Really exciting @TeslaMotors announcement coming on Thursday. Am going to put my money where my mouth is in v major way.
Read it online: http://twitter.com/elonmusk/status/316260319360061440
Care to speculate?
Get "The Hitchhiker's Guide to the Galaxy" series. Essential reading and education.
I normally don't like science fiction that much, is it still worth reading, keeping that in mind?
Hitchhiker's Guide to the Universe is a classic. And hilarious. Pretend like you're reading Catcher in the Rye.
Please, I hope the car will not start talking be it super happy to help me or depressed because it thinks it is smarter than me.
Yes, the secret of Life, The Universe and Everything is revealed therein.
And who can resist the ebullient charms of Marvin the Robot, with a brain the size of a planet?
@PaceyWhitter: If the second part of the five part trilogy is called: The Restaurant at the End of the Universe
Then we know it has something to do with a restaurant (most likely near every supercharger) which fits nicely with Elon's comment about his mouth. And free juice for your car to travel to the end of the universe ;-)
Looks like leasing is finally here
Seems to be the announcement of the ability to lease the Model S for $500/mo.
Pseudo-leasing, 10% down covered by tax credit (so zero entry cost), residual guaranteed (by Elon) to same value as Merc S class.
US Bank and Wells Fargo have agreed to provide 10% down financing for purchase of a Model S (on approved credit.)
The 10% down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000. New Jersey, Washington and DC also have no sales tax for electric vehicles. These advantages are not available when leasing.
When considering the savings from using electricity instead of gasoline, depreciation benefits and other factors, the true net out of pocket cost to own a mid-range Model S drops to less than $500 per month.
After 36 months, you have the right, but not the obligation to sell your Model S to Tesla for the same residual value percentage as the iconic Mercedes S Class, one of the finest premium sedans in the world, made by Daimler (also a Tesla partner and investor).
Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing.
Good news for TM, not so interesting for us owners.
@trydesky - good for us owners in that it makes a Model S much more attractive, therefore enhances the long term success chances of the company. Removes another barrier to purchase.
Also good for us stock holders.
But you are right in that it doesn't make our cars any better or put an $$ in our pockets.
Yes, overall, letdown. I'm glad I sold my Tesla stock yesterday. Will buy back after it goes down some more...
I actually think this is indeed very good news for all of us. It means that the entry hurdle for owning a Model S has been lowered and that almost everyone can now own a Model S. That means stability for Tesla and the ability to build out the super charger network even more aggressively.
This should give a huge boost to the order book.
What is the question?
Oh... leasing will help with getting more people in one. But I think they are stretching it a bit with figuring in the cost of the time at the gas station. What about the time pulling in and out the plug every day?
Stock down 1% after-hours and the presser just started...
So, the big announcement is that you can lease a Model S 85kwh for $1154/mo?
For all owners this is a gret thing. No guessing on residual value. Do you want to sell in 3 years to upgrade to Model s "Super sport AWD"? Then ask 1,000 below residual. This is a benefit to everyone... unless the car plummets in value and Elon loses his shorts.
To be fair though, I always have found BMW to have the best residual values in their lease agreements (Sometimes mid 60s for a 36 month term). I don't know what the MB is but if it is anything like our other American manufacturers it may be below 50%!
this is a good move - having a leasing program opens the market to new types of buyers - Tesla was going to eventually run out of "enthusiast" willing to "buy" the car - a lot of institutions and buyers just want to lease cars - don't look at this as "just a leasing" announcement…
this is planning for when they run out of reservation holders - they are broadening their market and bringing new people into the tent that previously wouldn't or couldn't "purchase" a car.
This means the nearest SuperCharger is still over 1200 miles from my front door. Not the news I was hoping for today.
