DLC for leases

[OCR1]

I think ultimately Tesla will face some legal challenges to these practices. Especially if they are actually removing the options from the cars and then selling them again to the next owner while at the same time not allowing the first owner to either keep the option or transfer it to somebody else.

What would the legal argument be? If you lease your car and then return it to Tesla, it’s their car to do as they wish with it. It’s the same thing with a purchased car that you trade in to them.

They have the option to remove FSD and sell the car for a lower price without it, or keep it and sell it for more. Either way someone is not going to pay the same price for a car without FSD as a car with FSD. So the market will ultimately determine what Tesla can sell the car for. Tesla’s only advantage is that it doesn’t cost them anything to sell FSD, so it’s pure profit to them. But when they buy a car back that has FSD on it they either have to buy it back at a higher price or lose the sale to Carmax or a private transaction.

 

[MrFusion]

What would the legal argument be? If you lease your car and then return it to Tesla, it’s their car to do as they wish with it. It’s the same thing with a purchased car that you trade in to them.

They have the option to remove FSD and sell the car for a lower price without it, or keep it and sell it for more. Either way someone is not going to pay the same price for a car without FSD as a car with FSD. So the market will ultimately determine what Tesla can sell the car for. Tesla’s only advantage is that it doesn’t cost them anything to sell FSD, so it’s pure profit to them. But when they buy a car back that has FSD on it they either have to buy it back at a higher price or lose the sale to Carmax or a private transaction.

Look at it this way. I go and lease a BMW. After I get the car I decide I want different wheels so I buy a set of $3000 wheels from the dealer. When I turn the car back in at the end of the lease I don’t give them those $3000 wheels. Tesla is basically saying “yes, you have to pay us full price for those wheels, and you must give them to us when you turn the lease in”.

If we want to shift this into the software world then they need to treat it like software. I bought a software license for the feature. So I own that license. If I lease a computer and then buy software for it the software remains with me for use on the next computer even when the hardware lease ends.

Tesla seems to want to have it both ways. They want to consider the upgrade as add-on software that has to be paid for at full price, but at the same time want to consider it part of the lease that has to be turned in.

Put another way. Think about if Apple sold you $2000 in software for your iPhone, and then when you upgraded your phone they said “sorry, the software stays with your old phone so you have to buy it all again to use it with your new phone”.

 

[MP3Mike]

But you aren't buying independent software. You are buying software linked to particular hardware. Just like when you buy Windows with a PC you can't move that Windows license to a different PC.

 

[OCR1]

But you aren't buying independent software. You are buying software linked to particular hardware. Just like when you buy Windows with a PC you can't move that Windows license to a different PC.

Yes, that is pretty much the closest analogy to the Tesla world. The boost upgrade is tied directly to the car. If you sell the car down the road to another buyer they get to keep the upgrade.

The original argument here is that the upgrade is not favorable to lease holders because they pay full price but only get to benefit from the upgrade for 3 years. It’s a valid complaint, but it is what it is.

 

[MrFusion]

But you aren't buying independent software. You are buying software linked to particular hardware. Just like when you buy Windows with a PC you can't move that Windows license to a different PC.

Yes, but in that example I would be getting the software rolled into the lease price because it came with the car. The better analogy is you buy a Windows PC with a Windows license (which is the car and the included software), and then later you buy Photoshop for that PC (which is the boost option). When you get a new PC the Windows license goes with your old PC, but your Photoshop license moves to your new PC.

 

[dmurphy]

But you aren't buying independent software. You are buying software linked to particular hardware. Just like when you buy Windows with a PC you can't move that Windows license to a different PC.

Even more appropriate, it’s really an RTU. Right-to-use. Not even really a permanent license or a hardware feature; you purchase the right to use that software on that piece of hardware.

New hardware, same owner, need a new RTU. New owner, same hardware, need a new RTU. Same thing.

 

[MP3Mike]

Yes, but in that example I would be getting the software rolled into the lease price because it came with the car. The better analogy is you buy a Windows PC with a Windows license (which is the car and the included software), and then later you buy Photoshop for that PC (which is the boost option). When you get a new PC the Windows license goes with your old PC, but your Photoshop license moves to your new PC.

