Used Tesla Prices are Going INSANE

Why do EVs depreciate so much? Because every few years they get way better and way cheaper. Do you think Hardware 3 will be upgradable to Hardware 4? I get a little bit allergic to people like being super rageful about it on the internet because listen, like we didn't know what the hell was gonna happen. What would be your prediction on the value of a vehicle that has autopilot versus one that doesn't? It's hard to say for sure, but it's so difficult to fathom owning a vehicle that doesn't at least have autopilot, but it's gonna yield the desired result is anybody with one of those vehicles that has the budget is definitely gonna subscribe to FSD. So at $299 a month for a Model 3, is leasing smarter than buying? Because when you buy, you're kind of sacrificing all your cash. But at $299, I feel like you're beating depreciation. What do you think? I mean, not financial advice, but that seems like one of the best deals on earth. So what's your advice? Someone brand new to this, maybe a 22 year old, a young professional, and they wanna get into a Tesla. Should they buy or should they lease? Hey everyone, welcome back to another video. I'm really excited for my special guest today because this is the CEO of Plug, Jimmy. And we're gonna learn a lot about all the different hacks out there. But before we get into that, what is Plug? Big fan, Dennis. Thanks for having me. Plug is an online wholesale marketplace that facilitates the buying and selling of used EVs. We sell used EVs directly to dealers all across the country and we source them from consumers, dealers, lenders, automakers, and fleets. Just jumping into it, how is Plug able to offer so much more than everybody else? The short answer is we're focused only on EVs and that makes us better at it than everyone else. And what I mean by better, I mean more precise. So as all of your audience probably know, the way that we should be appraising a used electric vehicle's condition and capability is fundamentally different than that of a gas car. Factors like the autopilot computer hardware, the software-enabled features, charging network access, battery health, all of these factors that cannot be distilled down to originally manufactured equipment and odometer, that is basically incompatible with how used cars have been priced since the beginning of time. We took all of that and made it the only thing we're focused on. So our offers are the most accurate, which means most of the time they're the highest. So your advice to people that are selling their Teslas or electric vehicles, they should not go to that BMW store on the corner lot because they won't be able to accurately value it as well. I wouldn't discourage anybody from working with any business that is local to them or that they're comfortable with. But if you're the type of consumer that wants to shop around, certainly we should be one of the options that you consider. And if you're wondering what we're doing here, we're actually, we pulled up a grill. We're at a park in North LA and we're going to be cooking some burgers here while it's plugged to the Cybertruck. So we're really trying to see, put the Cybertruck to the test in this nature environment. Oh, there you go. I'm only good at one thing. Cooking? Eating. You're cooking right now. So a lot of you sent us questions, so I wanted to kind of make sure we hit on all of them, but they're really kind of going back to the top again in the sense that if someone is selling their Model Y or Model 3, what are the top three tips you have for them to make sure that they get the most money from it? So if you're liquidating your Model 3 or Y, first is obviously hopefully you've been taking good care of it, just like any used car. Make sure that all of the major repairs are completed. Make sure that it's nice and clean when you're representing it. And more importantly, make sure you know exactly what you have and what makes it valuable. For a 3 and Y in particular, if you have a vehicle that has full self-driving or if you have a Model Y and you have a seven seater, or if you have a hardware four car versus a hardware three, or if you have a hardware three retrofit that started as a lesser version, these are all factors that will help you properly evaluate if the offer that you're getting from anybody is an accurate one. And certainly in working with us, we will tell you what we see, but the best consumer experience is one where you're entering the transaction as informed as possible. What's the best ROI on someone trying to prep their vehicle for sale? Is it like a nice detail? Is it brand new tires, brakes? Well, I guess brakes last a long time, but what would you say is like, what's important for you as a buyer? I mean, highest ROI, and this is true for everybody, is actually a detail, believe it or not. It's a super uninteresting answer, but clean cars simply sell to more money, whether it's another consumer or a dealer. And they're generally not very expensive. What's one type of vehicle, or when you see a certain issue in your Teslas that you're buying or electric vehicles, that you're like, nope, I'm staying away from it no matter what? We don't operate in like any sort of like salvage capacity. So if the vehicle is inoperable for whatever reason, like maybe it has a bad drive unit or bad battery pack or something like that, or if it's been in a collision that hasn't been repaired, there's better outlets than us for liquidating. Yeah, I mean, people do ask me a lot, like they see these cheap Teslas that are salvaged, like a Model 3 Performance, and they ask me, should they get it? Would you say, heck no, don't buy a salvage Tesla at all? I mean, it's hard to be like extremely prescriptive for every single use case, but for the average buyer, there's so much inventory available right now. Certainly you need the most affordable option you can get, but if you're buying a previously salvaged vehicle because you otherwise cannot afford the vehicle, I don't think that's the right decision. I think you should save a little bit more money and get one that's not salvaged. If you're buying a previously salvaged vehicle because you specialize in vehicle restoration or you otherwise have the right resources or familiarity, that's a different story. For the people that are trying to be financially smart, like an 18-year-old just getting out of high school, should they buy a Honda Civic or a Tesla Model 3? They should go enjoy college and not buy a car. Honestly. What if they need a car? What if they need a car to get to