Inside the used-car numbers of Tesla

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CARY, N.C.  - 

Tesla has been increasing its used-car sales this year, and based on discussion in its latest quarterly earning filing with the Securities and Exchange Commission, that trend will likely continue.

And when looking at Tesla’s volume in the auction lanes, those numbers have increased, as well, albeit from a small base.

According to data that J.D. Power Valuation Services shared with AuSM, Tesla’s year-to-date auction volume is up 160 percent through August, coming in at 670 units.

A year ago, Tesla’s auction volume through eight months was at 258 units, according to the J.D. Power data.

In August alone, Tesla’s auction volume was at 118, increasing dramatically from the 33 units in August 2016.

Used pricing trends

When consumers are shopping for Teslas, they are likely going to be interested in how well these cars hold their value.

For one model in particular, retention appears fairly strong.

Autolist.com projects that the Model 3 will depreciate 29 percent after 50,000 miles and 50 percent at the 100,000-mile mark.

The company said in a post on its website, “Looking at the Model S, its competitors and their in-brand counterparts, if the Model 3’s depreciation tracks analogously to the Model S and its gasoline rivals, the projected trajectory would be best in class.”

For instance, at the 100,000-mile mark, Autolist has the Audi A4 to have 60 percent depreciation, with the BMW 3-Series a couple points under 60 percent and the Mercedes-Benz C-Class hitting around 50- to 55-percent depreciation.

The company based the Model 3 projection on the Model S data. The full data set from Autolist

More on Tesla’s used-car sales

In its SEC filing, Tesla explains that pre-owned car sales are included in a revenue category called “services and other revenue,” along with maintenance services and the sales of electric vehicle powertrain components and systems Tesla makes for other manufacturers.

That slice of Tesla’s business was up 157 percent year-over-year (a $131.9 million spike) in the second quarter.

“This was primarily due to an increase in pre-owned vehicle sales as an organic result of increased automotive sales as well as from expansion of our trade-in program. Additionally, there were increases of $10.4 million from powertrain sales to Daimler, $10.2 million from the inclusion of engineering service revenue from Grohmann, which we acquired on January 3, 2017, and an increase in maintenance services revenue of $9.3 million as our fleet continues to grow,” Tesla shared in the filing.

“In future periods, we do not anticipate meaningful revenue from sales of powertrain or other vehicle systems and components to third parties,” it continued. “However, we anticipate that revenue from sales of pre-owned vehicles will continue to increase as the volume of pre-owned vehicle sales increases and that revenue from services by Grohmann will decrease as we primarily consume internally its services.”

Year-to-date, the increase in the “services and other revenue” component is at 124 percent (a $226.4 million increase).  Again, used vehicles were the driving factor.

“This was primarily due to an increase in pre-owned vehicle sales as an organic result of increased automotive sales as well as from expansion of our trade-in program,” Tesla leaders explained. “Additionally, there were increases of $32.6 million from the inclusion of engineering service revenue from Grohmann, an increase in maintenance service revenue of $23.0 million as our fleet continues to grow, and $16.7 million from powertrain sales to Daimler.”

Tesla production

Tesla also noted in the filing that it has ramped up production. In fact, the second quarter was a quarterly record for production; Tesla built 25,708 vehicles.

This occurred even with a lack of 100 kWh battery packs for the Model S and Model X as well as “disruptions from extensive installation of Model 3 manufacturing equipment,” the company said in the filing.

“For Model 3, as is inherent in the production ramp of each all-new product, we expect production to begin slowly, grow exponentially, and then tail off at full production. Accordingly, we expect to achieve a rate of 5,000 Model 3 vehicles per week by the end of 2017,” it said.

“We expect to further ramp to a rate of 10,000 Model 3 vehicles per week, and an annual Tesla vehicle production rate in excess of 500,000, at some point in 2018. We have designed Model 3 to facilitate a ramp to volume production, including through production facilities that are highly dense and automated, resulting in costs of materials and labor for Model 3 that are expected to be significantly lower than those of Model S and Model X,” the Tesla filling stated. “We also expect to make additional investments and preparations as we make milestone-based payments for Model 3 equipment and continue with Gigafactory 1 construction, in addition to expanding our Supercharger, store, delivery hub and service networks.”

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