Tesla owners are flipping their cars like houses

Dennis Wang lost on his first try, but then he learned from his mistakes.

On his second attempt as an electric car driver, Wang made $4,000. On the third, he hit what he considers the sweet spot, a $7,000 profit. All of the deals involved Teslas that Wang bought and resold, turning them into tickets to a hot concert.

“I have a Model S right now and I will probably sell it within three months, pending release,” said Wang. “I also have another Model Y and another Model X on order.”

Buying and reselling content is just as old as commerce, full of wary stories and questionable legitimacy. House flipping has become so enticing that many reality TV shows advertise the process and the personalities involved.

Now, a new breed of flipfish has emerged that hopes to have zero emissions equal to big profits. Helping them is an unusual combination of factors plaguing electric vehicle manufacturers (supply chain issues, semiconductor shortages, unmet production targets, emerging scarcity of lithium batteries) as well as car buyers (record fuel prices, high prices for used cars, waiting lists for vehicle electricity).

Some like Wang, a 33-year-old car enthusiast with insane spreadsheet skills, have learned they can flip cars, with a recent focus on electric cars. Some EV flippers are looking for buyers willing to pay sometimes exorbitant sums, tens of thousands above retail price, to buy a vehicle.

Consider someone trying to sell an actual new 2022 Hummer EV1 for $220,000 on Facebook. It has retailed for less than half, at $105,000.

On Facebook, there are also two Rivian R1T 2022 adventure electric cars listed for $ 123,000 and $ 220,000. On Rivian’s website, the same car starts at $67,500. Buyers on Cars & Bids, an online auction site, can find them listed for $97,000 and $103,000. Although more outrageous claims to double or triple the value of some electric vehicles are ignored or hit by a serious online flare-up, some of the less-premium listings are succeeding.

For example, Cars & Bids lists 14 recent sales of R1T, from April 12 to June 28, with prices ranging from $106,000 to $138,000.

A Tesla Model S plugged in at the Supercharger station on the vehicle

A Tesla Model S is plugged in at a Supercharger station in Seabrook, NH, in 2018.

(Charles Krupa / Associated Press)

In June, Tesla raised the price of its Model Y by 5%, to $65,990, but that hasn’t stopped the flippers. A Model Y with less than 2,800 miles of mileage recently went up for sale on Edmunds for $70,995. Edmunds considers it a “good price,” $1,739 “below market,” as the market says such a car is worth.

Eddie Gribust, who makes a living sewing Mercedes-Benz Sprinter trucks for off-grid use, recently dismantled the Tesla Model Y he’s been using as a family car for nine months.

Gribust was so excited about the sale – the buyer flew from Las Vegas to Boise, Idaho to make the transaction – so much so that he posted a video on YouTube titled: “Flip my Tesla for a profit. $5,000 profit! This is the way. “

“Since my business is buying and selling these Sprinters, I know things like microchip shortages,” says Gribust. “And people have been talking about how especially the secondary market has grown by 20 to 30 percent.

“I was going to order a [Tesla] Model X and Electronic Truck. Delivery times are nine months to a year, and that would obviously signal high demand and, therefore, low supply. Since then, it has taken advantage of simple economics. “

Former Chief Economist for the Securities and Exchange Commission, Larry Harris taught that exact lesson to students at USC’s Marshall School of Business.

“When supply and demand are not in sync, you get these opportunities where smart people can capitalize on them,” Harris said. “We have seen this in all types of markets. When the price changes dramatically for a scarce good, some buyers realize that the item is of greater value to others than they are worth, and they will sell to those willing. pay more than they want and profit from it”.

Rivian R1T all-electric truck at Times Square in New York in 2021.

An all-electric Rivian R1T truck in New York’s Times Square in 2021.

(Ann-Sophie Fjello-Jensen / Associated Press)

Or, as Gribust put it in his video, after expressing his regret over giving up Tesla, “I have a simple rule: If someone puts a profit in your hand, all you have to do is do. is to close that hand and walk away.”

Recurrent, which tracks the used electric vehicle market and provides vehicle buyers with independent reports on electric vehicle performance and battery life, noted in its most recent market assessment that electric vehicles have used in 2021 “accounts for a surprising 17.5% of inventory.”

