Tesla Model S – Diminished Value On A Rare Vehicle

tesla diminished value

Recently, I was asked to review the impact a collision would have on a relatively rare vehicle, the Tesla Model S.  The review was challenging because the vehicle doesn’t have many of the mechanical components that a traditional internal combustion engine vehicle has.  Additionally, there has been some reservations about the safety of the Tesla due to recent reports of fires ensuing after collisions (undercarriage damage to the battery bank).

Tesla – Why Diminished Value Is A Frustrating Issue For Owners

Tesla currently produces three models.  A roadster, a crossover, and a sedan.  The S Model is the sedan and, according to Tesla’s website, the crash rating of the S is the highest available in the US.  If a model like this is in a crash, the ensuing issues could be, well, frustrating for many reasons . . .

  1. Teslas are pure electric vehicles with a one-speed transmission and a battery bank that sits neatly across a substantial part of the base of the vehicle (and help the rigidity of the frame).
  2. The exterior body & chassis is primarily aluminum so as to minimize the weight.
  3. Parts are only available direct from Tesla.
  4. Tesla certified repair facilities are still rare and widely disbursed.

All of these things mean that repair of a collision is going to be time consuming and require a lot of learning, even for Tesla.  Additionally, insurance companies aren’t sure how to value the vehicles as they don’t incur wear and tear in the same manner as other vehicles.  The immediate torque they exhibit (as opposed to gradual in ICE engines) could shorten the life of the transmission.  On the other hand, the chassis may outlast traditional vehicles because it is mainly aluminum.

Tesla Value – How Much Does Mileage Come Into Play?

tesla mileage and diminished valueThe amount a Tesla loses value due to mileage is relatively unknown.  The only way to figure it out is to use traditional appraising techniques, like the sales comparison approach, and even then it proves difficult due to the fact that almost every Tesla owner is an enthusiast and places a high value on their used vehicle, regardless of mileage.  Long road trips are harder in an electric vehicle, too, no matter what Telsa may say, therefore, most Teslas don’t rack up mileage like traditional gas powered cars.

Would You Buy A Wrecked Tesla?

As of yet, I have not talked to a Telsa enthusiast that wants a vehicle that has sustained damage and repair.  They cite the fact that it is not possible to figure out if a repaired vehicle will perform the same in a subsequent collision, no matter how expertly repaired.  On top of that, owners of Telsas have an extreme amount of pride in the technology that goes into building one, so they don’t believe a repair can duplicate the quality of a vehicle that comes from the factory.  Any substantial damage to a Tesla usually results in very expensive repairs making the economic threshold for repair very unusual.  Even minor repairs can cost thousands and require months.  When does the vehicle become totaled?  That’s a whole other blog post, but trust me, it is not as easy to determine on a Tesla as it is on traditional vehicles that have a substantial sales (and value) history.

214-227-2154So, does a Tesla have inherent diminished value after it is wrecked and repaired?  You bet!  In my opinion, it will suffer more than the average vehicle because of the niche market, rarity of production, and complexity of design.

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