Nope I would say it is more like you buy a PC with Windows XP and you pay to upgrade that to Windows 10. The Windows 10 upgrade (which is the boost option) isn't part of the lease purchase, but you still don't get to take that OS upgrade with you to the next PC.

 

[MP3Mike]

I hear this point, but what I am saying is, with the way most leases work, if you add an item onto the monroney sticker (as in the car comes with the option), it can be residualized, thus you will only pay for the portion of the option that you consume during the lease. So, if someone adds FSD at whatever cost it is on a 3 year (36 month) lease, if the RV on the lease is 60%, the cost to the person leasing the car will be 60% of the cost of the option, split amongst their monthly payments.

So you say you would have been willing to pay ~$1,300 for the boost option (60%+interest) as part of a three year lease, which isn't even an option, but you aren't willing to pay the extra ~$700, or ~$19/month, for the pleasure of having the boost option.

It seems to me like the only one missing out here is you.

 

[Knightshade]

Yes, but in that example I would be getting the software rolled into the lease price because it came with the car. The better analogy is you buy a Windows PC with a Windows license (which is the car and the included software), and then later you buy Photoshop for that PC (which is the boost option). When you get a new PC the Windows license goes with your old PC, but your Photoshop license moves to your new PC.

Except Photoshop is a 3rd party software.

In this case it'd be like Microsoft selling you an add-on to that windows license you already agree stays with the hardware

 

[MrFusion]

Except Photoshop is a 3rd party software.

In this case it'd be like Microsoft selling you an add-on to that windows license you already agree stays with the hardware

This is not true. If you had a computer with Windows 8 on it and bought the upgrade to Windows 10 the Windows 10 upgrade is fully transferable to another computer.

Regardless though, my overall point is that Tesla isn’t gaining any new revenue from leasees through the current upgrade program, so I think there’s an untapped market they need to explore.

As somebody who leases my Model 3 I’m totally fine with it as-is and will just get different features at the time I lease the next car. As a Tesla shareholder I feel they are leaving money on the table by not having an appealing upgrade path for leases.

 

[MP3Mike]

Regardless though, my overall point is that Tesla isn’t gaining any new revenue from leasees through the current upgrade program, so I think there’s an untapped market they need to explore.

Not true, I have seen people that have leased say that they have paid for the acceleration upgrade. So they might not be getting as much as they could, but they are getting some. (And those that they are getting are at 100%.)

 

[MrFusion]

Not true, I have seen people that have leased say that they have paid for the acceleration upgrade. So they might not be getting as much as they could, but they are getting some. (And those that they are getting are at 100%.)

Okay sure. But then the argument becomes they shouldn’t expand the program with a more attractive option for the majority of leasees because a very very small percentage of them are willing to pay full price.

The way I have to look at it is for $2000 across the lease I could have leased a full P+ model. So there’s no way I’d pay $2000 now. I’ll just lease a full P+ next time if I want to spend $2000. But if they had an option for me for under $1000 I might consider it.

 

[MP3Mike]

The way I have to look at it is for $2000 across the lease I could have leased a full P+ model. So there’s no way I’d pay $2000 now. I’ll just lease a full P+ next time if I want to spend $2000. But if they had an option for me for under $1000 I might consider it.

How does that math work out? A P+ is $8,000 more than a AWD, so if your 3 year lease assigns a 60% residual, your 40% cut of that would be $3,200 before interest. (And is the residual even 60%, or is it more like 50%, or even less?)

So no, you couldn't have gotten a full P+ for only $2,000 more than your AWD.

 

[pilotSteve]

I wonder if Tesla will come up with a plan so us lessees can take advantage of DLC without getting screwed. For instance, I would consider the FSD and Boost options if Tesla adjusted the price accordingly based on my remaining lease months. This seems like a trivial software feature that would just automatically adjust the price based on when you buy it compared to when your lease ends. Then when the lease is up they could just remove the features from the VIN.

