Biz Break: Tesla puts the brakes on its resale program

Top Of The Order:  

Master Plan, Part I?: Tesla Motors Chief Executive Elon Musk has a lot going on. That’s no surprise. He likes to take risks on things, too, and you got to give the guy some credit: Many of the things he bets on end up setting a standard that rivals have to try to meet, or else end up as perpetual second bananas.

And now, here we are, awaiting the details of his next Master Plan, in which Musk will probably lay out his vision and strategy between Tesla, SolarCity (where he is chairman, and which Tesla is now trying to buy), and SpaceX (where is is CEO). Who knows, maybe something cool like a solar-powered-Tesla-brand-rocket ship that offers round-trip service to Mars is in the works?

Or, maybe it will be a simplification of things. And maybe we’ve already gotten a look at it? Which brings us to Tesla putting an end to its resale program.

Previously, Tesla had guaranteed the resale value of its cars by offering to repurchase its original Model S vehicles after three years for at least 50 percent of the base purchase price paid for the car. But, as of July 1, that practice is as gone as the old white sidewall tire. Instead, Tesla is doing like all other carmakers and saying it’s up to the marketplace to determine the trade-in value of its vehicles.

A Tesla spokesperson put it this way:

“We have discontinued the Resale Value Guarantee program as of July 1 so that we can keep interest rates as low as possible and offer a compelling lease and loan program to customers. We will continue to support customers currently financed through the RVG program.”

Auto industry watchers say part of the reason Tesla aligned its trade-in policies with the rest of the industry’s practices may be so that it doesn’t have to hold more than a billion dollars on hand just in case it needed to pay off all those older-model owners at artificial rates not set by market.

So, say you had a 3-year-old Model S and were looking to trade it in on something newer, like the Model X SUV. You could have gotten more bang for your used-car buck two weeks ago.

But, if you still want that Model X, Tesla’s got a deal for you. On Wednesday, the company unveiled a new Model X 60D at the low, low, can’t walk it away base price of just…$74,000.

Middle Innings: 

Step Up To The Mic: The Republican National Convention kicks off in Cleveland next week, and it might even attract more attention than the Cavaliers’ NBA championship parade last month.

Part of the “fun,” if you will, regarding political nominating conventions is guessing who will speak at them. With Donald Trump the presumptive GOP nominee, it takes someone with thick skin to appear in public at what might be The Donald’s coronation as the Republican presidential candidate.

So, then, why is Peter Thiel going to speak?

Thiel, a founder of PayPal, a director at Facebook and a billionaire investor in the tech sector, is best known of late as the Guy Who Bankrolled Hulk Hogan’s Lawsuit Against Gawker Because He Held A Long-Running Grudge Against The Company Because It Outed Him As Gay In A Valleywag Article Years Ago. Thiel couldn’t let that incident rest, so he started cutting checks to pay for Hogan’s legal bills. Hogan won the case, and Gawker filed for Chapter 11 bankruptcy protection and is trying to sell itself.

But, Thiel, if anything, is an individual. In a region that prides itself on being liberal, Thiel is known for his conservative political views. He has come out as a Trump supporter and will throw his weight behind Trump in as public a way as possible in Cleveland next week. And there can be no doubt that there will be some anti-Thiel pontificating right before and after his convention speech. How Thiel reacts to that will show just how thick, or thin, his skin really is.

WWJMD?: By that, we are talking about the one and only John McAfee, cybersecurity pioneer and one-time Libertarian party presidential candidate. If he will speak up, he’ll certainly have something to say about the reports that the Chinese government hacked the U.S. Federal Deposit Insurance Corporation in 2010, 2011 and 2013. To make matters more interesting, the FDIC apparently found out about the hacks and covered up the incidents.

Bottom Of The Lineup: 

Here’s a look at how some leading Silicon Valley stocks did Thursday…

Movin’ On Up: Gains came from Lending Club, which rose more than 6 percent, as well as NeoPhotonics, eBay, SunPower and Cypress Semiconductor.

In The Red: Decliners included Brocade Communications, Aemetis, Nimble Storage, YuMe and Aviat Networks.

The tech-focused Nasdaq Composite Index rose 0.6 percent to 5,034.

The blue chip Dow Jones Industrial Average added 0.7 percent to close at 18,506.

And the broad-based Standard & Poor’s 500 Index rose 0.5 percent to end the day at 2,163.

Quote Of The Day: “It is hereby ordered that the petition is denied.’’ — the ruling by the U.S. Court of Appeals for the Second Circuit. The petition that was denied was sought by New England Patriots quarterback Tom Brady, who will now have to serve a four-game suspension this season for his role in the Deflategate matter.

Sign up for the 60-Second Business Break newsletter at

Photo: Screenshot from the Tesla Model S ordering website.


Tags: , , , , , , ,


Share this Post