Folks... this is good news! Maybe not the home run we were expecting or dreaming about but the company just made a huge step to becoming an on-going car manufacturer. If you purchase carefully, you're going to have a VERY low cost of ownership if you sell the car back at the end of 36 months. The sales tax and registration amortized over the 36 months will add about $250-$325 per month to the COA but even with a RV on the S-Class of around 45%, the 36 months will be like leasing a Hyundai entry model.
Thanks, Elon and Tesla.
this is the one of the few pieces of new that equal Elon putting his money where his mouth is - he's guaranteeing the value of the entire fleet and providing a basis for depreciation - it's a big step…
few if any of the suggestions proxy'd on this thread met the criteria of Elon putting his money where his mount was - sure it would've been investiment capital, but hanging it out on the line to buy back cars at a given depreciation value is a huge risk - Elon is now very very invested in Tesla success cause the down side is very large.
What does this mean for current owners? My supposition is that the resale price of our cars in three years will be close to (slightly below maybe) the "guaranteed" Lease value. Maybe?
Remember today's announcement was #2 out of 5 according to Elon. #1 was no 40watt models I'm assuming. This is a major boost to the viability of Tesla and greatly increased the number of potential end users.
3 more announcements to come? We hope.
@pilotSteve - I think the retail market will be 10-15% above the guaranteed buyback value. TM doesn't want to stockpile cars, they want to sell them and make a profit. The guaranteed buyback value is akin to the "trade-in value" of an ICE. That's significantly below the retail value, because it considers average condition and average mileage.
They will "certify" them, and sell them for a profit. That price will be above the "private party" market because they will be Tesla certified, but the private party market for clean, low-wear vehicles should be above the guaranteed buyback price, IMO.
This is all conjecture on my part, but this is basically how the ICE resale market works.
For this hopeful buyer, it means I can get into a Model S a whole lot faster than outright purchase. I would think/hope the same thing applies to many, many more.
This announcement is actually pretty simple. They are guaranteeing that they will buy back the car at 43% of the value after 3 years. So you know exactly where you will stand in 3 years, unlike before the announcement when depreciation was a complete guess. And depreciation is the biggest cost in owning a car.
If you do the math, it basically means that you will not be underwater at 3 years of your loan - what you owe remaining on the loan very closely matches what they will purchase it back for.
Best of all, it sets a minimum - if the car is worth more, good for you. But it can't be worth less.
Unfortunately this announcement is a major disappointment for anybody who hoped that it will lower the threshold of ownership for MS. It is essentially 66 month loan at minimum available rate of 2.95% APR.
The main advantage of lease - lower payment because it is calculated based on relatively high residual value is not there.
The only good news is that Tesla and EM guarantee residual value after 36 month.
Lets hope that announcement 3 in the five part trilogy actually brings some excitement.
The stock will be most certainly down tomorrow.
Sorry I am a "noob" when it comes to leasing as I always buy. If after the 3 years I decide to keep the car how would that work? How does all the money I payed over the last 3 years factor in? Would that now imply that I own it?
Very strange. It's a $500 / month car but only if I can monetize the time I don't spend stopping at gas stations. Hmmm.
Let me suggest another alternative. PenFed credit union is still giving ridiculous auto loan rates. 1.74%.
My loan was 1.49%
There's something off-putting about a marketing message that you realize just doesn't apply to you (or most people). Gas stations aren't that inconvenient, I can find cheaper money, don't live near a carpool lane, can't claim a business use, and can't easily monetize extra minutes in the day (and I charge clients by the hour).
And TM will pay market; the 43% is a guaranteed minimum.
BTW, Elon said a net worth guesstimate of $11 bn. was too generous, but that the financial papers were in the right ballpark. :)
Darkwax, you own this car only after making all of 66 payments. It is a 66 month financing at 2.95% with an added option of returning the car to Tesla after 36 month.
Yes, DanD, 66 month loan at 1.49% will yield a lower monthly payment...
Glad to I'm not the only one having trouble with this. Very misleading with the get a model s for $500 a month. If you write a check for $500 a month, you will not have a model s...correct?
