Model S buy back another revenue stream for Tesla

By Marc Castro

Sep 10, 2013 06:32 PM EDT

The buy back option for the Tesla Model S under its lease style program was seen to be a potential stream of revenue for the company once these cars are resold to the market. This conclusion was reached by Bloomberg Industries analysts.

Under the plan, Tesla, which sold the cars through its own stores, would have greater control over the resale prices of its vehicles compared to what traditional automakers would have. This was observed by Bloomberg Industries analyst Kevin Tynan, who projected that the sales revenue of the used Model S market can generate an estimated USD388 million in annual revenue by 2016 or an additional USD40 million in gross profit annually.

In an interview, Tynan said, "Buying back three year old cars at a set price means Tesla to a great extent can control the secondary market for the Model S and other cars it brings out. The conpany's going to be the main buyer and gets a chance to earn a second gross profit on the same car." According to his estimates, Tesla is offering 46% of the original price of the Model S at buy back.

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