classes? If they need a car to get to classes, I think leasing a new Model 3 for 299 is a far more economically sound decision than spending a whole lot of cash on a used car that might break down and need repairs. But the disclaimer on that is that that is wholly dependent on whether or not you have access to charging. That's relatively easy. If you're 18, if you're either renting an apartment or if you're in school, you might not have access to charging on the ready and that changes the equation. But if you do and you need a car and you're starting from zero, yeah, the Model 3 lease is probably the best choice on the market. Yeah. For the people out there that are also in this financial smart or financial savvy, is buying a used Honda Civic, which one's more financially smart? A used Honda Civic or a 2018 Model 3? Man, if you want a Model 3 or you want a Honda Civic, just buy the one that you want. The thing about the new Model 3 or any new car lease in general, not just EVs, it's brand new, it has a factory warranty. If you're price sensitive, certainly the price of the vehicle is something to be considering, but so is maintenance and repair. And- Cheers. Hell yeah. Let's get the first bite on camera. Yeah, let's go. Thanks for the burger. My pleasure. Let me know how I did. Mm. Not gonna lie, that fucks. I never had a burger powered by a Cybertruck. Yeah, it's a first for me too. I've eaten sushi out of the back of a Cybertruck before. That'd be cool if it was like the Optimus powered by the Cybertruck making sushi or something like that. I think the team should think about that. We should probably just do a whole lot of unhinged ideas, like cookout ideas, like food-related, drink-related, and let the team use it as content that's promotional, but it's not promotional by nature. We're just having a good time. I think Plug needs a Cybertruck. I mean, we end up owning Cybertrucks every other day. That's true. Very briefly. And we should talk about that really quick. One of the things that's unprecedented about Plug's business model is when we become the owner of an EV, we sell it to a dealer and our inventory turn time is on average about two days. Wow. So most of the time, we never actually see the cars in person. Sometimes we do, we're experimenting with some different models, but because we can evaluate their condition and capability fully remotely, we're able to pull all of the processes out that take the most time, moving it to another location, a human-based inspection, running it through a physical auction lane, stuff that's not really needed. And I took a lot of these lessons from Tesla when we were living by the algorithm, which is very famously authored now by John McNeil, passed down by Elon, where we'd pull all kinds of steps out of a process. And if you're not adding back 10% of the steps, then you haven't pulled out enough. Wow. Yeah. I think to like Robotaxi and AI and Optimus, do you think he's going to kill the Model Y? So his compensation package now is tied to vehicle deliveries and Model Y is ebbing and flowing as the highest selling car in the world. So no. No? Well, they need the revenue at the end of the day to support everything else. And that's like the number one seller. Is the Model Y L coming to the US? I don't know, dude. But like, I'd be surprised if not. Right. Well, so Model Y right now is like a 48 to $49,000 price range with all the way to 58 for the performance. When the Model Y L comes, because I think it's going to come as well. Do you think it's going to be Model X pricing or is it going to be in the middle between Model Y or slightly above the performance? Overall, the only way to sell more cars is to make them cheaper. And the reason I say this is because if you look at segmentation of cars that are sold in the United States, how many are sold between zero and 35,000? How many are sold between 35 and 50? Whatever the actual segments is and like the S&P mobility data, the absolute majority of vehicle sales are in that bottom end. Whereas if you get into cars that cost over $100,000, there's relatively zero cars are sold in that upper end. So when people ask like, why would you end of life like S and X? Like it was low volume for Tesla already. And it's a highly competitive segment because that segment is kind of overproduced. So when you think about Tesla's plan for continuing to absorb market share, the only way to do it is to make cars that are more affordable. Now, where does Model Y L land in all of that? If that's presumably kind of like the highest end, like 3Y variant, it'd be hard to imagine that it's not the most expensive out of all of them. But in order to continue growing sales in the absence of releasing a new, less expensive model, they have to continue making them more accessible to more people. What's the biggest mistake Tesla owners make when they're trying to sell their vehicle? Selling it at all. What are you selling it for? I mean, other than that, you don't see like a consistent like big mistake that's like super unique to selling a Tesla. Like it's the same as selling any used car. Like you should know what you have and you should know what it's worth and why it's worth that much. But that also means that you should have realistic expectations of what it's worth. And I would say EV owners in general might have a little bit of sticker shock when they see the depreciation, but that's because EVs are becoming better and cheaper every year. By design, it's a technology asset. Ultimately, it's not like a normal car. And as long as you enter the transaction with that proper expectation, you shouldn't be met with any huge surprise. Like it hit the hardest. Since you buy so many electric vehicles and the market flows so much with depreciation and everything, have you lost money on a vehicle that you guys bought? And how bad was it? We lose money all the time. All the time. Wow. So you really are just trying to offer the most just to capture the business. Most of the time, the cash offer we make is exactly reflective of the amount we believe we will sell the car for in our auction the next day. Wow. Sometimes there's a bit of margin baked into it, but that's usually to recover any losses that we take, which does happen occasionally. Sometimes we end up making a lot of money on a car kind of on accident. And sometimes we lose a lot of money on accident. I think the most we've ever lost on a single unit was $10,000. Wow. What car was that? It was a Wagoneer. Oh, okay. It was the first one I'd ever seen. The EV Wagoneer? Yep. I didn't even