Looks like leasing is here!
I there is more, but I see this on the webpage now that it's up.
I "hope" there is more... LIKE AN EDIT FUNCTION HERE!
Looks like leasing indeed:
Well leasing is a great factor for Tesla to win the business market.
As leasing is a key factor for getting a well calculated car fleet that holds costs that are foreseeable and manageable without putting a strain on the firms ability to meet other financial demands. No even companies can easily order a fleet of Tesla Model S's and know the monthly costs already before the lease is signed. Even the resell value is set and I am sure we will see a large increase in demand for the Tesla in the company car market. Congrats to Elon. This is yet another milestone as many skeptics just lost one of their most hard hitting argument - resell value and battery life. When a leasing company dares to set a resell value others can be sure as well.
I don't understand how the link above has people thinking TM or BOA is offering a Lease program. A bank, percentage rate, and term are specified. Can someone explain why they think this translates to Leasing?
I have a delivery date of April 15 - 29 - hope I can make use of this program. Let's see how the numbers work out.
The True Cost of Ownership page doesn't factor in the cost of the mandatory maintenance which I assume is born by the lessee. Did I miss it somewhere?
It's not a lease program. Looks like hybrid loan financing program with some kind of a guaranty option to sell back to TM at a certain price after 3 years. From business deduction standpoint, this does not help. However saying resale is like the MB-S, may push other lenders to offer third party leases
It's not a lease, but with the guaranteed buy-back it functions much like a lease except you get the benefit of the tax credits and EV sales tax benefits that aren't available on a lease.
This is good news for all current owners, especially those who hope to get into a new Model S in three years, as it helps establish the future resale market. Thank you Elon!
If you order wisely, that is, maybe a 60 versus an 85, this is pretty close to a Kia entry level cost of ownership for the 36 months. Ok, maybe add a pano and 21 wheels... now more like the COA of a Hyundai Sonata. Still...
Where's the catch? This looks like a very good program to ensure on-going demand for the vehicle. My fiancee may have just gotten lucky (luckier!). Model S number 2 is now around the corner!
If it isn't a lease, will businesses not be interested in this program then?
It must be a purchase in order to claim the tax credit. You can't claim a tax credit on a lease because you don't own it.
@jackhub - You are correct. I stand corrected :)
It really is a 66 month loan at 2.95% with buyback guarantee at 36 month mark. I'm getting 1.49% for 72 months from Alliant. :/
In many places you can claim the tax credit on the percentage of ownership. This established percentage as a real value to many.
Personally, I'm not sure how this will work out long term for current owners or shareholders.
Will it increase sales?
Will it force depreciation on our cars to 'complete' with trade-ins in three years?
I don't see this as an announcement worth tweeting a week in advance, that's for sure.
Elon, just run the company and get these things done. Stop broadcasting before the SEC comes down on you like a ton of batteries!
@shop - Unfortunately you are correct, as a business owner, I look to lease vehicles in order to expense 100% of all related costs, inclusive of lease payments.
Therefore, not interesting plan for me and many others.
Why would I want another Model S in 3 years?
I like the one I have and it'll be paid off.
That is when I reap the real rewards of ownership.
And I take it there are no third party leasing companies yet for the model S? I'm guessing the sticking point is the $7500 rebate which is a significant part of the price.
I used to lease my vehicles for the tax write-off as well. However, AMT wipes away the deduction. Unfortunately I am W2.
I do like that Elon is personally backing the guarantee. That should help overcome any anxiety that Tesla's guarantee won't be worth anything if they aren't around in 3 years. Although I am confident Tesla is here for good, some are not convinced yet and Elon's guarantee should help to assuage some of those folks.
I also like that the guarantee uses Mercedes S class as a barometer. That should help to create an aftermarket for the car.
I hope the buy-back is offered to existing owners as well.
I am reading this not as a lease, but as a purchase, with the guarantee residual value (similar Mercedes S Class) if you wish to walk away after 3 years. I am not clear on why they webpage says $500 per month statement, as that seems misleading. Am I reading this right?
We guarantee that your vehicle will have a resale value after 3 years of at least 43% of the original purchase price (exclusive of taxes, fees and accessories) of your vehicle. This resale value percentage is based on an average of the last twelve months of residual value percentage for a three year old Mercedes S550 as established by Automotive Leasing Guide.
