There's one angle about Tesla (NASDAQ:TSLA) that hasn't yet been explored enough. And that's how it runs its CPO (Certified Previously Owned) sales (and associated trade-ins).
We have some data on this segment because Tesla has split its revenues between automotive revenues and "service and other revenue." Trade-ins and CPO sales are accounted for within this segment and are increasingly a large (now probably largest) component of it. Here's the official description of the segment:
Services and other revenue consists of repair and maintenance services, service plans and merchandise, sales of pre-owned Tesla vehicles, sales of electric vehicle powertrain components and systems to other manufacturers, Tesla Energy products, and net sales of non-Tesla vehicle trade-ins.
Source: Tesla 2015 10-K
Tesla started its CPO program during Q2 2015. The program has been growing since then, accounting for $20 million in Q2 2015 revenues, $33 million in Q3 2015 revenues and an unknown value during Q4 2015.
To dig into this program, we will use Tesla's public disclosures, working back from Q4 2015. As it often turns out for Tesla, sometimes it's more important what Tesla stops saying, than what it says. Here's what Tesla had to say regarding "services and other revenue" during Q3 2015:
Q3 Services and Other revenue was $84 million, up 62% from a year ago. This includes $33 million of pre-owned Model S sales. The number of pre-owned Tesla vehicles that we sold in Q3 exceeded the number of customer trade-ins that we received, leading to a 17% sequential reduction in trade-in unit inventory. Q3 Services and Other gross margin increased sequentially to 9.1%.
Source: Tesla Q3 2015 Shareholder Letter
And here's what it said during Q4 2015:
Q4 Services and other revenue was $97 million, up 47% from a year ago. Higher used Tesla vehicle sales, as well as growing service
