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Tesla Cuts Its "Resale Value Guarantee" Program for New Purchases

Elon Musk may seem like a confident man now, but for Tesla to get where it is, it had to go on a bumpy ride that could have ended in a lot of different (read "less fortunate") ways for the pioneering company. Of course, that doesn't mean he wasn't confident back then too - it's just that he had a lot less to base his faith on.
Tesla Model S 7 photos
Photo: Tesla Motors
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When Tesla first started to build its own vehicles from the ground up (the Model S did use some Mercedes-Benz parts, but let's just say they are neglectable in the bigger picture) and sell them to the public, the said public had no idea how this beautiful-looking vehicle that was presented in front of it would hold its value over time. Forking out nearly $100,000 on a car out of impulse was great, but if it turned out to sell for only $10,000 three years later, we might have witnessed a surge in the number of suicides.

So, like the interventionist CEO that he is, Elon Musk stepped in and came up with the "Resale Value Guarantee" program. This assured clients that Tesla would buy back the cars after a period between 36 and 39 months of ownership for 50 percent of the base price plus 43 percent of the price of options. Since Tesla wasn't exactly basking in liquidities at the time (this was in 2013), Elon Musk backed the program with his own personal wealth.

With the peace of mind that comes with knowing the exact minimum of what they'll get for their car in three years time, one of the major things holding people back from investing in Tesla's EVs was eliminated. Three years later, it was proven that Tesla's resale value is even better than the one initially guaranteed by the company (it sits at 57.2% of its initial value according to a NADA report), so the "Resale Value Guarantee" program is being discontinued.

A Tesla statement quoted by Electrek explains the decision: “We have discontinued the Resale Value Guarantee program as of July 1 so that we can keep interest rates as low as possible and offer a compelling Lease and Loan program to customers. We will continue to support customers currently financed through the RVG program.” What Tesla doesn't say is that keeping it running would have been too much of a burden once a mass-market product such as the Model 3 was launched.
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About the author: Vlad Mitrache
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"Boy meets car, boy loves car, boy gets journalism degree and starts job writing and editing at a car magazine" - 5/5. (Vlad Mitrache if he was a movie)
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