realize, I guess that is out there, yeah. Yeah. And it was when they were relatively new to the market and the lease deals were out of control, amazing. And that's really hard to compete with as a used car buyer. It's still a great car. I would buy another one and we are better informed to do that today than we were back then. Just learning. Learning at the end of the day. All right, so Jimmy, you used to work at Tesla. Why'd you leave? It was the best job in the world. And the only reason I left was because I was hell bent on building Plug. And if that weren't the case, so long as it would be up to me, I would still be there. Nice. So what made you think of like Plug? Like, was there like a problem in the marketplace? Like how did you get started on Plug? Yeah, we were operating the used car business across North America, which at the time was the largest used EV operation in the world. And particularly selling Teslas, which were the first of its kind, truly software, computer hardware, AI defined computer on wheels of a car. And that just meant that nobody's problems were similar to ours. And running vehicles through traditional automotive wholesale rails that have been around for 80 years, no surprise to you, was not an efficient way to run an operation. And when I thought through the need for a healthy and efficient secondary EV market to continue to propel primary market EV sales and electrified transportation, I realized how important this would be both for Tesla as a company, but for the industry overall. And when it came down to it, I realized that nobody cared as much about this as I did. And myself and the team that I've been building are simply the most qualified in the world to solve the problem. So through some changes in my life circumstances, primarily my son being born, I just got the kick that I needed to cement my conviction and just go all in on it. But isn't that super scary? Like your son being born, you're leaving probably like a super cushy job at Tesla for the most part. Like what made you like take that risk and just like say like, hey, I wanna start something on my own with that. It wasn't just scary, man. I literally like cried on my way out the door. And then I got to my car, it was a Model X Plaid in the Fremont parking lot and I had a flat ******* tire. It was like the worst possible omen. Actually a very representative omen for the beginning of the entrepreneurial journey. Yeah, it was scary, it was hard. I don't think anybody that works at Tesla would describe their existence as cushy, but certainly like there were a lot of benefits that came with the territory of being director or above at one of the most valuable companies in the world. In particular, the caliber of people that I got to work with every day, let alone Tesla as a platform for propelling my career. And one thing about me is that I was poisoned with the entrepreneurial mindset very early in my life. My dad built a couple of companies as I was growing up and I saw that go extremely well when I was very young and I actually saw it go catastrophically bad and to some extent being a founder literally killed him when I was pretty young. Nonetheless, growing up in that environment always cemented in my mind that this is something that I was born to do. It just so happened that never before in my life did I run across a problem that I felt was so important and so worth solving that sort of merited like taking the risk and taking the jump, but the convergence of the problem being important and my belief that I was the most qualified person to solve it really pushed me right up to the edge. And finally, when my son was born, it totally changed my relationship with time. And I realized that suddenly my time does not wholly belong to me any longer. And most importantly, given the type of career that I have, I know that no matter what, I'm gonna work a lot of hours and I'm not gonna be around quite as much as I want to be and I'm always gonna bring home some kind of energy. And what it came down to was what I wanted to model for him and there's a big difference between corporate executive energy and company building energy and thanks to the time at Tesla that I had, I was in a position where even if I took this risk and it went badly, the downside outcome would be very far from catastrophic. All that said, I will not let it fail. Nice. So since you worked at Tesla and you were in the sales operations, you probably saw the backend or you saw the backend of like the used side of Tesla and the new side. Yeah. What does Plug do differently then? Or what's bad about Tesla's used operations? What do they fail at? And what does Plug do differently? It's not about fixing any failures inside of Tesla. It's really zoomed out from there. How does the industry treat a used electric vehicle, particularly a software defined computer on wheels electric vehicle? And the majority of used Tesla transactions happen outside of Tesla's own inventory and its own walls, right? Like there are plenty of peer-to-peer transactions, every major retailer stocks plenty of them and every wholesale platform, every used car auto auction has plenty of them flowing through. And the biggest issue is twofold. The first is what our relationship is with data and pricing. A used Tesla is an asset that should be defined by its condition and its capability, much like any other vehicle. But the way that we measure those things are fundamentally different. And in terms of capability, as an example, when a normal gas powered vehicle rolls off the factory line, its capability is pretty well cemented. There's no ADAS hardware retrofitting. There's no over the air updates. There's no software enabled feature purchases or subscriptions and transfers through subsequent owners. There's no fundamental changes to the charging network infrastructure. I could go on and on and on, but these are all examples of what drive real world value differences in the used Tesla market today. On plug, we see very significant pricing differences in a hardware four car versus a hardware three car. We see pricing differences for full self-driving, which sounds intuitive, but in the broader market, you honestly don't see that because there isn't enough confidence around the accuracy of that data or the transferability of the feature. We see free supercharging for life, driving thousands of dollars of incremental value. And to believe in plug is to believe that the rest of the industry is going this direction where the capabilities are no longer static. And the only source of truth is