 | by James Ayre56
Model S Buyback Program Could Generate ~$368 Million
October 1st, 2013 by James Ayre
Tesla’s unconventional Model S buyback program could generate around $368 million in revenue for the company by the year 2016, according to recent reports from Bloomberg.
Tesla’s finance plan — which was announced back in April and is backed by Wells Fargo — guarantees a resale value for the Model S equal to 50% of the base purchase price for the entry-level model and 43% for all other options after 36 months. What this means is that the company can retain a great deal of control over resale prices/value — and, in essence, it gives the company the chance to earn a second gross profit off of the same car.
Certainly sounds like it is a good deal for Tesla, and it seems to be yet another example of the company’s apparent disregard for industry standards and willingness to step out into new territory.
Autoblog Green has more:
Good news, everyone. If we can manage set aside about $37,000 over the next couple of years, a Tesla Model S, a used one, will be ours. That’s one of the findings in a Bloomberg Industries study on Tesla’s financing, vehicle buyback and resale programs. As Bloomberg News reports, any additional financial obligation stemming from the pre-set buyback price and challenges from a lack of a dealer network may be offset by the fact that Tesla doesn’t have to work with dealerships that would take a cut of the resale.
Tesla’s predicted 2016 revenue and profit figures reflect the gains from about 10,000 vehicles being bought back from customers. Of course, a bunch of those folks may choose to hold onto their Model S EVs, dings and all, instead of selling them back to the automaker, but that speaks to the whole different subject of the Model S holding up better than expected and a customer base not willing to part with them.
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