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Tesla ends buyback guarantee program

Tesla Batteries

Tesla has ended a buyback offer that guaranteed the resale value of its cars. A Tesla spokesperson said the program was discontinued “to keep interest rates as low as possible and offer a compelling lease and loan program to customers.”

The aim of the program, which began in 2013, was presumably to reassure buyers who might have been skeptical about the resale value of a new technology. At the time, industry observers called it a shrewd move that would give Tesla control over its secondary market.

So far, Teslas seem to hold their value well (unlike other EVs such as the LEAF, which is selling at bargain prices on the used market). Only a small number of Model S are sold through used vehicle auctions, and they “seem to be going for a pretty strong premium,” Patrick Min, an Analyst with Automotive Lease Guide, told Reuters.

Ending the guarantee allows Tesla to free up cash that had been set aside to buy back cars. Tesla could theoretically have to pay out up to $192 million within the next 12 months to cover guarantees on 4,209 vehicles (although it could offset part of that by reselling the vehicles). In its latest quarterly SEC filing, the company valued the total liability of the guarantee program at $1.58 billion.


Source: Reuters

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