the vehicle's onboard computer. What is that snapshot in time of what's true today? And what is the glossary of terms that you even need to be looking for and how to market it? And that's capability. That doesn't even get into condition. And when it comes to condition, most of the chatter of course is around high voltage battery packs. And what's fascinating about this, one of the greatest things Tesla has done for the whole industry is release data inside of its environmental impact reports showing that batteries are way more resilient than everybody thought. The three NY fleet that have crossed 200,000 miles have retained 85% of their battery capacity. For S and X it's 88%, which is for the most part older architecture, by the way. Meaning all of this fear around battery deterioration is pretty overblown. All that said, because these vehicles will be on the road for so long, I see a world where it's quite normal for vehicles with two, three, 400,000 miles to be transacting as really nice looking used cars. So standardization around how battery health is measured and making its way into other factors as well, the drive units, the charging hardware, calibration of ADAS equipment, all of that becomes a highly important factor and at some point more important than odometer. All right, so what's happening behind the scenes in the used market right now? Like, are dealers scared of buying vehicles? Is Tesla low balling? And how is Plug able to offer so much more than everybody else? Yeah, right now is a really interesting time because we have $100 oil barrels. So if you asked me this question exactly a year ago, it was a totally different world. Less than 2% of US dealers were actively participating in the used EV market, like very seriously, like having 10 or more vehicles in stock. And CarMax, Carvana and Tesla combined were doing as much as the next 300 rooftops. We're in a different world right now. Suddenly there's so much demand for the used EV products from a broader set of the population all over the country. And now dealers are entering the fold at a rate unlike anything we've ever seen. So if you've got a Tesla that you want to get rid of, you should just try and sell it right now because the market is the hottest? Oh, it just depends. And going back to your question, how is Plug offering? We don't beat everybody every single time. We beat everybody majority of the time. And we have data that proves this. I mean, the way that we do that is really simple, right? Like dealers want access to high quality inventory. And the best inventory that's out there are vehicles that are still in your driveway. Most of the cars that they see at an auction was discarded by another dealer. And that meant that it wasn't ready for prime time for whatever reason. Meanwhile, if you're shopping with a nationwide retailer, they don't have unlimited capacity. So they're going to bake whatever their margin target is relative to their capacity and how many cars they can buy. But there's thousands of dealers out there that want access to your vehicles too. So getting an offer from us is in essence kind of like shopping it around against hundreds, if not thousands of dealers versus just one or two. So you basically have partners in every single state that can, you basically are the middleman from where the customer is selling the vehicle to you. And then you sell the vehicle to the dealer. So that's how you're kind of able to get the highest valuations. Yeah, that's right. We have over 600 dealers that have fully onboarded into the platform. And by the way, it's not even that easy to onboard. Like you have to give us your dealer license. We do kind of a background check against an underwriting database. There's a lot of stuff that we do to make sure that the auction is safe to transact. But then our model is very simple. So in our business model, when we make an offer on a vehicle, we go on very thin margin. We're going for throughput. We are generally offering exactly what we believe the car will sell for or very close to it. But then how does that make sense? Like if you're just offering just like a little bit less, like how do you guys make money then? Yeah, the business model is through the dealerships. So they pay us a buy fee for buying the car. And then we have some other value added services that go into it. We help them move the car to their dealership. We're rolling out a financing product for when it's sitting on their lot. And it's not that we make zero margin on the consumer acquisitions, but by design we run it to be very thin. And the only reason it's even a positive number is to make up for losses because losses do happen occasionally. Of course, yeah. So a lot of people want to know like, they've got like a 2018, 2019 Model 3 or 2022 Model Y. What are the specific factors when it comes to like condition of the vehicle that will hurt an EV and what doesn't matter at all? Like light surface scratches probably not, but like tires is probably a big one, right? I mean, tire is like the number one consumable on EVs, right? So certainly if you have new tires, we can pay more money for the vehicle versus if you have old ones. But the stuff that really freaks people out is like glass, as an example. If you have a cracked roof, you're better off getting that fixed before you try to sell it into a dealer auction because there's plenty of cars that dealers can bid on out there. And that's like a $1,500 repair sometimes. And more importantly, parts can be kind of hard to come by. Another one of those actually glass related might be the MCU screen. If there's a crack in it, get that thing fixed before you try to sell it. But consumable stuff, like a little bit of paint, a little bit of curve rash, a little bit of tires, that's just normal used car stuff. So that's not like a huge turnoff to anybody. I see. And is there actually a valuation difference now getting into like software, like hardware three, hardware four, do you see any difference in the market? Oh yeah, yeah, absolutely. Dealers are way more aggressive on bidding for hardware four cars than hardware three cars. Wow, and what about like the old stuff, like hardware 2.5, do people care or there still is a difference? They do care. Well, and like, if you were lucky enough to get the hardware three retrofit on a vehicle that was originally lesser than that, there's a difference for that too. Oh, wow. And then, so because full self-driving just switched to subscription only, are you already starting to see more demand for people that want the full