True Story: I Sold my used Tesla Model 3 to CarMax for a Profit !!!
Still hard believe that I actually made a profit for driving a Tesla Model 3 for 14 straight months
When my friends found out that I left Los Angeles and is currently working remotely from Hong Kong, funny that the most asked question is: “What about your Tesla?” Apparently the status of one’s Tesla is the most critical thing in the middle of the pandemic. Now I know what’s the appropriate question to ask next time when I find out that someone just has his colonoscopy done.
Let me just use this article to tell the story so that I don’t have to repeat it every single time, a story that even at this very moment I have a hard time believing. I sold my Tesla Model 3 to CarMax for a profit after driving it for more than a year!
This is a true story, as well as a very long one. That’s because I want to provide you as many details as possible throughout the whole process. But if you are short in time and just want to know how much profit that I made, please just jump straight to the last part of this article. I will not be offended at all.
The Promise
When Elon Musk unveiled the Tesla Model 3 on March 31st, 2016, he promised that the base model would start at US$35k. The audience cheered like he was Jesus reborn. Many people wet their panties that night, while others had doubt whether he was able to deliver it. Well, he didn’t break his promise, but he didn’t make it easy for you to get one neither.
When the base model (which is named the Standard Range model) was finally available for purchase, it was already 2019, three years after we first saw it. To avoid building a different manufacturing line for the Standard Range model, Elon Musk decided to sell the more expensive Standard Plus model as the US$35k base model, but using software to lock certain features, such as 20% of the battery capacity.
In order to strike a balance between his promise and Tesla’s profitability, sneaky Musk removed the Standard Range model from Tesla’s official website, making it an “off-menu” item, an action that totally contradicts Tesla’s business value to make the car purchase process as painless as possible. The only way you can buy the US$35k Standard Range model is to either visit a Tesla store in person, or call them.
The Purchase
It’s not that I didn’t have the extra few grands to upgrade to the Standard Plus model, but I am a stingy cheap-ass who was determined to get the Standard Range model. The small hurdle that cunning Musk put in front of me was not going to stop me from getting one. I would cross the Red Sea if I had to!
The entire purchase process through the phone was much smoother than I thought. It took less than 15 minutes during my after lunch walk. The Tesla online sales agent was very helpful as well. He clarified to me that per Tesla’s standard protocol, my order would be processed as the more expensive Standard Plus model with autopilot, and there would be a two step process to “downgrade” it to the base model, first by removing the autopilot, then the partial premium interior features. It would take approximately one week to complete the process. I gave him my credit card info for the US$2,500 deposit and thanked for his help.
After about 3 weeks, I received a call from Tesla saying that my vehicle was ready for pick up. Since I chose to pay in full, I had to wire the full amount minus the US$2,500 deposit prior to picking it up.
Together with the sales tax, the registration fee, and the ripoff fees, the Tesla model 3 set me back by about US$40K, despite the US$35K sticker price. Let’s use the letter “I” to stand for the “Initial Out of Pocket Cost”.
I = US$40,401.50
The Rebate
Because I bought my Tesla in April 2019 and took delivery in May 2019, my vehicle was qualified for 3 different electric vehicle (EV) rebate programs.
The first one was the Federal EV Tax Credit. The full amount of this program is US$7,000 for anyone who purchasing a qualified electric vehicle, but begins to phase out once a manufacturer has sold 200,000 qualifying vehicles in the U.S. Because Tesla sold its 200,000th EV in July 2018, my Tesla Model 3 only qualified for US$3,750 because of the phase out.
The second one was the Clean Vehicle Rebate Project (CVRP) from California which offers US$2,000 in rebates for the purchase or lease of a new, eligible electric vehicle. Unlike the federal one, there is no cap for manufacturer on vehicles sales number. So I was qualified to get the full amount.
The third one was the Clean Fuel Reward Program (CFRP) from Southern California Edison which offers US$1,000 rebate for the purchase or lease of any new or used electric vehicle. The caveat is that your vehicle’s current registration has to be a SCE residential service address. If your service provider is Department of Water and Power (DWP), then you are out of luck. Fortunately mine is the former.
