The Model 3 has USB Type-A ports, which are the large ones found on computers and USB sticks. The cable will serve as the adapter to Micro and Type-C.
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All three cable types are already available for purchase from the Tesla store.
RobStark
Well-Known Member
It's been brought up many times, but there has never been a satisfactory answer here. Leasing companies yes, but sometimes Tesla is the leasing company. And in those cases, how can Tesla capture that tax credit? Tesla does not make a profit and therefore it's tax liabilities are 0. As far as I understood, the credit cannot be carried over to the future. So what gives? Are the leases spun off in a seperate vehicle that does make money, like the VIE's from SolarCity? If so, are there outside investors?
Hopefully once Apple invents wireless charging this fall, the Model 3 will get a charging pad behind that phone holder.
Just to set the record straight.
- I am buying silver, so do not personally benefit from Tesla offering white as a cost/contract included low maintenance color.
- I own 753 shares of TSLA with a commitment to hold through April/May of 2018. A stock price move of $5 on this number of shares equates to the $3750 step that occurs in the middle of next year. The stock swings that much in a day. The light battery with leather like seating (million mile interior) is the lowest cost to society configuration (with my use model) and is what I will be purchasing.
- The biggest threat to committed longs is the end of the tax credit. I like the idea of investing in a company because of goal alignment, as do other stock holders and many Tesla employees. Tesla lives off goodwill more than immediate profit. Telsa's policy at the edge of the tax credit will determine whether they want to live, or be a footnote in history.
My thoughts expressed here are with a view toward the long term health of Tesla employee effort.
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RobStark
Well-Known Member
Tesla doesn't depend on goodwill anymore than any other consumer facing company. Toyota and Tide detergent et al depend on goodwill to a certain extent.
Tesla doesn't have any immediate profits, so funding (whether equity or debt) depends on forecasted future profit.
Despite what the nutjobs at seeking alpha say Tesla funding is not a charity crowdsourcing project.
The vast majority of the funding(excluding tiny amounts of idealistic/ideological retail investors) comes from people/ institutions that expect a decent return on their investment.
Reciprocity
Active Member
I get what you are saying and have no clue how Tesla deals with the credits it gets for leases. If it's a separate company, then they would offset the last liabilities on their profits, but as you said sometimes Tesla is the leasing company. It could be in those cases Tesla eats the difference, almost like a manufactures discount. In that scenario, Tesla wouldn't offer the lease directly, it would have to be through a third party which is probably the reason one is not available yet. They probably have to have more information about residual value to get a good deal. I have no idea how initial residual values are determined, but I expect them to be very good for a mostly aluminum car with a million mile drive train and extremely low maintenance cost and upgrades thorough software for this like FSD and Tesla network. But how does a bank value that without resale data? Probably like an insurance company would, because they need to understand residual value or how then vehicles value changes over the life. At least they have the S to use in their models.
RobStark
Well-Known Member
For Model S Tesla gave the Banks a residual value guarantee. They took the Mercedes S class residual value and gave 1% better guarantee.
With standard Full Self Drive hardware, Model 3 should be at least 1% better than BMW 3 Series.
Reciprocity
Active Member
Tax credit loss is over blown. At 30% gm and marginal costs we have heard about from the space X engineer would show that Tesla has pricing flexibility. Tesla will have to accomplish one or more of the following in the next year to offset the list credits, which btw they are not alone in.
1) 21-70 saves roughly $5000 per car in cost. S/X will at some point be converted.
2) interior refresh to a more model 3 like environment with better materials and a HUD to replace the installment cluster. Cost would be net/net but the value proposition would improve.
3) Tesla had already dropped the price of S/X and added more to the base to all but offset the list credits, I don't expect any further drops, just more refinement for the same retail price.
Model 3 doesn't need any help with this, it's already competitive without credits and there is no competition with a similar quality or value. Tesla is only listing tax credits in the US, much of the future expansion will be outside the US with GFs in Europe and China to save terifs and taxes. Many states in the US will step up to fill the void, but Tesla won't need it, other manufacturers will. When a comparably equipped ioniq or bolt is still not then a model 3, I'm not worried as those companies tail off with tax credits on a similar time frame, the difference is that Tesla will pump out nearly 400000 cars in the last 4 quarters as tax credits get cut in half. Others do not have nearly enough demand to take advantage of that. Tesla has time it very well in that the model 3 will be reaching maturity at the time credits run out and the model Y is beginning initial production.