license? Yeah, some dealers won't even buy a car if it doesn't have FSD fully purchased, transferable with the vehicle. Wow, so what would you say the street value is of full self-driving, a permanent license on the vehicle is like right now? You know, it depends on the model and like the higher end of the vehicle, the greater premium that you'll see for it. So like in 2018, Model 3, like it's hard to put super hard numbers on it, but like the range that you're dealing with is in like low single digit thousands to high single digit thousands. Okay, so if it's like a Model S or Model X, it's the street value is probably worth three to 4,000 is what you're saying? In some cases, a little more probably. Yeah, it moves so fast, so it's hard to even put like a hard number on it. And the only way to really put a hard number is to have enough vehicles that are identical other than that one single variable transacting within like a pretty short window of time. I see. We don't have quite that much precision, but general rule of thumb, like you should be receiving thousands more for an FSD fully purchased vehicle than one that does not have that. Yeah, because I've always told people like for Model 3s and Model Ys, it's like worth like two to $3,000, but that was probably my like months ago advice. Ever since it's changed with like subscription only, I feel like it's gone up a little bit more because people just want it. They just feel more comfortable buying the whole license. Yeah, well, it's just a math problem, right? And if you're otherwise gonna pay $100 a month, the question is how long are you gonna keep the car? And if it's for more than three years, then yeah, that should be worth a few thousand bucks to you. Any other factors that come into like a low ball offer from other dealerships versus getting a higher one? Like, I guess what's like the tips and hacks to make sure you can get the most money for the people that are trying to sell out their 2021, 2022 Model Ys or 3s? So not three or Y answer, but like if you have like a legacy like SRX with free supercharging for life, that one's really hot, people love those. So one of the hacks around that is just to make sure that you're selling to an entity that actually puts a signable value on that and knows how to properly confirm that the feature is present. On three and Y, yeah, so it's hardware three to hardware four, it's FSD versus no FSD. Obviously, Juniper versus the legacy platform. Juniper's rip off the shelf right now and people are really excited about performance vehicles. The most high-end, most decked out versions of vehicles right now are the ones that are selling the fastest. And in some cases, I've seen some of these for sale at retailers at prices that are higher than just buying a new one, which it's not the first time in history I've seen that. And historically, those events typically follow oil price peaks. So now that autopilot isn't available anymore, are you seeing a difference between the used ones that have autopilot and how much is that difference between one that doesn't and one that does? No, we haven't actually seen any sold without autopilot yet. What would be your prediction on the value of a vehicle that has autopilot versus one that doesn't? Oh man, great question. I mean, at minimum, it should be worth hundreds. It's hard to say for sure, but yeah, it's so difficult to fathom owning a vehicle that doesn't at least have autopilot, but it's gonna yield the desired result is anybody with one of those vehicles that has the budget is definitely gonna subscribe to FSD. Do you think hardware three will be upgradable to hardware four? Yeah, I mean, they're gonna figure that out. Like what exactly that looks like, I'm not totally sure, but I get a little bit allergic to people like being super rageful about it on the internet because listen, like we don't know what the hell is gonna happen, right? Like everything that we knew at the time absolutely pointed us toward the ability to launch a fully unsupervised FSD on that hardware. And you know, it is what it is. Nobody else has accomplished that or even anything close to what FSD supervised is capable of today. So I'm sorry if you're upset, but kindly like get over it. And yeah, I'm sure that Elon will come up with a solution. I don't know what exactly what that will be, but it's important. Why do you think Elon killed full self-driving as a package? Like a permanent purchase package? Well, the best I can do is speculate, right? I haven't worked there in a few years, but if I wanna think about what a company like Tesla or any EV only software defined EV company becomes in the future, it really becomes a platform company more than a car company. And an increasing percentage of the revenue streams should be coming from AI and software driven solutions and not necessarily just the car itself. I'm frankly surprised it took so long for this to happen. Another value question, because when you have a gas car, once you hit that like 80,000, 100,000 mile age of a vehicle it starts to really depreciate because there's like bigger things that you have to fix. But EVs are different. Is there a drop-off with an EV? Like once it hits 100,000 miles in your opinion, like do you tell your buyers like, ooh, that one it's got 100,000 miles, we can't give as much. Or like, is there like different factors that go into play with mileage specifically? Yeah, so the way that we make offers is based 100% on the transactions that we host in our auction. And it's a competitive bidding environment so that we can always find a market clearing price. And we run an auction every day, so our pricing is very real time. All that said, it comes down to how are consumers buying cars at the dealers and therefore how are dealers buying cars at the auction? So even though odometer is a very imperfect measurement for the longevity of a vehicle, it's the way that they're still being transacted today. In the future, it will no longer be that way, but today that is still the world that we live in. So the best arbitrage on earth as a car buyer is to buy a high mileage EV, like assuming of course that the condition has been confirmed around battery and everything else. Are you scared of buying like a Tesla Model 3 or Model Y that has 300,000 miles? No. And the vehicles, those Tesla vehicles that have like a battery replacement, how do you like check to make sure that's like good or not? Yeah, so we do a couple of things depending on the scenario, but at minimum we get a state of health rating off of every Tesla. And a state of