The $500/mo thing is just stupid.
Are we into voodoo economics again? This is marketing jargon. You will not buy this car for $500 per month out of pocket...I think it is closer to $1200. Money is practically free right now and you can get loans at 1.5% for 72-84 months. This was not big news, especially considering that 43% residual after 3 years is/was Kia or chrysler territory. I thought the tesla roadster was holding at 65% residual and I would hope the Model S would be the same. Hopefully, Elon will talk supercharger infrastructure with is next announcement...this is what matters to potential buyers, not funky lease/buy deals.
Don't underestimate this. There's a lot of fear out there from potential owners that the car will be worthless after a few years. Elon has put a floor under the value. One by one he is going after the 'reasons not to buy'.
Reason 1: I can't go long distances. Answer: Superchargers, free for life.
Reason 2: The car will be worthless in a few years, maybe. Answer: battery warranty, and floor under the value based on TM buy back at S Class value.
Agreed. The floor is important to me because I can stifle my son-in-law, who thinks I'm crazy.
I love the thinking here. The risk to value of current S's here is that Tesla makes it to 5 years to produce 100,000 cars, not that they fold after three years. The play is to buy the car and sell the three year 43% floor for the fat premium offered if you could, not buy the floor for a cost.
Then again I expect they will be here so I can get my X so all of this is a moot point...
The floor is a minimum, and matches the residual on the 66-mo loan. TM will pay market if it's higher.
@Brian - Do you really think TM will pay market if it's higher? I would think TM will pay the floor, and if you can sell it in the market for more, you are free to do so.
I am sure you are right and BrianH wrong.
After all, the incentive for such a deal is to remove some of the uncertainty some buyers feel regarding Tesla value as secondhand car. And why would TEsla go higher then floor? That would mean increase risk without substantial befits. Cars in a shop is always money tied down - no matter how you calculate. And in the end you don't know the bottom line until all cars leave shop. If some or most cars are bought even higher priced then agreement the risks goes up for Elon.
@ nickjhowe - agreed; it's a bit like the iPhone 3G which "sold for $200" instead of $500, with carrier subsidy; if the customer is rational, he understands that over 2 years he pays more than the difference, but the proposition is irresistible nonetheless (it's a bit like failing the marshmallow test http://en.wikipedia.org/wiki/Stanford_marshmallow_experiment)
@ DouglasR, @ torst1 - there was an analyst who asked precisely that during the call yesterday; Brian is right, Tesla will pay more if the market price is higher
Buying and selling used cars is a big profit center for dealers. Since Tesla has no dealers, why wouldn't they get into the used car marked for their own cars - especially when they can clean them up and sell them as "Certified pre-owned" If the wholesale price for a used tesla MS 3 years from now is higher than the floor, then it makes perfect sense for Tesla to buy it for a higher price because the retail price will be even higher so they make the mark-up. Tesla is in the best position for someone to buy a used Tesla from - they can add on extended warrenty and service packages, and other add-ons.
It's just all good business, and Elon is a great business man!
Well then I stand corrected - but I can not see why they would do that.
If market is higher you are free to sell to anyone you like. Problem solved and no need to add more financial risks. If market is lower the buy back stands and Tesla will pay floor.
For me this seems kind of like trade with options and futures and those who trades do not like to add risk without possible financial gain. After all buying used car will tie up money or lower the credit rate. So as I said from where I stand that makes no sense at all. After all Tesla should focus on their long term goal - to be a producer of EV. Dealing with used cars is not where they have expertise and manpower.
I am not saying used Tesla's don't hold value - I am just saying Tesla stick to your guns. This is for me like a contract with stock options - here you don't trade underlying assets in the form of stocks but in the form of a car. You have the right but not the obligation to sell - just as with stock options. So why increase the risk by making more people use this option? The money was already made the second the lease was approved and signed.