The Tesla Scam

No, the cars aren't fraudulent, but the market allowed savvy operators to game the system

Disclaimer: I am not a fan of Tesla’s. In fact I have always thought that they were overrated and seemed to attract the most annoying people to own them. The smugness, the snootiness, the assholery. Yes, all of that.

But what I am here to talk about was that the market was so tight for new Tesla’s that there was a 6 - 9 month wait on the average. That made it difficult to buy one when you wanted (or needed) a new car.

Whenever there’s a supply and demand differential, that opens up opportunities to play the arbitrage game. What is arbitrage? It is someone (or some entity) matching buyers with sellers at different prices, and pocketing the difference.

A LOT of people wanted Tesla Model Y’s in particular, and from the release in March 2019 until about the end of 2022, the Model Y was in short supply. That meant that you needed to place a deposit with Tesla, and wait in line, typically up to 9 months, until it was ready for delivery.

A lot of people didn't want to wait those 9 months. So, they would buy from the secondary market, often at a premium over retail price by a few thousand dollars, to get their grubby hands on a Model Y.

Many enterprising people realizing that once they received theirs, they could order a second one, drive their newly delivered Model Y for 8 or 9 months, put 10K miles on it, and then when their new order was ready, they could “flip” their current Model Y to an eager buyer for $3,000 - $5,000 over new price, pocketing the difference, and placing yet another order.

And this worked over and over again… until it didn’t.

The end of this scheme came just about at the end of 2022. The Fed’s raising of the interest rates coupled with a ton of other very good quality EV’s hit the market, wiping the sheen of the Model Y, and demand softened. Suddenly, if you wanted a Tesla, you could drive one off the lot the same day. This year alone, there have been multiple cost cuts, first as an effort to qualify for the federal subsidies, and then to help move inventory.

In fact, last week I drove by the local Tesla dealer and the lot was OVERFLOWING with Model 3’s, and plenty of Y’s as well.

The arbitrage game is over. Hell, if you want the Ford Mustang Mach-e you can get one today.

Coda

My neighbor is one of those who played this game. He was super proud explaining to me how he made an extra $10K last year doing this flip three times.

I am sure he will be OK, but he had two of them in his driveway for a while.

Also, the huge inflationary spike we have lived through, used cars were a major driver, and of those, Tesla used prices were truly off the fucking chart. Now, used Tesla’s are leading the lowering of used car prices, the secondary market crashing.

It is a good thing!

I will have much more to write about EV’s in the future, but for now, I will stop here.

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