health is really just a measurement of remaining capacity, right? Which basically tells you how far can I drive this vehicle on a full charge? That's not the exact same thing as how likely is this vehicle to have a catastrophic failure. Our means for diagnosing that component of a vehicle's health requires us to physically access the vehicle and we don't physically access most of the cars we sell today, that's slowly changing. But because the majority of vehicles that we are currently selling are still under the original battery warranty from Tesla anyway, it doesn't really matter. Like we're perfectly comfortable moving vehicles through with that state of health rating and trusting that there's warranty coverage if something goes wrong for the majority case. So you probably have like some sort of connection that can get battery state of health, but for the people that are watching, like how can they check their own vehicle to get like a battery state of health before selling their vehicle? Here's the problem. There's no standardization on this right now. So like objectively, I don't even know who the authority would be to tell us who the best is. What I've seen is that having any indicator that comes directly from the vehicle's data is drives as much confidence in the buying pool as any other solution. And that's how the market is operating today. So for me, I would just say, do a tiny bit of research and use the means that you're most comfortable with, whether it's something that you authorize your account into accessing purely through software, or if there's a physical device that you wanna use, or if you wanna work with a shop that does it, or just use the built-in battery diag, which you can do, it's super inconvenient, but you can do it. It takes like all day, right? Yeah, exactly. But like, whatever works for you, it's perfectly fine. Some people have just told me, just basically look at the percentage and switch it to miles, and there you go. That's your battery health. I mean, the truth is, is there are plenty of dealers that will buy a vehicle based on those two data points alone, because with those two, you can extrapolate what is the remaining capacity. It's really not a measurement of state of health. And if I were buying a vehicle that's no longer covered by warranty, I would want something more robust than that, because most vehicles are still under warranty. For the most part, that's honestly fine for now. And so a lot of Tesla vehicles, they come out of the factory in not the best condition because of the builds, right? Panels could be repainted and all that stuff. But on the secondary market, does that have a lot of effect? Because it's hard to tell which ones are actually been painted at a body shop, right? I mean, honestly, you're not buying a McLaren. Like, if you're gonna get super bent out of shape about- The Tesla owners feel like they're buying a McLaren sometimes. Yeah. I mean, I've got a checklist that I put on my channel, but sometimes I see them going out with magnifying glasses. Every single thing is out of alignment. It gets pretty intense. Yeah, I would say that you should not set yourself up to be disappointed. Like, if you're buying a software-defined electric vehicle, like the real feature behind it, what makes that vehicle great, is not 100% paint match correctness across every single panel. And certainly, if that is really critical to you, I hope you never street park in Los Angeles. Yeah. Yeah, I always tell people that every Tesla has build quality issues. It's never perfect. So as long as you set that bar low, then you're pretty much fine once you go into the delivery appointment. I don't even know if I would go as far as to say is they all have build quality issues. Like, I mean, there's certainly- You can scour Reddit and find all kinds of people like speaking out with anecdotes. I don't really think those are the majority, but I also believe that the importance that goes into the micron level accuracy and depth, like on a paint job, compared to the fact that this thing will literally drive you anywhere you want without you intervening as you eat a burrito. Like, those worlds are so far away from one another that, for me, as a car enthusiast, by the way, I just think that people shouldn't think so hard about it. Okay, so what's your advice? Someone brand new to this, maybe a 22-year-old, a young professional, and they want to get into a Tesla. Should they buy or should they lease? Man, it's really hard to argue with the $299 luxury lease deal, but there's also 0% deals on buying them. Honestly, by the time you're 22, maybe you know this about yourself, maybe not. When I was 22, I was probably on my fifth or sixth car. I had owned 30 before I turned 30, so I had some sort of diagnosable problem. That persona should just lease the thing. If you're of the persona where you're 22 and this is the second time you've bought a car and you've had the same one for the last six years, then buying one is probably a pretty solid bet for you. Ultimately, it's one of those things, once again, where I think conventional wisdom is wrong. Conventional wisdom is that leasing is a waste of money. That's totally not true in the EV context because the cars are getting so much better every few years and more affordable. And if that's important to you, if having the latest technology is important to you, which includes safety, by the way, then I think leasing is perfectly reasonable. But if you really want to own it, you want to modify it, you want to put a ton of miles on it, then just buy the thing. And the 0% deals on new ones are great, but also the greatest arbitrage in the entire car market is used EVs. They are so outrageously affordable for what you get. So actually, to bring that into the fold, should they lease a new one, buy a new one, or just buy a used one with like 10 to 20K? I guess as the first EV though, because there are Model 3s that can get super dirt cheap, like $8,000. Crazy. What would you recommend to that first time buyer? Should they buy a new one, lease a new one, or find a really nice used one? Very first time buyer, lease a new one. You've got a warranty. You've got the latest technology. You get to interact with people at the store. So all of your questions can get answered by a professional. There's no worries about what was the history behind it. You build credit. You can give it back at the end. Or if you don't want to, you can buy it out and you can keep it. So at $299 a month for a Model 3, is leasing smarter than buying? Because when you