For an automaker with such a bloated and large stock value, Tesla has returned only one profitable quarter during its entire 11 years of existence. But one additional area of business still holds hope for the company: certified pre-owned cars.
The carmaker has already upset many in the industry by refusing to adhere to the traditional dealership model, opting instead to sell the Model S – and any future products – through their own factory-owned stores. Despite this, the automaker is still not profitable; a Tesla CPO program could change that.
The Tesla CPO program would not only make available the current Model S at a price point more affordable to the average consumer, but it would most likely do so through Tesla’s existing factory store network, meaning that any profit from Tesla CPO sales would cut out the middle-man, and give the marque a “pure” margin on the cars.
To put potential buyers’ fears of low resale value of the Model S to rest, Tesla CEO Elon Musk has already assured purchasers that their cars can be sold back to the company after three years for up to 50 percent of the original market price. In fact, the company is contractually obligated to do so, if the buyer so chooses.
This should provide a steady stream of pre-owned vehicles to the Tesla CPO program soon, which could be serviced and sold again by the factory with no profits going to third-party outsiders. And, as Automotive News notes, “Although records of private Model S sales are spotty, early signs indicate that the Model S sedans returning in 2016 will be worth more than what Tesla has promised to pay under the buyback program.”