Tesla Motors Inc (TSLA) May See A $368M Boost In Annual Revenue By 2016 With Vehicle Buyback Plan

Posted Sep 10, 2013

Tesla Motors Inc (NASDAQ:TSLA) may see $368 million in additional revenue by 2016 if their vehicle buyback plan expands, according to estimates by Bloomberg Industries.  Earlier this year, Tesla Motors said that they would buy back Model S sedans from customers that have the leasing option.  This plan could enable Tesla Motors to generate more revenue by selling used vehicles.

Bloomberg analyst Kevin Tynan said that the buyback plan would give Tesla more control than traditional auto companies over how much their used vehicles sells for.  Tynan said that Tesla Motors could generate $368 million in additional revenues by 2016 for selling used Tesla vehicles.  Tynan also said that the company could also see $40 million more in annual gross profit from the buyback plan.

?Buying back three-year-old cars at a set price means Tesla to a great extent can control the secondary market for Model S and other cars it brings out,? stated Tynan. ?The company?s going to be the main buyer and gets a chance to earn a second gross profit on the same car.? Tynan estimates Tesla is offering 46 percent of the Model S?s original price.

Tynan estimates that Tesla Motors would offer around 46% of the original Model S sedan price.  To calculate how much Tesla would make from the buyback plan, Tynan assumed the automaker would resell 10,000 used vehicles in 2016 with an average resale price of $36,763.

[Source: BusinessWeek]