If you put 10% down and finance 90% at 2.95% over 66 months AND make all your payments, then after 36 months the remaining balance on the loan is 42.7% of the original purchase price. Tesla with their 43% floor guaranteed value is letting you turn in the car and walkaway from the loan.
The payment in the above scenario is about $1500/month/$100,000 of original purchase price. Per the website, the net expense goes down to $500/month due to the $1,000/month imputed value of the Tesla Grin.
This would have been a good, exciting announcement, but it is marred by the creative and overly "salesy" math used to try to convince people of how much this is a "revolutionary new finance product". It sucks because I like to think that Tesla is more about substance. To the casual observer, it makes Tesla seem slimy and dishonest.
IMO, even though the media will notice and make note of it, which will bring some extra negative attention, they should immediately remove the crap calculators they have.
Yea, alot of the calculations depend on individual owners and people should already have done the analysis before purchasing, atleast i did.
I would rather hear an announcement about supercharger network expansion due to increased demand of model S.
I AMA big supporter of Tesla and Elon, but this "big announcement" is a huge disappointment. I understand that this may open up the market to more buyers but really, this is not BIG. Big would have been developing their supercharger infrastructure quicker as this would give more buyers, especially the ones who can afford this car more reason to buy... I hope he has more big news coming otherwise, I think the market will react negatively to this.
Any news about us folk up north? I know there is at least one 3rd party offering leasing in Canada, but I'd rather lease (or whatever this hybrid is) directly through Tesla.
The "marketing" math and "lease" misunderstanding was instantly accepted at CNBC. I was listening this afternoon as the chief bingo caller and Phil Lebeau "explained" the Tesla announcement in real timehttp://video.cnbc.com/gallery/?play=1&video=3000158579
" this is official. tesla is starting a lease to own program. and essentially it works like this. u.s. bank and wells fargo will put down a 10% deposit or fund a 10% deposit on a model s. and then that wouldng the monthly payment to under $500 for those who are part of the program. after three years, tesla says if don't like the vehicle or you want to move out of the vehicle, you can then resale it. and they're guaranteeing that the resale value, maria, will be at least the same as a mercedes model s. so that's the program that tesla is announcing. it will be interesting to see, maria, how much this improves sales or orders for the model s. that's a pretty big deal. most people, that's what they worry about, that the value of their car when they buy it is going to go down. right. and they're making that guarantee. they're saying it will be at least worth the same residual value as an s model from mercedes. but what does that do to margins? can you make that guarantee, really, and also make money? well, you know, you have to look at, i haven't crunched the numbers, maria, but clearly they would not be making this guarantee if they did not believe they were going to be able to hold those margins. the key here, though, for tesla, can they bring that monthly payment down under $500. we've talked for some time, maria. that's the magic line in terms of people who are out there in the market looking for a particular vehicle. if i can get the monthly payment under i'm interested in it. and that's what tesla is trying to do here with the model s"
This is a little sad, right on the homepage it says $500 per month. You are not paying $500 per month for the "financing" you are paying over $1,000 and the "effective pricing" due to not paying gas, tax credit and other discounts based on a luxury car bring the price down to $500. I'd say that's deceptive.
I'm all for leasing but don't paint that you are paying less out of pocket than you really are.
I was annoyed enough when they would list the price after the tax credit.
Still love the car and am waiting for delivery, but let's be honest to potential customers.
Bostoncde--- yes, I agree with you, this was a bogus announcement. I hope supercharger infrastructure will next on Elon's announcement list!
Other factors: $0.25 per mile penalty over 12,000 miles erodes the electricity VS gasoline savings. If you drive 20,000 miles/year (as I do), that's $6,000.
I am on the fence for financial reasons, but this didn't make me jump.
Love the concept. Hate the fuzzy math. My car is amazing!
For myself this is really good news. I thought I would have to wait 3 or 4 years to be able to afford a Tesla ( Gen 111 ) I can now purchase model S in a few months when this offer comes to Canada.
I strongly recommend purchasing Tesla shares.
I bought Tesla shares 1 month ago & at this rate ( I paid an average of$ 35.90 per share ) I should be able to make monthly payments from the profit of the shares. Tesla is paying for my Tesla.
