Tesla’s Certified Pre-Owned Program Will Make the Model S Much More Affordable

Tue, 10/10/2017 - 7:02 pm by Kirsten Rincon

Tesla Model S CPO programOne of the most popular electric vehicles nowadays – the Tesla Model S – is widely considered to be a luxury car, which is understandable, given the $69,900 price tag for the base model, along with the abundance of comfort amenities and high performance. This is the reason why it is out of the average consumer’s price range, and why it has mostly been targeted to high-end consumers. Nevertheless, Elon Musk, Tesla’s CEO, has said repeatedly that one of the company’s main goals is to make its cars as affordable as possible, and the latest project towards achieving this goal is the Certified Pre-Owned Program for the Model S, which is set to start very soon.

The news about the CPO program was announced by Simon Sproule, Tesla’s vice president of communications, in a statement to Automotive News. “With the Model S fleet now heading toward the first cars hitting three years old, we are looking at certified pre-owned and how best to structure,” he said.

With this program, Tesla intends to make good on the buyback offer, which was announced last year, with Musk saying that he personally guarantees that Model S owners will be able to sell their cars back to the company after having owned them for three years, and get anywhere between 43 and 50 percent of the original sticker price in return. After Tesla buys the used Model S vehicles back from customers, it will service and repair them and resell them, probably for about $40,000.

The CPO program for the Model S will be certainly beneficial to consumers who would like to own a high-performance, eco-friendly vehicle, but can not afford it, giving them the chance to buy one such car at almost half the original purchase price. What’s more, the company will likely give some warranties to buyers of used Model S, specifically regarding the cars’ battery life. The manufacturer, for its part, will also benefit from this program, in that it will become a new revenue source for the company, with some estimates saying that it might bring nearly $400 million in revenue per year.

Once Tesla starts buying back used Model S and reselling them, it will enter the pre-owned luxury car market, which is a fast-growing segment, and also a highly competitive one. Virtually all luxury car manufacturers, including BMW, Mercedes, Toyota with its Lexus brand, and Nissan’s Infiniti division, to name a few. Not only that Tesla is set to try and get a piece of the action of this pretty attractive market segment, it has a good chance of being very successful at it. The fact that it sells its cars directly to consumers, unlike other car makers, who do it through authorized dealerships, will help Tesla control the price of the used cars it will resell, and also maintain a higher profit margin, which gives them quite a competitive advantage. On top of that, the CPO program will surely help the company expand its customer base, and it should boost the sales of electric vehicles in general.