Tesla To Sell Their Own Used Cars

We previously reported Tesla Motors was planning on building a Gigafactory in Nevada, however that may not be their biggest news this year. In an interview with the Automotive News, Simon Sproule, the Vice President of Communications for Tesla confirmed that they will indeed be creating a program to sell their own used cars. In an email with AN, Sproule said, “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.” With CPO of course meaning Certified Pre-Owned, this means that Elon Musk’s car company is trying again to make their fleet of vehicles more affordable.

On Teslamotors.com, the lowest cash price for the entry-level 65kWh Model S Sedan appears to be $67,465 after incentives are added in. That is simply not affordable enough for most of the world. Tesla knows this, which is why they are building their “Gigafactory” and branching out into the CPO market.

The Tesla Gigafactory is going to cost $5 billion dollars and will be constructed in Nevada. It’s creation is meant to lower the cost of the Tesla Model III Sedan down to around $35,000 after incentives. That vehicle isn’t expected to be available until 2017. However, their latest used vehicle project offers the opportunity for consumers to buy less expensive Teslas from a one of their direct-to-consumer stores. There is, however, not guarantee that it will work. What format will be available for buying a used Tesla? Is that online? Will they have a Tesla car lot with a fixed price format? Whatever medium they choose, one insider thinks that they will score big with this venture. On this issue, John Krafcik, President of Truecar told AN, “When you have a manufacturer-controlled retail network, you’re capturing all of the profit with each sale. The upside is pretty amazing for Tesla.” Reports have indicated Tesla could make $6,000-$10,000 in profit on each used Tesla Model S sale.

Is this a game-changer for dealers? Has Tesla Found the formula to reach into a new market or are they getting in over their heads by jumping into used cars? What are your thoughts? Will this work out for Tesla or be an experiment that didn’t work out? That answer as always, is up to you.