Tesla Motors is reportedly developing a certified pre-owned program for its Model S sedan, a move that would boost the earnings potential of its retail network.
According to Tesla’s vice president of communications, Simon Sproule, the company is working on a certified pre-owned program similar to those offered by BMW and Mercedes-Benz. “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,” the executive told AutoNews.
In April 2013, Tesla Motors CEO Elon Musk personally guaranteed the resale value of the Model S. Since then, Model S buyers have been able to return the car after three years and recover 43 to 50 percent of its sticker price. Tesla designed the payouts to be comparable to the trade-in value of a 3-year-old German luxury car.
If owners decide to return their Model S sedans, Tesla could be flooded with used EVs starting in the spring of 2016, with more to follow in 2017. Trade-ins could start even earlier, as Tesla will introduce the Model X crossover next year.Tesla has offered business leases since April this year and started offering 36-month Model S leases to retail customers as of October 1.
Good news for Tesla is Model S sedans returning in 2016 may be worth more than what the company has promised to pay under the buyback program. And since Tesla has its own dealerships, the used-car program will allow it not only to reach a new segment of the market at a lower price point, but also to access the most lucrative part of the retail business.
That’s because used-car departments at U.S. dealerships averaged a 12 percent profit margin in 2013, compared to just 4 percent for new-car departments, according to data from the National Automobile Dealers Association.
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