Tesla No Longer Guaranteeing Resale Value

Tesla used to guarantee the resale value of its EVs, but it will do so no longer.

The company had introduced its Resale Value Guarantee back in 2013, as a way to protect prospective buyers against the risk that EVs might not have strong resale values on the used-car market. But times have changed.

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A growing EV market is getting stronger, and thus Tesla no longer believes it needs to entice buyers by protecting against the risk of lower than expected resale value. So it’s no longer offering resale value protection for any vehicle purchased after July 1. Vehicles purchased before that will still be eligible, however.

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Tesla says that cutting the program will result in reduced interest rates on loans and leases that are more favorable to customers.

When the program was in effect, Tesla promised 50 percent of the base price and 43 percent of the optioned price at a minimum.

Tesla could afford the potential expense at first due to its low sales volume (CEO Elon Musk even promised to back it with his own money), but once it begins mass-production of the upcoming Model 3, the potential cost will be much higher. On the other hand, increasing demand for Tesla products and an overall bigger and stronger market for used EVs means that Telsa no longer needs this program to entice buyers.

Engadget, The Verge