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Tesla Model S and X Vehicles Boast Superior Resale Value

Daniel Sparks, The Motley Fool

Despite rising competition and growing sales of Tesla's (NASDAQ: TSLA) lower-cost vehicle -- the Model 3 -- the electric-car company's Model S and Model X have exceptionally strong resale value, according to Autolist's analytics team.

The two models' superior resale value is telling, highlighting high demand for the vehicles and a key selling point for potential buyers.

Here's a closer look at this study -- and what it means for investors.

Model S and X vehicles outside of Tesla's factory in Fremont, California

Model S and X vehicles. Image source: author.

Better than rivals

After poring over data from 35,442 Model S listings and 4,242 Model X listings between Jan. 1, 2012 to Nov. 5, 2018, as well as a total of 1.209 million listings from the large luxury sedan segment and 1.683 million listings from the large luxury SUV segment, Autolist came away with a clear conclusion: Both the Model S and the Model X have higher resale value after 50,000 miles than their comparably priced rivals. Further, this wasn't just true for the two vehicles' resale value at the 50,000-mile mark, but at every point on the two vehicles' depreciation curve, Autolist found.

"Despite growing competition from its own Model 3 electric sedan, and continued news about upcoming electric vehicles from legacy automakers," Autolist said in post detailing the study's results, "Tesla's Model S and Model X vehicles have continued to hold their resale value better than all of their gas-powered competitors, a study by Autolist.com has found."

The difference between the two Tesla vehicles' resale value and their comparably priced rivals' was significant. The value of a Model S declined an average of 27% by the time it had accumulated 50,000 miles. Meanwhile, the next closest competitor, which was Daimler AG's (NASDAQOTH: DMLRY) Mercedes S Class, saw its value decline by an average of 33%. The average value of a Model X after 50,000 miles declined by 23%, with the next closest rival -- Ford's (NYSE: F) Lincoln Navigator -- losing 34% of its value. Other notable vehicles topped in this study were the Mercedes GLS and General Motors' Cadillac Escalade.

Even more telling, Model S vehicles in the study held their value slightly better than they did in 2016, according to a study by Autolist. In 2016, a Model S with 50,000 miles had lost an average of 28% of its value, compared to an average of 27% in this 2018 study.

A red Model 3

Model 3. Image source: Tesla.

No cannibalization yet

One key concern when Tesla started selling its Model 3 was that the vehicle would cannibalize sales of its pricier vehicles, particularly the company's Model S. After all, Model 3's starting price is about 41% lower than that of the Model S. And the price difference between the Model 3 and the Model X is even greater.

But Model S and Model X deliveries have remained strong even as Model 3 deliveries soar. Trailing 12-month Model S deliveries have remained steady -- between about 50,400 and 55,500 since 2015. Meanwhile, Model X sales even rose to a trailing 12-month record as of the end of Tesla's most recent quarter.

With strong resale value and demand for Models S and X as Model 3 deliveries rise, cannibalization doesn't appear to be a factor investors need to worry about.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends Ford. The Motley Fool has a disclosure policy.