Can you imagine the buzz or good will generated by 500,000 model 3s on the road and a model Y announcement? You think anyone is going to be buying a 160 mile leaf with no tax break, ever? Tesla is not Nissan or hyundai.
Reciprocity
Active Member
But didn't that end at some point recently? The guarantee.. Or is that the standard way to offer leases on the industry?
RobStark
Well-Known Member
Yes, it ended a while ago( for the USA and most markets). Once Model S had established its resale bona fides.Tesla still has residual value guarantee in some newer markets.
Banks assumed Model X would be similar. Similar price, similar target market.
Model 3 is new. But Tesla brand is not. Will be interesting to see.
No, the legacy automakers have long established residual values. They don't do guarantees.
If FF or Lucid makes it to market my guess is they will have to offer guarantees. Although Tesla has established that residual value for premium EVs don't collapse like Nissan LEAF. Well, at least Tesla premium EVs.
ValueAnalyst
Closed
Vehicle sales to customers with a resale value guarantee program ended as of June 30, 3016.
Vehicle sales to leasing partners with a resale value guarantee program is ongoing.
DragonWatch
Small FootPrint
I totally disagree with your tax incentive theory, and not as an up or down vote. We bought our first Prius in 2006, and got some tax incentive which was probably due to the decline in the incentive or our tax bracket, not sure right now and do not care to look it up. We bought the Prius because of the concept of better gas mileage, we always have. A couple of years later we bought a second Prius with absolutely no tax incentive. The first Prius went to our daughter as a wedding gift ~ no tax incentive or resale value. The new car fit our driving habits, best mileage at the time, and trusted product. As far as trusted products, we gave up on VW and Volvo years ago.
On 1 January 2013, at 5 pm my recently turned ninety year old father passed away:-( By spring I sold his 1K shares of Shell and bought Tesla without a tax incentive
for roughly the same price. We also added a master bathroom which until my design became real and finished my wife accused me of putting lipstick on a pig ~ now she loves it and is very grateful that I was pushy We also added solar panels on our garage roof and now benefit from net metering. In fact yesterday I received my PSE notice for my 2016/17 check that will be around $1,112 plus or minus a buck and change. Not too bad for Washington (cloudy side). We did in fact receive a tax incentive in all fairness to this conversation. However, I would install solar cells/roof again regardless of incentive. We are transitioning to a different home location and will install solar panels/roof regardless of incentives within the next couple of years.We were on the waiting list for the M3, but like the lipstick on the pig gig with adding a master suite bathroom, I had to sell the idea of the X with my wife. I conned her into downsizing from two vehicles to one and the timing was important since I could get more on the trade in the sooner we made the move. So, now she had to deal with downsizing and range angzity
We synchronize our calendars now on the iPhone so that is not a problem and I default priority to her. I also conned her into allowing me to shuffle money around to make a sizable down payment. Which by the way I had been saving the previous car payment plus two hundred for almost a year since paying off the Prius.My wife and I are not driven by money, for her that was a fact Jack
When we met, she made more money than me and I was living off the GI Bill plus part-time work. We have been lucky to live off of one income most of our married life, forty something years to date We just lucked out with our home purchases and investments. I had to laugh at some comments about wives shooting the men off at the knee caps. During one of my army commands I was struggling with an equivalent of mutiny. I sat my wife down to tell her about my concern and she responded with she would kill them if they killed me. We laughed about it a couple of weeks ago because there was no backup plan for the kids:-( Oh, and had their been any doubt about her love and devotion at that point, it was all washed awayOkay, I cannot lie and say that the $7,500 tax incentive will not come in handy next tax season, but it will not cause me to blink or prevent our daughter (and son-in-law) from buying a future Tesla ~ period. Look at the fundamentals! No other automaker is even in the same EV ballpark! Where is the all-one car/driving computer? Where is the charging/fueling network ~ not to mention functional and maintained. Is the competition charging infrastructure being built and maintained by Shell or Exxon? No, Exxon is trying to build into our foreign language schooling ~ Russian. Where are the customers lined up around the block(s)? Where is the vision, where is the customer base, where does the rubber meet the road? Did I mention global warming/climate change?