Let’s use the letter “R” to stand for the “Total Amount of Rebates”.
R = 3,750+2,000+1,000 = US$6,750.00
The Pandemic
COVID hit Los Angeles in late January this year. On March 15th, our office implemented the WFH (Work-From-Home) policy. Between March and June, I drove less than 200 miles per month, yet I still had to pay for the monthly parking in my apartment, the car insurance, and the vehicle registration fee. On average I spent more than $200 per month for a fully paid off but barely driven car. Without a clue when this pandemic would end, I started asking myself: “Does it even make sense financially to own a car now?”
The pandemic has fundamentally changed the way I work as well as the way I live. It decouples myself physically from the office. When the second wave of COVID came, I decided to leave Los Angeles for good. So I submitted a request to my company in June to let me work remotely from my hometown Hong Kong. When my request was finally approved by my direct supervisor and our IT department, I knew that I had to sell my Tesla so that I would have one less thing to worry about.
The Options
I started by calling Tesla sales center in Marina del Rey where I picked up my Tesla Mosel 3 last year. The salesperson told me that the fair market value of my used vehicle was around US$27,300. However, Tesla sales centers only do trade-in. They don’t buy back used cars, even if it is a Tesla. So I had to explore other options.
Another option I had in mine was to put an ad on Craigslist to sell it to a private party. However, since the COVID situation was pretty bad in Los Angeles, meeting strangers in a confined space for a test drive was the last thing that I would want to do.
My last option was CarMax. CarMax is America’s largest used-car retailer and a Fortune 500 company. It is a business exists to make money. No doubt it pays less compared to selling to a private party, but since I sold two used cars to it before, I felt more comfortable going with CarMax because I understand their process.
The Quote
It was a beautiful Sunday afternoon, just like the other 364 afternoons in Los Angeles. I drove to the CarMax store in Redondo Beach. I randomly parked at one of their parking spots and walked inside. I told the guy at the front desk that I was there to get a quote. Within a minute, a CarMax lady came out to greet me, asked me to pull my car to the designated inspection spot in front of the entrance.
I waited next to my car for about 10 minutes and an inspection specialist came. He spent about 10 minutes taking pictures of my car, doing visual inspections, and filling out some forms. After he was done, he told me that the quote should be ready in 15 minutes.
When the CarMax lady came back and presented the quote on a letter size paper, I couldn’t believe my eyes. It must be the side effect of my LASIK surgery from last year, I thought. But it vividly showed US$35,000, the exact same number when I bought it 14 months ago! I really wish someone would have taken a picture of me at that moment so that I can see my twisted facial expressions.
“Everything looks fine except some pet odor in your car. Here is the quote and it is good for 7 days.” She said when she handed me the paper.
I really wanted to sell my car on the spot. But first of all, I didn’t bring my title certificate. Second, my Tesla was packed with my personal items. So I had no choice but to go home and come back again.
“The number seems reasonable. Let me think about that. Thanks.” I said and then drove off, trying my best to conceal my exhilarations.
The Process
The next day, I took a few hours off from work to wash my car from top to bottom to make sure it looked spotless. I removed all my personal items and then vacuumed the interior. I made sure that the EV charger was in the trunk. It looked exactly like when I first picked it up last year in Marina del Rey, minus the new car smell. I double checked that I had the two key cards, the title certificate, the current vehicle registration, and my driver license before I drove to CarMax.
“Hi. I got a quote yesterday, and I am here to sell my car.” I told the same guy at front desk and showed him the quote that I got the day before. He instructed me to go straight to the office at the back after the door on my right.
The CarMax lady at the back office made sure that I brought everything as requested on the quote, and asked me to wait outside next to my car. The process was almost identical to the one from the day before, except this time CarMax sent two inspection specialists instead of one. Obviously neither of them were Tesla experts because they kept asking me how to navigate the central console to access the vehicle data. “Just wait here. Someone will be with you in a moment.” One of them told me after they were finished doing what they were paid to do.
