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Tesla will not allow you to buy the car at end of lease?

Tesla will not allow you to buy the car at end of lease?

Talking to a customer yesterday. He is getting his M3 next week. Leasing it and and said filling out the paper work Tesla demanded he understood that he could not buy out the lease at the end (3 years?). Said had to check a box that stated this specifically before could proceed.

It sounded weird to me but thought "hey, at least there will be a lot of used M3 for sale in three or five years"

He said they said no: "Elon & Co will need tons of robo-taxis in the not to distant future and this is the way they will know they will have a bunch of cars ready for autonomous driving taxis."

This ture?
Makes some sense I guess.

CooHeadly

Earl and Nagin ... | 21. syyskuu 2019

We've heard this as well. Haven't leased a car since my EV1 and we all know how that turned out.

EVRider | 21. syyskuu 2019

Yes, Tesla said all leased Model 3's will have to be returned, no buy outs allowed. That doesn't mean they won't change that requirement at some point.

Uncle Paul | 21. syyskuu 2019

Some leasers try to game the program at the end.

If the residual is higher than market price, they will sell the car, sticking Tesla with the car.
If the residual is lower than the market price, they will keep or resell the car, loosing Tesla the opportunity to buy the car below market.

If the car is trouble free, they may want to keep it, but if it has some expensive service needing to be done, they may want to return it.

This new program insures that Tesla will get all their cars back at the lease end.

Uncle Paul | 21. syyskuu 2019

Some leasers try to game the program at the end.

If the residual is higher than market price, they will sell the car, sticking Tesla with the car.
If the residual is lower than the market price, they will keep or resell the car, loosing Tesla the opportunity to buy the car below market.

If the car is trouble free, they may want to keep it, but if it has some expensive service needing to be done, they may want to return it.

This new program insures that Tesla will get all their cars back at the lease end.

owlegrad2 | 21. syyskuu 2019

I didn't realize you could lease something without the option to buy at the end. Is that different than renting somehow?

MAB1980 | 21. syyskuu 2019

@owlegrad2
“I didn't realize you could lease something without the option to buy at the end. Is that different than renting somehow?”

You pay rent (a transaction) for a lease (an agreement).

jordanrichard | 22. syyskuu 2019

Leasing a car is renting a car. There is no difference. When you rent an apartment you sign a lease agreeing to be there for what ever the duration is put forth. Leasing a car is the same thing. You agree to pay “x” amount for a set duration.

You either out right own something, are making payments towards paying it off to then own it outright (car loan, mortgage) or you are renting.

EVRider | 23. syyskuu 2019

@aaaaannestone: What’s your point?

TabascoGuy | 23. syyskuu 2019

@EVRider, it's a copy/paste bot. Been spamming every thread.

EVRider | 23. syyskuu 2019

Okay, flagged.

nukequazar | 23. syyskuu 2019

@Uncle Paul, it's not really gaming the program, it's just a choice the customer has. Car companies love leases and make tons of money from them, because they basically make three sales at once: the new lease, another lease to the customer when this one ends, and the sale of an excellent condition used car. The buy option at the just gives customers the option to keep the car if they love it, and the residual makes sense. I think relatively few people use it to to turn a quick profit. I've leased, and know many people who have leased, mostly people return the car and get a new one (it's one of the main advantages of a lease; always having a new car with minimal hassle), a few have kept the car because they moved it, and I have not know anyone personally to use it to make a quick profit.

Unusual that Tesla is taking away the option. Their reasons could be many. Maybe not wanting to service the end of warrantees with a new customer, maybe not wanting to lose resale profit on some (as you suggest), or maybe wanting to use them as robo-taxis, as the OP suggests, although I would think used cars with 3-4-year-old technology and batteries would not be the best place to start that service. I would think they would manufacture purpose-built vehicles for that.

robert.s.bjekich | 23. syyskuu 2019

Upon delivery, Tesla will most likely sell the lease to a finance company. The finance company will own the vehicle at the end of the lease. They will sell the vehicle to someone like Carmax who will retail the vehicles. Tesla needs the cash to reinvest in their production facilities. Tesla does not wish to maintain the leases on their balance sheet because it will be a drag on future borrowing capacity and cashflows.

curdcynthia1 | 24. syyskuu 2019

And there would be no option to buy the vehicle after the lease. Contrary to its deal on the Model 3, Tesla allows consumers to buy the Model S luxury sedan or the Model X, the SUV, at the end of the lease, according to its website. https://www.talktowendys.website/

CooHead | 24. syyskuu 2019

OP here.
My reason for the post was--> Wow Elon & Co think they will need thousands of Model 3 cars in 36 months for their fleet of robo taxis?!

But as long as we are talking about leasing: I don't get it. Why lease? So you can have a new car every three years? No thanks, I'd rather have a paid off car in five years. Then drive free. I have only done that (buy a new car) once. F150. What a waste of money. Better for me to buy a used car, say a three year old car came off lease. Pay <50% of the new cost of it and keep it for many years.

But really, are robo taxis really just three years away? I cant imagine. Then again, I couldn't imagine I would be driving an S75D...but I am.

Coo

nukequazar | 24. syyskuu 2019

@CooHead, there are many instances when a lease is the better choice for a person. Some people need a new car for their work, and lease expenses are completely tax deductible, e.g realtors. Also some people want and can afford the luxury of a new car so that they never have to deal with extensive maintenance or repairs, and those cost savings partially make up for the lease. Also with high quality, high end cars that have great resale value, with manufacturer subsidies, leases can be good deals ironically on more expensive cars. An F150 is probably not a great car to lease. When shopping for a car once, the lease on a BMW was cheaper than the lease on a Blazer (much less expensive car) because the BMW had so much better resale value.

PrescottRichard | 24. syyskuu 2019

Someone once said when you lease you’re financing the depreciation of the car. So what Nuke said makes sense.

I’m sure there’s more to it than just THAT though. Leasing always seemed to me to be a long term rental, and if you’re not able to save up money by doing that, then what is the point? With that tax write off and buy out options (were there any) I can see it being attractive I guess.

I suspect Tesla is using returned lease cars for loaners and they need more, but that’s a guess too.

EVRider | 24. syyskuu 2019

I had a similar experience to what @nukequazar reported. Many years ago I was planning to lease a Mustang GT convertible. The monthly payment was ridiculously high, so I ended up leasing a BMW Z4 convertible for hundreds less per month.

Leasing is popular so it obviously works for some people. I’ve leased many cars, including my first Model S, but I own the one I have now.

Techy James | 25. syyskuu 2019

@CooHead during the Autonomy Day Elon made the statement that FSD would be feature set ready by end of 2019. Then it would up to regulators to approve FSD. He went on to say they expect that by 2020 in some areas there will be areas where FSD is approved, and in 2 to 3 years they will be getting the robo-taxi network going. Now since we know Elon is normally very optimistic in his estimates so I say add extra 6 months to a year to above estimates.
So for the robo-taxi network, they will need likely 300K+ cars available for the network to be viable. So we have a few ways to get to that number.
1) Build near that time the required cars for the service. (Manufacturing capacity for Tesla and Batteries won't likely support this quantity of cars.)
2) Build extra cars today and let them sit till time for your service. (Bad strategy as would be extremely difficult to turn profit while making percentage of cars just to sit for 3 years.)
3) Open service to current owners to increase your fleet size. (Good, but unknown how many and how much time these will be available.)
4) Use the lease program to get cars back in inventory in 3 years as lease terms expire.

Option 3 and 4 allows Tesla to still make a profit while having cars available in 3 years for the Robo-taxi.