Thanks Elon For building a great EV & introducing this new financing program.
When someone has to tell you that something is exciting...
Quote from electrolight:
So for the next 66 months you are actually depending on the increase of Tesla stock to found your payments? Sounds like a crazy bet. Why not just take a trip to the nearest Casino and keep doubling your bets on the blackjack table until you hit it big - it is about as likely to happen as you making your payments with your new an revised master plan for financing.
What's all the hoopla about?
You can already get 1.49% rate at least at the following 2:
It's just a buy back guarantee when you use their financing partners but it's a great business strategy.
It's a great business stratege because not only it will entice more potential buyers to buy the car but will also get Tesla into the "pre-owned" car business. All major auto companies are into this business so the will make profits more than once for every car they manufacture. Tesla can make even more profit than those conventional auto companies because they don't have to go through the middleman/dealer.
Go out and buy more Tesla shares. These people are very smart.
that's weird math. 20,000 - 12,000 = 8,000. 25¢x8,000 = $2,000, not $6,000.
how many shares did you get for TSLA to cover the approx $1k monthly cost of leasing ?
torst1 is right though, it still is gambling and unlikely !
The buyback guarantee is great and will alleviate many buyers' concern about EV resale value, but did they really need the hucksterish sales pitch of claiming $500/mo payments? I mean, part of the argument for EVs has always been the fuel savings. You can't on the one hand calculate an "effective" monthly payment that factors in gas savings, and at the same time talk about how much money you are saving at the pump. You can only use that number once. And calculating in the "savings" i dollars from pump time to get to that number? Come on Tesla, why open yourselves up to ridicule for such a cheesy pitch.
@Brian H, x3 years
I'm a little comfused. Elon said after three years you can turn it in and receive cash back or equivalent trade in value... Does this means you will get the 43%+ in cash if you decide to turn it in? Sounds like a lease with the benefits of monthly payments contributing to equity over three year period. So essentially if you pay $1000/month for three years, you've put in 36k. If minimum resale value is 43% of 80k -- 34.4k -- you essentially paying 1.6k to drive the car for 3 years.
Clarification welcome. Thanks
Math is a little off. If the car is worth $80,000 day one and $34,400 in 3 years, it lost $45,600 over the 3 years (not including interest), so if you somehow only paid $1,000 per month (doubtful) you would owe $45,600 - $34,400 = $11,200 to get out of the lease (and this does not include interest).
More likely you would be paying around $1,450 per month and be closer to break even at 3 years.
That's funny, because he never said turn it in and pay the difference of the loan, he said turn it in and get 43% cash back. He also said turn it in and get trade in value. He didn't say turn it in get trade in value after the rest of the loan is paid off.
Otherwise, where is the added affordability? I don't see any change in market for the Model S if the above isn't the case. Paying over 1k is not affordable to a wider market no matter how much you save on gas (up to 12k miles).
I don't really like the creative calculations to arrive at $ 500 / month either. Many people will be lured to the site via the low per month cost and then be disappointed that it actually costs more than twice as much.
The cost of a car is more than the monthly payments and it is a real challenge for Tesla to get that message across to the public. This is just one approach to achieve that and if it slightly p**es off/disappoints potential customers, Tesla still got their attention. It won't score any points for elegance, but the most important thing is to deliver the message.
Here's a calculator to try
@jk2014. It is a loan with the buy back provision. So you don't get to pocket the residual. If it is an $80k buy with the guaranty it is worth $34k (43%) down the road, then assuming you pay $1,100/month, you'll owe $35k (assuming $10k down) on the car - so Tesla will pay $34k and you pay $1,000 and you get out of the loan obligation in month 36 if you want. You don't get to drive the car for free by getting all the money back in month 36. So it really just provides a lease-like program to help with affordability and gives people who use the program comfort they won't owe $35,000 Ina worthless car in 3 years.
I'd rather take the 1.49% from Alliant. Either way, I can't wait to take delivery of my beautiful 60kWh MS soon!
The financing plan is brilliant as constructed. But Tesla is making a credibility blunder by marketing it ingenuously. Only a rare subset of business owners will realize a cost of ownership approaching $500 a month. The average buyer will pay much more.
IMHO the marketing approach should be modified ASAP to be more straightforwardly honest before Tesla's credibility and reputation for integrity is lost.