buy, you're kind of sacrificing all your cash. But at 299, I feel like you're beating depreciation. What do you think? I mean, not financial advice, but that seems like one of the best deals on earth. Would someone that's about to buy a brand new Tesla, they should probably consider that versus maybe someone buying a used one? Even if they're thinking about buying a used one, yeah. I would look at leasing a brand new one for sure. That is such a great bargain. What are some tips for people that are looking to buy used that have to kind of finance something at maybe a higher interest rate? What are some different ways to maybe get lower? Is that something you guys kind of get into a little bit or not necessarily much? Not directly, but we work with all of the dealers that sell a meaningful number of used EVs across the country. And the best advice I have is if you're not going to buy it directly from either Tesla or from another individual owner, and you're going to buy it from a dealership, which is who we work with, buy one from a dealership that sells them all the time. The dealers that sell a high number of used EVs are also ones that have relationships with lenders that are used to used EVs as a distinct asset and any financing deals that are to be had, including mastery of inclusion of any tax credits that might be available. Obviously the federal ones are gone, but there are some state level ones, there's city level stuff out there. Those who are experts at selling used EVs are the ones that who are going to be able to help you capitalize on that. So when you look at the used market for Teslas, you've got Tesla that sells used vehicles. You've got the big box stores, like the BMW dealerships that sells, and then you have specialized used EV dealers. Who should people buy from? And like, what are the pros and cons between all three different parties? Yeah, I don't think there's any single right answer. It really just depends on where you are and what's important to you. And I say where you are, because as an example, if you really wanna see a car in person before you buy it, and if you happen to be located near a dealer that has a high number of used EVs or used Teslas in stock, like that's a really great experience because you can do the test drives, you can see the car in person before committing to it. And because it's a store that sells them all the time, they're gonna be able to have a confident conversation with you about what you're buying. Versus if you go to a dealer that just happens to have one in stock very passively, but they don't necessarily have any expertise in it, that's not gonna be a great experience. So if you're going to buy one that way, like you better be prepared to be the most educated person in the room on the vehicle, which is not a great experience for everybody. And of course, buying directly from Tesla, it's a very well-operated machine. Oftentimes there's really good deals there. I've seen dealers buy cars from that retail channel just to resell them. Oh, okay. Which is not what I would do personally, but it can be done. And so either if you want a very specific configuration and you monitor the site to find it, or if you just want a really great deal, both of those are options if you're just buying it directly from the manufacturer. What's bad about buying a Tesla, a used Tesla from Tesla? There's nothing bad about it. One of the things that you sign up for is no different from buying a car on the internet anywhere else. Like most of the time, you're not gonna see the vehicle before you're taking delivery and that's fine. It's very well disclosed what the condition standards are. And if you're comfortable with that and you're happy with the deal that you're getting, there's nothing wrong with that. Some people don't like to buy a car that way and they wanna be able to test drive it and see it first and that's a different experience and that's what dealers are there for. Are used Teslas on Tesla's website more overpriced than other dealers? No, there isn't any consistent like leveling there where they're consistently higher or lower. The market for used EVs in general moves so much faster than the traditionally used car market. So pricing is very dynamic and it's always worth checking in all of the places if optimizing for the best price is important to you. What's the best way like for the consumer that's just sitting at home and they see like a Model Y on cars.com at this deal and they see one on Tesla's website, what's the best way for them to actually figure out what's the value of that 2021 Model Y? Like the market value, like how much they should pay for it? Right. I mean, there's plenty of proof points out there. If you, no different from any other used car, like if you scan the market and you get really familiar with the vintage or the year, the model trim or the odometer band that you're looking for, like if you find three or four representative examples, you're gonna see pretty quickly like how much they're moving for on the market. Generally used EVs, especially used Teslas are being sold by dealers who are very fast in their throughput. You won't find a lot that have been sitting around for any longer than a month. So the pricing is always very close to real time. Are the, is the used Tesla market or the used EV market about to crash with all this flood of EVs coming into the space? We have a hundred dollar oil barrels, which will not be forever, but it's introduced a whole new cohort of interested customers. And there's also a used car shortage for gas cars because in COVID, there were factory shutdowns. And then following that, there were chip shortages around the country. You might remember seeing photos of new car franchise dealers that were totally empty and had no cars to sell a few years ago, that that's made its way all the way into this year's off lease cadence. And the shortage of used cars in the market compared to a normal year is far greater than the wave of used EVs hitting the market this year. Do you think like the brand new EVs coming into the space might have an effect with all, like, cause there's going to be more models like Rivian R2 coming out, the Lucid midsize. Is that going to put more competition and more effect of just appreciation across the board for a lot of these used EVs as well? Well, having more choice is great for the consumer. And I think more, more than a new models entering the market, I think new models entering the market more affordably is what's going to affect it. And we saw that when we had a $7,500 tax