Elon Musk: No Leasing program from Tesla in the first 12 Months (Q3 Financial Call)

[qwk]

The problem would be that it doesn't appear that right now anyone in the U.S. is stepping up to the plate and offering an option to lease a Model S. At this point I wouldn't anticipate anyone will either. The market will determine what the true depreciation of a Model S will be. The first few used Model S's that hit the market will fetch a premium because you'll essentially be able to jump the line and get instant gratification. After that we will see what the true depreciation is going to be and then once Tesla has sold enough cars to those willing to pay in full we will see leases come into play. Tesla needs to make money and the only way they are going to do that is by selling cars out right not by holding leases and collecting monthly payments holding out to be paid in full at some future date. As a share holder I would be disappointed if Tesla was leasing cars before all of the cash/fully financed cars had been sold and they were caught up with demand. That money/profit is what is going to fund the development of the Model X and future products. It's business boy's sorry for the hurt feelings.

I agree. Tesla is not a charity. While Elon wants every car to be electric, he isn't going to be able to do that if Tesla continues to bleed money like they have been. There is strong demand for the Model S, and until that changes, I don't forsee Tesla offering a lease. If you want to lease, go with a leasing company as suggested before. If the reason of not wanting to go with a leasing company is the extra money they charge, then the only other options are the Leaf or waiting until Tesla has their backlog filled. Early adopters always pay more, that's just the way it is.

 

[EVNow]

Tesla needs to make money and the only way they are going to do that is by selling cars out right not by holding leases and collecting monthly payments holding out to be paid in full at some future date.

They don't have to do that - just work with a bank to lease the car. The car will be owned by the financial institution - just like GM does Volt leases through US Bank.

 

[vfx]

Tesla did not offer a lease option on the Roadster until prodcution far exceeded demand.

 

[KBF]

I realize a lot of people like leasing for various reasons, but one main hindrance for Tesla is that it would force them to predict how this car will depreciate over the lease period, which I don't think they can do at this point.

Here is an easy to understand, basic article about leasing (written for Canadians, but has some good points for others as well); I was considering a lease on a new SUV recently, but after reading this I realized a lease would never be smart in my financial situation.

If one really can't afford a Tesla without a lease, it would be financially smarter to wait a few years and intentionally save up for it; don't worry, electric cars will be everywhere soon enough, and for cheap. It's like all cutting edge tech - let the rich people subsidize the initial products and it won't be long until there will be a cheap Tesla for everyone.

 

[Robert.Boston]

I see leases as having three primary functions in today's car market:

1. Tax treatment: Depending on your tax situation, leases can be expensed, which can be advantageous relative to ownership.
2. Put option: At the end of the (open) lease period, you have the imbedded option of returning the car or keeping it. This option lowers the transaction cost of selling or trading in a used vehicle; it also allows you to dump a lemon back to the car company (or the leasing entity) at an above-true-value price.
3. Manufacturer incentives: Many car manufacturers set up lease terms at below-market rates as an implicit price discount.

Tesla isn't interested in #3, and #2 isn't compelling for Tesla either, in part because there's no really good way to ensure that the driver has taken appropriate care of the battery (although I'm sure many drivers concerned about the longevity of Tesla Motors would like this option). The tax treatment value of a lease, though, is real.

I expect that, as we get closer to Model S shipping out, we'll see some entities offering Model S leases; I'm betting, though, that the terms could be horrendous.

 

[ahimberg]

On Taxes, don't you lose the 7500$ federal tax credit when leasing?

 

[Lloyd]

Yes, because it goes to the purchaser which is the leasing company, but the leasing company can agree to pass it back to you, usually in lower payments or applied to the residual value.

 

[gg_got_a_tesla]

Yes, because it goes to the purchaser which is the leasing company, but the leasing company can agree to pass it back to you, usually in lower payments or applied to the residual value.

Right; I know of Nissan LEAF dealers doing so with leases - they are taking that $7,500 straight off the sticker price before figuring out the lease payment amount.

 

[Jaff]

Leasing benefits TM by getting more units on the Road than sales alone...