Politically if a party is driven to crashing democracy and Mother Earth, then $7,500 is worthless. I cannot take it with me and my grandchildren will never see it. I do not plan on buying another ICE car ever again ~ amen
Oh wait, it's Saturday morningI am driven ~ in my MX
Johann Koeber
Happy Owner
Tax incentives are good to speed things up - initially. Then, when things have changed, it is time to phase them out. But the good will continue. People will have experienced the blessings of BEV and most will never look back. This is a good thing.
Think of all the people buying Teslas in other countries with no incentives at all.
In Germany only last year did they introduce an incentive to buy a BEV. Initially Tesla was not eligible, but somehow they changed that. So now you can get 4.000 Euro incentive when you buy a Model S. (X ist not eligible)
The take rate of these incentives has been lower than expected. Förderung Elektroautos: welche Kaufprämie für welche E-Autos?
Bottom line:
Tesla does not rely on the incentive for their livelyhood. It would be better for them (and for all of us) if the incentives went away.
While they are here, take advantage of them.
Think of all the people buying Teslas in other countries with no incentives at all.
In Germany only last year did they introduce an incentive to buy a BEV. Initially Tesla was not eligible, but somehow they changed that. So now you can get 4.000 Euro incentive when you buy a Model S. (X ist not eligible)
The take rate of these incentives has been lower than expected. Förderung Elektroautos: welche Kaufprämie für welche E-Autos?
Bottom line:
Tesla does not rely on the incentive for their livelyhood. It would be better for them (and for all of us) if the incentives went away.
While they are here, take advantage of them.
Reciprocity
Active Member
Is that a common practice in the auto industry or unique to Tesla?
Edit: Rob already answered
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ValueAnalyst
Closed
Most auto manufacturers do two types of financial support for leases. The industry term for such support is "subvention":
1. Money Factor- analogous to interest rate reduction on loans but not precisely the same. Money Factor and interest rate subvention both require the manufacturer/offerer to recognize the rate reduction as cost of sale, generally at time of writing the loan/lease. There are subtle differences between captive/non-captive accounting. Tesla has no captive so they simply pay the subvention to the lessor/lender.
2. Residual Value Guarantee- this is recognized as contingent liability since actual liability cannot be determined. FWIW, lease extensions and early terminations are often encouraged because they both often eliminate the Residual Value risk.
Different rules apply for 'operating leases' than for 'finance leases' but that probably becomes a trifle too detailed for this forum
If anybody wants more detail on this stuff I can provide it. Just PM me. My firm designed loans/leases and evaluated residual value risk for cars, trucks and aircraft for decades. It was not our primary business but we did quite a bit of that work, most often for newly introduced brands/models.
Just a couple clarifications.
Few manufacturers offer consumer level residual value guarantees. Several do offer guarantees through their captive finance companies, especially for totally new models or exotic vehicles. These are not publicly disclosed. Tesla innovated by publicly offering a lease-style residual value guarantee for the S, but it required a minimum of a 36 month/60% loan, and the interest rates were slightly higher for such loans but not explicitly stated as such.
Lease residual values are established by lessors. In the US the bulk use an industry guide called the Automotive Lease Guide. Manufacturers do try to influence ALG. Manufacturers set residual values with their capitives but not with private lessors. They do often subvene the Residual Values when they are anxious. Most often subvened in this fashion are new brands/labels and soon-to-be discontinued ones. This has been done extensively by all established manufacturers from time to time.
Tesla actually has had almost no cost from the practice but stopped as soon as it was prudent. Tesla has some people available to them who are familiar with some spectacular loses taken by several major auto manufacturers. They are skilled in learning from the mistakes of others, some of the most famous stories are from former shareholders of Tesla and from companies that have been based quite near the SpaceX HQ.
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