Tesla is bringing a new approach to buying a used car
Tesla
Tesla's used car division is transforming how people buy vehicles, and they are not resorting to “wacky waving inflatable arm flailing tube men” to do so. Tesla’s Director of Sales and Delivery Operations, Jimmy Douglas, told Electrek that he doesn’t need the attention-grabbing inflatables to beat the online used car giants.
Tesla seemingly stumbled into a brilliant plan to sell its used cars. In 2019, the electric vehicle trailblazer announced that it would not allow people who leased their Model 3s to sell them after; instead, the vehicle must be returned to the dealership. The original plan was to retrofit these previously loved cars to become the RoboTaxi. The RoboTaxi program, a fully autonomous vehicle that would take over the ridesharing sector, is still under development, so now Tesla has thousands of cars coming back to the lot.
The timing could not be more ideal. The demand for EVs has never been higher. However, some prospective buyers get sticker shock when shopping for electric vehicles, including the biggest name in the sector. A simple solution is to buy used. Used vehicle sales topped 40 million in the United States alone in 2021, compared to 15 million new vehicles.
Nevertheless, there is still the longstanding stereotype of the sleazy, used car salesperson pushing a shiny lemon at unsuspecting shoppers. That is certainly not the case with Tesla. Instead, the used car sales run similarly to the new car buying experience.
Douglas said to Electrek, “Most people don’t realize that Tesla runs its own vertically-integrated, nationwide online used car retailer. It’s as big as some publicly traded used car retailers you’ve definitely heard of, despite no Super Bowl commercials.” It can only be assumed he is referring to Carvana, which launched its Over Sharing Mom commercial during the 2022 Super Bowl. The used car company is valued at $4.69 billion.
Tesla does not have a line item showing how much its used car division is worth. That section of the company falls under Services and Other; on the most recent filing with the SEC, that number is $1.4 billion.
While it is not Carvana’s value, it is still a big chunk of change, especially because Tesla has recently stopped lessees from selling any of its products at the end of the term. That means a never-ending supply of used cars will be returned to the dealership.
In addition, the company is preparing for growth in this division. A recently posted job at Tesla reads: “Would you like to be part of a team transforming the way people buy a car?” Douglas is hiring an associate manager of used car quality. The posting continues, “As a leader in Tesla’s Used Car business, you are responsible for the development of the refurbishment process and managing daily refurbishment operations.”
Perhaps the used car division will get more respect in the future at Tesla and not be lumped into the 'other' category. That category has grown by 50 percent since last year. At this pace, used cars deserve a line of their own.
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Tesla has invested billions of dollars over the years toward vehicle autonomy. The mission continues as Elon Musk and Tesla now prepare to unveil their ride-hailing product, Robotaxi this August. Or, as Musk called it on Tuesday, Tesla CyberCab.
Early Days
Five years ago, during Tesla’s Autonomy Investor Day in April 2019, Elon Musk said he felt “very confident predicting autonomous robotaxis for Tesla in the following year [2020]”. At the time, Musk added a bolder claim, predicting that Tesla wouldn’t even make cars with steering wheels or pedals by 2022. While timeliness may not be Musk’s strong suit, he has a track record for getting things done that others were unwilling to try or thought were impossible. Musk later admitted he can be overly optimistic and said “sometimes I am not on time, but I get it done.”
Now, 5 years later, we have the robotaxi unveiling scheduled for August 8th. After the release of FSD v12, it’s clear that we’re much closer to autonomy than we were in 2019, although FSD v12 is still a far cry from full autonomy.
While Tesla still has the robotaxi unveiling scheduled for August, Tesla announced yesterday that it’d be prioritizing a simpler “next-gen” model that could be released by early 2025.
Latest Updates
On the conference call, Musk added that Tesla now has over 300 million miles driven with FSD v12 since it was launched just last month. He added that it's becoming “very clear that the vision-based approach with end-to-end neural networks is the right solution for scalable autonomy”.
Tesla said it has been investing in the hardware and software ecosystems necessary to achieve vehicle autonomy and a ride-hailing service. The company is confident that it can establish a scalable and profitable autonomous driving business by employing a vision-only architecture.
think of it [Tesla] as combination of Airbnb and Uber meaning that there will be some number of cars that Tesla owns itself and operates
Tesla = Uber + AirBnb
Later on, Elon Musk unveiled that the new service will operate and result in a mix between Uber and Airbnb where the Tesla driver decides if and when he wants his Tesla to be used and by whom. Tesla stated:
“We believe the Tesla software experience is best-in-class across all our products, and plan to seamlessly layer ride-hailing into the Tesla App.”
Tesla’s CEO clarified that the owners will be able to add or remove their car from the fleet “whenever they want” adding that it will be up to them to decide if they want to only let the car be used “by friends and family or only by five-star users or by anyone at any time”. The flexible program will, just like Airbnb, allow the owners to take the car out of the market when they want.
The upcoming ride-hailing service will enable users to easily request a Tesla vehicle, control the car's temperature, monitor its real-time location, and adjust the audio system. The only question is when.
“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025”. This was one of the key sentences that were part of Tesla’s deck shared on Tuesday directly before its financial results.
Since Reuters’ report a few weeks ago saying Tesla had “scrapped” the highly expected cheaper model— which Elon quickly denied on X —retail and institutional shareholders started asking for more details on Tesla’s product roadmap for 2024 and beyond.
In the earnings conference call, Elon Musk reiterated that Tesla expects to launch the next model in “early 2025, if not late this year”.
“We've updated our future vehicle lineup to accelerate the launch of new models ahead of previously mentioned start of production in the second half of 2025. So, we expect it to be more like the early 2025, if not late this year. “
Over concerns of temporary production halts to update the factories for these new models, Musk said that Tesla will produce new models with certain aspects from their next-generation platform and current models. This will reduce the number of changes needed on production lines and allow Tesla not only to ramp up production faster but also to get the vehicles to market quicker.
Model Y Redesign
Tesla appears to hit that their next-gen vehicle will be less “next-gen” than they were initially aiming for, but to get a new vehicle out the door by late 2024, the process would already have to be in motion. Tesla may likely be referring to the redesigned Model Y, which is expected to reuse many parts from the new Model 3. Earlier this year, Tesla said that the redesigned Model Y will not be released this year, so it makes sense that they’re looking to speed up that production.
Tesla CEO concluded by saying that these measures will allow Tesla to reach a capacity of over 3 million units. Tesla produced 1.84 million vehicles in 2023. However, this year they’re ramping up Cybertruck production and introduced the new Model 3 into new markets.
And we think this should allow us to get to over 3 million vehicles of capacity when realized to the full extent.
Tesla reported on Tuesday its earnings results followed by a conference call where it teased its upcoming Robotaxi and its next-generation platform saying its “purpose-built Robotaxi product will continue to pursue a revolutionary ‘unboxed’ manufacturing strategy”.
Earlier in the day, Tesla announced the new Performance variant of its sedan Model 3 with deliveries in the United States starting already next month. The new version starts at $45,490 (after applying the $7,500 Federal EV tax credit) and goes from 0 to 60mph in 2.9 seconds.
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