BTW, in case you haven't noticed, a big business that operates only to benefit themselves (to the exclusion of their customers / corporate citizenship / etc) ain't exactly in vogue right now...

We already have lemon laws and Tesla will have a warranty. I can see how turning in the car after a lease would benefit you, but how does it help Tesla? Tesla is a business and isn't going to just throw away money. A lease has to provide a benefit to Tesla for them to offer one.

 

[Jaff]

This is flat out wrong!

The problem would be that it doesn't appear that right now anyone in the U.S. is stepping up to the plate and offering an option to lease a Model S. At this point I wouldn't anticipate anyone will either. The market will determine what the true depreciation of a Model S will be. The first few used Model S's that hit the market will fetch a premium because you'll essentially be able to jump the line and get instant gratification. After that we will see what the true depreciation is going to be and then once Tesla has sold enough cars to those willing to pay in full we will see leases come into play. Tesla needs to make money and the only way they are going to do that is by selling cars out right not by holding leases and collecting monthly payments holding out to be paid in full at some future date. As a share holder I would be disappointed if Tesla was leasing cars before all of the cash/fully financed cars had been sold and they were caught up with demand. That money/profit is what is going to fund the development of the Model X and future products. It's business boy's sorry for the hurt feelings.

 

[Tessier]

This is flat out wrong!

Which part is wrong? Does Tesla not ever need to make money:smile:, was that the wrong part, or has someone stepped up to offer private leases, because I was under the impression that no banks, leasing companies, or other organizations had stepped up to the plate to offer a lease on a Model S. Which would lead me to believe that at this point in time it's gonna be Tesla holding the note which would mean accepting monthly payments and holding out to be paid in full at some future date.

 

[Lloyd]

The cost of money today for the leasing company is 6 to 8%! For an outside leasing company to make a profit the effective rate to the consumer (which does not need to be disclosed in a lease) will be in excess of 10%!! Get a car loan make the payment, then you can sell it when you want, and not at the termination of a lease contract for much less bottom line cost than a lease. Your payments may be a little more, but you will be better off at the end of three years with a purchase contract vs a lease. IMHO

 

[Andrew Wolfe]

The cost of money today for the leasing company is 6 to 8%! For an outside leasing company to make a profit the effective rate to the consumer (which does not need to be disclosed in a lease) will be in excess of 10%!! Get a car loan make the payment, then you can sell it when you want, and not at the termination of a lease contract for much less bottom line cost than a lease. Your payments may be a little more, but you will be better off at the end of three years with a purchase contract vs a lease. IMHO

Why would it be so high? B of A or GMAC can get all the short-term money they want for 1-2% - either from the Fed or from savings accounts.

 

[Lloyd]

That is what the banks are charging independent lease companies to keep their credit lines open. GMAC has been funded by the taxpayers with bailout and TARP money to keep GM producing cars. The rates I quoted were from actual lines currently in place from my previous employer with B of A. Short answer is risk vs return!!

 

[Mycroft]

Leasing now going to be available?

Tesla may have found a lease provider. Take a look at the Facts page now:

You would think they'd send an email out when they make changes like this. Not that I care about this, since I have no plans of leasing. But who knows what other changes may happen on any given day?

 

[AnOutsider]

Wasn't that always there? It doesn't say at launch though. I was always under the impression that they intended to lease AT SOME POINT, but not right away

 

[Mycroft]

Possibly it was and I didn't see it. I just noticed it and was surprised because Elon said during the November earnings call that leasing would not be available. It could be that they never got around to modifying the site verbiage to match.

 

[AnOutsider]

I believe the line was no leasing initially or something along those lines. Here's a thread on it:

Elon Musk: No Leasing program from Tesla in the first 12 Months (Q3 Financial Call)

 

[WhiteKnight]

Wasn't that always there? It doesn't say at launch though. I was always under the impression that they intended to lease AT SOME POINT, but not right away

Yes! +1

 

[fairlycool]

YESS!! I hope they have some leasing options in 2012!!