credit, that was a huge suppressant on used EV residual values there for a while, because it was being compared to a subsidized new car. What really needs to happen is new EVs across the board need to become more affordable and more compelling for that matter, for the average consumer. Because we had a whole lot of early adopters and people that were willing to pay green premiums and those people have all but been exhausted. And now new car days of supply, EVs are something of the magnitude of 90 to a hundred days, which is really unhealthy. And that's because they're too expensive. But meanwhile, used EVs are at 35 days versus gas cars, which were at 42 days, meaning used EVs at dealers actually sell faster right now than used gas cars. But the inverse is true on new cars. Interesting. I get this question a lot, but do you think the $7,500 federal tax credit for EVs is coming back? No. Not at all? No. What if there's a change of regime? Still no. Still, it's just too expensive? If you look at what it took to get that bill passed, it was a Herculean political effort. And we're in this really odd moment in US politics where administration changes dramatically change policy and then whipsaw the whole market back and forth. It's been a huge challenge for manufacturers because they can't live and die by changing administrations when it comes to CapEx and R&D and laying out a 10-year plan. All of the calories that would go into reactivating that would be at risk of going to total waste. And I just don't see any of that happening in Congress following an administration change. Why do EVs depreciate so much? Because every few years, they get way better and way cheaper. Okay, so it's just kind of like an iPhone that gets better every single year. And it's hard to compare it against legacy auto manufacturers because there's just always these upgrades. But it's even like other brand EVs as well, like Porsche Taycans, they depreciate pretty heavily as well. Those are kind of an oddball example though, because those things were like $180,000. And the average new Porsche customer is very different than the average used EV shopper. So it's a bit of a mismatch in the market, but it's also very low representative sample. The better example is just look at the Model 3 and the question you asked before, should I buy a three, four-year-old Model 3 or should I lease a brand new one that's $299? The fact that they can roll off the line and be sent into the market with those type of economics is only possible because of economies of scale and all of the years that went into making those vehicles more cost efficient to manufacture. And that's an example of the vehicles getting better and cheaper every few years, which is just kind of incompatible with how automotive residual values have worked historically. So Model 3 prices and Model Y prices have, I think it's crashed. Like we've seen some crazy prices as low as like 8,000, 10,000, but do you think there's like a floor for Tesla Model 3s and Model Ys? Like will they not go past, like I don't think I've seen it go past like 5,000 to 6,000, but do you think that's like the minimum, bare minimum price? Well, even those ones are extreme examples, right? Like I haven't seen the exact vehicles you're talking about, but I have to imagine they were extremely high mileage, maybe like really catastrophic condition or history. We rarely see them go below $20,000. It happens, it certainly happens, but those are usually vehicles that are super beat up or super high mileage. Like a nice car that isn't horrifically above on odometer and in good condition ownership history is pretty much bottoming out in like the high teens or the low twenties. For the people that are looking to buy Tesla Model 3s and Model Ys right now, what's that sweet spot for depreciation? Like this person wants to buy a used Tesla, no matter what. They're not looking at a new, they don't care about $299 a month. They want to buy a used because their dad or parents told them that you should always buy a used. What's that sweet spot for that depreciation cliff? Like is it two years, three years, one year? Or I guess let's isolate it to Model 3 and Model Y. Yeah, I mean, anything that you're buying for around 25K that's a few years old is just an incredible car for the money. Like unbeatable. Do you think that with the Model S and Model X getting killed, prices will hold? Or do you think they will also depreciate like everything else? So Model X is up 15% since the start of the year. It's absolutely crazy. Anybody sitting on a Model X is basically sitting on like a bucket full of gold bricks. Like please sell me your Model X right now. Model S also benefited, but not as much. It's up three or 4%. I think that I wouldn't personally recommend like thinking of a car as like a stock that you should be trading in and out all the time. Especially if you have to pay sales tax when you buy a car, which we do here in California. It's not really something that I would personally overthink. If you're going to be looking at it as an investment just buy stock in one of the companies you believe in instead. Jimmy, thank you so much for coming on. Thanks for having me. Of course. Okay, one last plug. This is your 10 seconds. What do you want to say? Man, I want to say a lot. Okay, so what I'll say is we've been building Plug for the last three years. I've been overwhelmed with gratitude for all of the enthusiasm that's going around the company. We just completed a $20 million Series A financing led by Lightspeed Venture Partners. And we are hiring like crazy. The company should grow 50% in headcount over the next three to six months. And we're looking to 100X our transaction volume over the next four years. So if you're thinking about being a part of this team and you're either in Los Angeles or willing to be in Los Angeles, you should look at all of the jobs that we have posted. And in the meantime, if you want to work with us as a dealer, you can sign up with your dealer license right on our website, PlugMotors.com. And of course, if you're thinking about trading up to a new EV, get a cash offer from us. Perfect, well, thank you so much, everybody. Thanks for watching. Please hit that like and subscribe. If you got any other questions or comments you want to leave, put it down below in the comments. And if you think we should do this again, maybe even bring on some other guests, definitely put that comment down below in the description as well, or the comment section as well. But thanks for watching. See you guys in the next one.