The very best con artists can convince people that the moon is made of green cheese and that the sky is the ocean. Or, in the case of Elon Musk, he’ll try to convince people that a Tesla will defy the laws of the free market and actually appreciate in value over time.
Such was the case in a Twitter exchange Elon Musk had with Quinn Nelson, a Tesla owner. Quinn was complaining that the $74,000 car that he had purchased a few months ago could now be bought for almost 20% less, thanks to the price cuts that Elon Musk had instituted.
Yet Elon Musk insists that a Tesla with a full self-driving package will appreciate in value, apparently because it’s utility will be increased by a factor of five.
He claims that full self-driving Tesla vehicles will be able to generate revenue for their owners. They will basically become robot taxis when they aren’t being used.
The stupidity and blatant dishonesty of this statement, if it came from anyone else, would be ripped apart by everyone. However, because it’s Elon Musk, he gets a pass.
That is, from everyone except Quinn Nelson:
There is an economic truism that all car owners understand, and this includes Tesla owners. That truism is that automobiles are depreciating assets. The only cars that appreciate over time are vintage vehicles that are considered antiques.
There is a reason why generally accepted accounting principles and the Internal Revenue Service created depreciation schedules for hard assets.
There are three simple reasons why Elon Musk’s claim is garbage.
First, it assumes that a Tesla owner, when he is not using his vehicle, is going to let his robot taxi pick up complete strangers and deliver them to some unknown location.
What idiot would permit that? For all the Tesla owner knows, the Tesla will be returned with vomit everywhere – and God knows what other damage to the interior.
An owner of a luxury vehicle is not about to permit this, nor would he have the need for the additional money.
Second, this problem falls prey the classic ride-share trap that ensnares Uber and Lyft drivers. The additional wear and tear that one puts on a vehicle by using it for rideshare reduces the vehicle’s potential lifespan.
If one normally drives 12,000 miles a year, but instead drives 20,000 miles a year including rideshare, then five years of driving and maintenance is compacted into three years.
That’s what would happen to Tesla vehicles. In point of fact, then, their value would depreciate even faster.
Yet there’s a whole piece to Elon Musk’s argument that isn’t being addressed. We are years away from a car, much less a Tesla, that has a full self-driving automation package that is completely safe, trusted by the public, properly insured, widely accepted, and isn’t tricked by table salt.
This even assumes that Tesla as a company still exists at that time. Because the way things are going right now, Tesla survival appears very much in doubt.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.