WTF is DLC? Too many TLAs* here. (*three letter acronyms)

 

[Knightshade]

This is not true. If you had a computer with Windows 8 on it and bought the upgrade to Windows 10 the Windows 10 upgrade is fully transferable to another computer.

yes it absolutely is true

If you upgrade an OEM windows install, it is still an OEM license and restricted to only that hardware

How to Transfer your Windows 10 License to a New Computer

If you upgraded from an OEM Windows 7, Windows 8 or 8.1 license, these are licenses that come preinstalled on a new computer from a manufacturer, and then your Windows 10 license maintains the OEM rights – cannot be transferred

Frequently Asked Questions: Windows 10

When I upgrade a preinstalled (OEM) or retail version of Windows 7 or Windows 8/8.1 license to Windows 10, does that license remain OEM or become a retail license?

If you upgrade from a OEM or retail version of Windows 7 or Windows 8/8.1 to the free Windows 10 upgrade this summer, the license is consumed into it. Because the free upgrade is derived from the base qualifying license, Windows 10 will carry that licensing too.

If you upgrade from a retail version, it carries the rights of a retail version.

If you upgrade from a OEM version, it carries the rights of a OEM version.

Regardless though, my overall point is that Tesla isn’t gaining any new revenue from leasees through the current upgrade program.

Sure they are. Folks for whom it's worth the full price to have the unlock for the lease period. Just like folks do with FSD.

 

[jjrandorin]

So you say you would have been willing to pay ~$1,300 for the boost option (60%+interest) as part of a three year lease, which isn't even an option, but you aren't willing to pay the extra ~$700, or ~$19/month, for the pleasure of having the boost option.

It seems to me like the only one missing out here is you.

I am assuming that is directed at @MrFusion , because I dont have a leased model 3. I have a purchased model 3P and as far as I know, there is no boost option for me. My example was about leasing in general. @MrFusion absolutely could have purchased FSD at lease inception. I havent studied tesla leasing closely, but most leases, when you have something on the sticker, the option is residualized.

If you order a BMW with an option from the factory on a lease, the option is resdualized (including things like M performance power and sound kits, which is almost exactly like the "boost upgrade" in that it includes a software flash to the engine for the "power" part of the kit).

If you order the power and sound kit when the vehicle is at the dealership, but before you take delivery, its NOT residualized, and you have to pay for it in full.

So, for BMW, people who are leasing and want the additional power, its best to order the car with it, because if its on the sticker, it can be residualized verses paying for the feature full price (one bmw lease tip). Anyway, Not sure if tesla leasing works that way, but its fairly normal for something that is on the sticker to be residualized... but it has to be ordered with the car and on the sticker. Anything added after, no dice.

@MrFusion could not have gotten this boost option at lease inception because it was not offered, but absolutely could have leased a stealth model 3 performance for that same 2k upgrade price. Its "just a lease" so he only has to ride it out another 2 years and change until he can switch into something else.

 

[Knightshade]

WTF is DLC? Too many TLAs* here. (*three letter acronyms)

DownLoadable Content

Most often uses in video games and apps to add content to existing software

 

[Evergreeen]

Agreed if they made the perf boost three years 1000 I would do it

 

[MrFusion]

How does that math work out? A P+ is $8,000 more than a AWD, so if your 3 year lease assigns a 60% residual, your 40% cut of that would be $3,200 before interest. (And is the residual even 60%, or is it more like 50%, or even less?)

So no, you couldn't have gotten a full P+ for only $2,000 more than your AWD.

I have a two year lease. It was right at about $2000 more across the 2 year term for the P+.

 

[MrFusion]

yes it absolutely is true

If you upgrade an OEM windows install, it is still an OEM license and restricted to only that hardware

How to Transfer your Windows 10 License to a New Computer




Frequently Asked Questions: Windows 10










Sure they are. Folks for whom it's worth the full price to have the unlock for the lease period. Just like folks do with FSD.

Nope. Dig deeper on Microsoft’s site and you’ll see that if you buy a retail upgrade for the OS that upgrade transfers even if you apply it into an OEM original license. The ones that don’t transfer are the free OEM upgrades. In this case the full price retail upgrade is the analogy because I’d be paying full retail price for the boost upgrade. If they sold me the boost upgrade at a discount then I wouldn’t expect it to transfer.