SAN FRANCISCO -- Elon Musk, in his quest to transform Tesla Motors from a scrappy electric-vehicle startup into a mature, profitable automaker, may have an ace up his sleeve: used cars.
Tesla is developing a program to sell the Model S secondhand, Automotive News has learned, in a bid to lower the cost of entry for the $71,070 sedan and unlock the earnings potential of Tesla's factory-owned retail network.
Tesla's vice president of communications, Simon Sproule, confirmed that the company is developing a certified pre-owned program to compete with those offered by luxury brands such as BMW and Mercedes-Benz.
"With the Model S fleet now heading toward the first cars hitting three years old," he wrote in an email, "we are looking at CPO and how best to structure."
Tesla is racing against a clock that started ticking in April 2013, when Musk -- determined to reassure customers about buying an unproven electric car from a brand-new automaker -- personally guaranteed the resale value of the Model S.
Since then, buyers who financed a Model S under certain terms have been given a contract allowing them to return the car after three years and recover 43 to 50 percent of its sticker price. The payouts were designed to be comparable to the trade-in value of a 3-year-old German luxury car.
"Even if Tesla is unable to honor [the buyback guarantee], I will personally do so," the founder and CEO, who is worth an estimated $10 billion, told reporters at the time. "That's what I mean by putting my money where my mouth is."
If owners take up the offer, it would bring Tesla a steady stream of used Model S sedans starting in the spring of 2016, with many more to follow in 2017: Tesla, which has offered business leases since April, quietly started offering 36-month Model S leases to retail customers on Oct. 1, with offers starting at $5,000 down and $932 a month. The offer is available in 37 states.
In an email, Sproule wrote that the new lease offer, combined with traditional loans and the resale value guarantee, "completes a suite of products ... that covers a comprehensive range of financing needs for Model S customers."
Although records of private Model S sales are spotty, early signs indicate that the Model S sedans returning in 2016 will be worth more than what Tesla has promised to pay under the buyback program.
The influx of trade-ins could start even earlier, when the Model X crossover arrives next year, giving early buyers of the Model S a chance to choose something different from the Tesla stable.