“A moment” turned into almost an hour long wait in the hot CarMax parking lot. Suddenly the California sunshine didn’t look as attractive as it used to be. I was like, “Shit! They must have found out that they made a mistake.” While I was anxious like hell, the CarMax lady showed up from nowhere and scared the fart out of me. “Mr. Cheung, sorry for the wait. Please follow me inside.” She said.
I followed her like a lost puppy into her cubicle on the main floor. She pulled out my title certificate and said, “All you need to do is just sign here to transfer your title to us.” I did what she asked, and then she just vanished into thin air again.
The Check
The CarMax lady reappeared after 5 minutes. That’s the longest 5 minutes in my entire life. When she handed me the check, I wanted to hug her so hard, but intimated by the thought that I might end up in jail before noon, so I resisted the urge.
That’s the check with the most zeros that’s I’ve ever held in my entire life. It clearly showed US$35,000.00 no matter many times I rubbed my eyes.
“Thank you for doing business with CarMax, Mr. Cheung!” She said with a sincere smile. If I recall correctly, there was also a halo on top of her head.
“Absolutely. Appreciate your help.” I replied with the best poker face that I could possibly put on.
As soon as I left CarMax, I ran like Usain Bolt towards the Bank of America branch across the street, at the same time peeked at my back every now and then to check whether there was any CarMax security guy coming after me. Luckily there was none.
Let’s use the letter “S” to stand for the “Sales Price” of my Tesla to CarMax.
S = US$35,000.00
The Profit
Profit is equal to the sum of the generous check from CarMax and the rebate money that I received from the three different entities, minus my initial out of pocket cost for the brand new Tesla. Let’s use the letter “P” to stand for “Profit”. It is pretty easy to remember: Profit is equal to the reverse of IRS (Internal Revenue Service). For those who don’t know what IRS is, it is a bunch of jackass in the United States who spend every single minute of their pathetic lives trying everything humanly possible to screw up your financial life. While IRS shamelessly takes money from my pocket, SRI generously puts money back based on the equation below.
P = S+R-I = 35000+6750-40401.50 = US$1,348.50
The Whys
After scratching my head so hard for a few months, I came up with 3 possible theories:
- CarMax didn’t have any inventory of Tesla Model 3 within 500 miles radius at the time when I sold my car to them. They made a calculated business decision to pay a premium to get my Tesla Model 3 in order to diversify their inventories.
- I sold two used cars to CarMax before, not including this Tesla. Their process is very systematic and standardized. So I don’t believe that it was a human error. In fact, I believe it was a computer glitch. The glitch was a result of CarMax’s system not having enough data of used Tesla Model 3 to generate an accurate quote.
- Tesla forgot to fully lock all the partial premium features it was supposed to lock. For example, although the base model has a 20% software lock on the battery, I was able to bypass it when I was charging at a Tesla Supercharger Station. I am still not sure whether it was a mistake or intentional.
The Reality
The whole experience felt unreal. I traded my Tesla in tangible form with a complete stranger for a piece of paper called “check”. Then I handed this piece of paper to another total stranger in a building called “bank” to turn the paper into some kind of computer data. I literally “digitalized” my Tesla Model 3 based on a human culture called “trust”. Suddenly it reminded me about Leo from one of my favorite movies The Matrix. “Am I in a computer simulation?” I asked myself. “How could it be possible that I drove a brand new Tesla Model 3 for 14 months yet still got paid with US$1,348.50 for doing so?”
4 months have passed and I still haven’t been presented the choice between the red pill and the blue pill. The only thing that comes in red and blue these days is just the iPhone 12, which reinforces my belief that I am actually in reality.
I am not sure whether this was just a single incidence or a systematic error from CarMax. I searched online and I was unable to find anyone has similar experience. That’s why I decided to write an article about it. The reality is, even if it was a mistake, as a reputable company, CarMax still has to honor the quote and own the mistake. There is no recourse for CarMax to ask me for a refund.
If you are thinking about selling your Tesla Model 3 to go “car-less” like me, or considering trading up for a more premium model, I hope this article helps. It doesn’t hurt to get a few more no-obligation quotes if you decided to sell. After all, who doesn’t want to have a few more bucks in the pocket in the middle of the pandemic?