The Seattle startup found that used electric vehicles have increased in price by 25% since March 2021. On average, it says, a 2021 Mustang Mach E sells for 60% more compared to last year. Citing what it calls “the new normal, inflated prices are here to stay,” Recurrent said the trend to sell used electric vehicles is heavily deviated from the most recent models available. .

“Anecdotally, we have heard of many owners who have sold nice new cars to dealers and returned more than their purchase price, and the numbers suggest this makes sense.” Recurrent said. “The resale of a nearly unowned vehicle works differently for different cars. In terms of Teslas, last year the price of new cars went up too much, and the wait time for a new car was so long that used car values ​​skyrocketed.”

If you have a relatively new EV, Recurrent’s advice is to get into the game now.

“If you are an EV owner or dealer, now is the right time to list a used EV. As we anticipate that prices won’t change much in the coming months, by holding onto your vehicle you run the risk of higher inventory flooding the market.”

If you’re one of the many people hoping to get an EV, “you might not have to pay if you wait for the price to drop,” says Recurrent.

The restrictions on flipping EVs depend on where you live.

In France, where flippers have been reselling near-new electric vehicles for a profit of $10,000 or more, the government in June changed the energy code to prevent immediate resale for a profit. with electric vehicles purchased using state incentives. EV owners must now keep their vehicle for a year before reselling it.

Germany has kept six months on EV sales but is considering increasing the year-long waiting period from 2023.

In the US, some states limit the number of cars – EVs or not – a person can buy and resell for up to a year before a car dealer license is needed, in California an online course is required , pass a test administered by the DMV, pay a fee, and meet other requirements. States are trying to protect consumers from car thieves and unscrupulous salespeople, and protect auto dealers from competition on the street.

For example, if you’re selling cars for profit in California, you must have a retail auto dealer’s license, the DMV California professional licensing office says, even if you’re using the auction site. car selling price as an intermediary.

In California, obtaining such a license requires a six-hour course, passing a test and paying a fee. Most EV flippers can’t achieve high sales because it takes too long to get the car in the first place. In terms of enforcement, according to the California DMV’s investigative offices, the agency’s primary targets are people who conduct bulk sales without a license or a car lot. However, it pays – no pun intended – to play by the rules; Violating them can result in fines and possible imprisonment, based on the severity of the case.

Wang, a Los Angeles resident, a digital marketing consultant for the auto industry who said he’s getting a license to sell, said he’s heard of some people buying electric vehicles. on the negotiated waiting list to sell them on delivery. Some want to earn even faster, he said.

“I have heard of some people transferring their bookings to your name for one price,” said Wang. “There are ways to do it, but it’s like super hard.”

Might as well aggravate the golden goose here. Wang recently posted a video on his YouTube channel citing examples of people apparently being banned from buying new Teslas because they resell them too soon and too often.

As far as cars are concerned, Wang is the ’em and leave’ type of guy.

Although his recent focus has been on electric cars, Wang has rolled out several dozen cars over the years, buying them at first from Craigslist and making minor upgrades before selling them. Of course, he remembers the first car he flipped over – the car and profit to be exact.

“It was a Lexus ES 300. I bought it for $3,000 and sold it for $4,000,” said Wang.

Wang insists he really didn’t do it for the money; He just wants to drive as many cool cars as he can.

“Life is about experiences, isn’t it? I like the cars. And so it really fulfills my joy of being able to drive a wide range of different vehicles,” said Wang. “I used to work for BMW before, and I had 20 BMWs at different times. So that’s also what I’m doing with Tesla.”

Wang says his best customers are car dealers.

“I sold one to a private buyer, then I realized that dealers would cut you a check, and that was even easier than selling privately,” says Wang.

What would his advice for car flippers be?

“Don’t pay for lots of add-ons if that’s not the car you intend to keep,” he says, “and don’t wait too long to sell it.”

https://www.latimes.com/business/story/2022-06-30/ev-demand-hot-tesla-owners-car-flipping Tesla owners are flipping their cars like houses

Edmund DeMarche

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