Tesla is taking gas cars off the road in huge numbers through trade-ins

[MEDICALJMP]

Tesla is taking gas cars off the road in huge numbers through trade-ins
(CREDIT: EVERYTHINGTESLA VIA INSTAGRAM)

ByJoey Klender
Posted on April 27, 2021
https://www.teslarati.com/tesla-trade-in-numbers-dominated-gas-powered-cars/


Tesla revealed its trade-in statistics in the Q1 2021 Earnings Call Update Letter, showing that a majority of the vehicles it accepts through trade-in are gas-powered.

In the Update Letter that was released a few minutes after Wall Street closed up shop for the Monday trading session, Tesla revealed it had successfully accomplished another profitable quarter thanks to strong demand for its two mass-market vehicles, the Model 3 and Model Y. That, along with expanding production efforts, increasing gross margins, and decreasing manufacturing costs powered a positive quarter once again for the electric carmaker.


The fact of the matter is, however, that gas-powered cars are being displaced by electric vehicles. The market share for the automotive industry still remains heavily based on the production and sale of gas-powered vehicles, but electric cars are beginning to make their presence known. IHS Markit, a market analysis company, said that the overall presence of BEVs rose from .5% in 2019 to 1.2% in 2020. The firm forecasts global EV sales to rise by 70% this year.

With that being said, Tesla is undoubtedly the overall leader in EV sales by a single manufacturer. Statista broke down EV sales by manufacturer in 2020 via CleanTechnica, and Tesla had a commanding lead over second-place Volkswagen. Tesla sold 499,550 vehicles in 2020, Volkswagen sold 220,220 EVs.

However, some of these sales, not all of them, were brought in by the need for a new car. According to a graphic that the automaker included in its Update Letter, gas-powered vehicles make up an overwhelming percentage of Tesla’s trade-ins: 98%.

Credit: Tesla
The graphic seems to reveal that nearly 60% of its trade-ins come from “non-premium brands,” including Toyota, Honda, Ford, and Chevrolet. Close to 40% of the company’s trade-ins are premium brands, like Audi, Lexus, BMW, and Mercedes-Benz. Only 2% of the trade-ins are EVs, proving the competition, in the simplest terms, is other gas vehicles and not other EVs.

Tesla wrote in its Update Letter:

“ICE vehicles comprised 97% of cars sold globally in 2020 and 98% of Tesla trade-ins. As more OEMs join our mission by launching EVs, we believe consumer confidence in EVs continues to increase, and more customers are willing to make the switch. Our Q1 order rate was the strongest in our history, and we are moving as quickly as possible to add more production capacity.”

It has always been Tesla’s goal to create more EVs on the road, and doing this requires the displacement of gas-powered cars. Tesla has been able to make their vehicles a more appealing option than gas-powered cars, and consumers are beginning to recognize the advantages that driving an EV has over driving a gas car. The increase in EV market share, which is led by Tesla’s domination of the sector, shows that more people are turning away from fossil fuels and looking toward electrification to solve their transportation needs.

 

[Luke42]

The chart in the article is a measure of what car dealers call "conquest sales", not a measure of displaced ICE vehicles.

Where does it say these cars are being taken off the road? Most cars are resold and put back on the road after being traded in, and the dealer makes a profit.

Tesla would be stupid to junk traded in cars, financially speaking. They can make money by reselling the tradins.

Traded-in vehicles often end up with guys like me. I prefer used cars, because I find them less stressful to own than new cars.

 

[Crissa]

Well, unless the trade-ins are junk.

-Crissa

 

[Cybertruck Hawaii]

I need a electric pickup truck. I’m getting tired of being in line at Costco to fill up with gasoline.

 

[Cybertruck Hawaii]

Tesla should be able to give a higher price for a trade in considering the that no negotiation was done with the new Tesla vehicle purchase.

 

[Firetruck41]

Misleading title, they are being traded in, not taken off the road. Tesla isn't paying you market value for a car and then sending it to the recycler...

 

[OneLapper]

Ummm, yeahhhh.

So Joey, the used car manager's (managers') job(s) includes making as much money as possible on all trade ins. This would include selling to the secondary car markets.

For example: I buy my CT and trade in my diesel BMW. The BMW is in perfect order, looks amazing, interior is perfect, all service up to date, etc. Let say that Tesla gives me $15k trade value for it and I drive away in my new CT. The aforementioned manager then sells my trade in for $17k to local European used car dealer. That used car dealer then sells my car for $23k, plus a 3 year bumper to bumper warranty for and additional $3k. Boom. Dimetri just grossed $9k on my old BMW. And Tesla made an additional $2k on the CT for taking my old car off my hands.

Hence, my old diesel powered car is still on the road.

In 20 years, my old diesel powered car will likely be retired. Sent to the recyclers.

 

[CyberGus]

Misleading title, they are being traded in, not taken off the road.

This is the same logical fallacy employed by the anti-EV crowd when they tried to claim that an EV would never be able to offset the CO2 if its own construction. In their math, they completely omitted the effect of the discarded ICE vehicle on the used-car market, which will delay the construction of a new ICE car for the remainder of it's lifetime.

Should I be shocked that 98% of Tesla's trade-ins are ICE, when 98% of the cars in existence are ICE?

 

[Crissa]

Somewhere, on the used market, a less-good ICE car was bumped off to be replaced by a slightly better ICE car that was replaced by an EV.

More cars are sold than recycled (at least 2/3rds, but more than in downturn years) but the us fleet doesn't grow at that rate; some are retired, exported, etc.
https://www.statista.com/statistics/183505/number-of-vehicles-in-the-united-states-since-1990/

-Crissa