Lease Model S in Texas

[ReturnZero]

Did any of you guys lease your Model S in Texas? How does it work here given they can't sell directly in TX? I've heard stories of FedExing paperwork, having to fly to other states to sign the lease, having to go all the way to HQ in California, etc. Would be good to hear some actual information on how it works these days.

 

[SomeJoe7777]

I leased my 85D here in Houston. Process went like this:

- Ordered online, got VIN.
- When it was getting close to delivery date, the delivery specialist e-mailed me and I corresponded with him on the final due-at-signing amount. You will pay:

--> + $5000 capital cost reduction
--> + $150 Title/Registration
--> + $700 Acquisition fee
--> + First month's lease payment
--> + Sales tax (different payment options available, see below)
--> Minus $2500 you paid when ordering.

- 1-2 weeks before delivery, you'll be FedEx'd an envelope that contains the California temporary registration sticker. Bring it with you to delivery.
- Once you get to delivery, you'll go to the Tesla service center, meet your delivery specialist, and they'll get the final payment from you and deliver the vehicle. You'll put the temporary California registration sticker on the back window.
- Tesla will register the car, pay the sales tax on your behalf, and get the license plates for you. You'll bring the vehicle back to them to have the license plates installed, or you can pick them up yourself. This may take a while, so you might be driving around with the temp Calif. registration for 3-4 weeks. Once the Texas plates are on the car, you can remove and discard the temporary Calif. registration.

Essentially, the car is being sold to the lessor (US Bank) in California. They're then leasing the car to you in Texas. They're paying Texas sales tax to register the car in Texas, so they want to collect that from you.

There is an option on the sales tax. You can pay it all up front, or you they can roll it into the lease payments. Be aware that if you're driving the car partially for business use, this choice can make a difference in what you can deduct on your federal taxes. If you pay all the sales tax up front, you can deduct the entire amount for that tax year, just as if you bought the car. If you have it rolled into the lease payments, then:

a) Any potential deductions get spread out over 3 years instead of all in year 1.
b) If you use the standard/simple business deduction of 56.5 cents per mile, then I don't think the sales tax itself is deductible.
c) If you use the actual operating costs method of deduction, then the entire lease payments, including the sales tax, are deductible by the fraction of business miles driven. Thus, if you drive 50% of your miles for business and 50% for personal, then you can deduct 1/2 of your lease payments as a business expense. But this means that after 3 years, you'll only have been able to deduct 1/2 of the sales tax instead of the full amount.

- Your lease payments will be monthly to US Bank.


You do not have to go to California or pick up the vehicle there, nor do you have to register the car yourself -- Tesla will take care of all of that for you.

The only questions I still have outstanding regarding my lease have to do with accessories. I presented the following questions to Tesla, but I don't have an answer yet:

- I purchased the 2nd charger and had it installed. This was purchased as an accessory. After the lease is over, what happens?
- It's my charger, since I paid for it out of pocket -- it's not being leased with the vehicle. Thus, I should get to keep it when the lease is over.
- What's the charge (if any) to uninstall it?
- Assuming that I lease or purchase another Tesla after this one, and the charger is compatible, can it be installed in the new vehicle? At what charge?
- If the new vehicle cannot use this charger, can I do one of the following:
--> Sell the charger as used equipment? Can the new owner have it installed in his Model S (or X) ? At what charge?
--> Return the leased vehicle with the 2nd charger still installed and receive credit from the leasing company?

If/when I get answers to these questions, I'll post them.

 

[ReturnZero]

This is really great info, thanks for laying everything out.

This is particularly interesting:

- Tesla will register the car, pay the sales tax on your behalf, and get the license plates for you. You'll bring the vehicle back to them to have the license plates installed, or you can pick them up yourself. This may take a while, so you might be driving around with the temp Calif. registration for 3-4 weeks. Once the Texas plates are on the car, you can remove and discard the temporary Calif. registration.

This is different from everything I've heard regarding leasing in Texas. Everything I've been reading has been people complaining about having to go to the MVD and make the full tax payment up front. When did you place your order? When did you pick up the car?

I won't be using the vehicle for business purpose so I don't think I care about the write-off stuff. A little miffed about the TX sales tax issue (paying 100% of it instead of only the depreciation portion) but oh well. It's a small amount when comparing the total cost of the car.

I also haven't heard about the 2nd charger. I was always under the impression this was part of the Supercharger stuff which is now included. Is this different? What does it do?

 

[SomeJoe7777]

You would generally have to go to the DMV and pay sales tax and register the car yourself if you bought it in Texas, but if you lease, Tesla is the one doing business with US Bank (the lessor), so Tesla collects sales tax from you, forwards it to US Bank, and then US Bank pays the state of Texas, because they actually own the car.

I ordered 2/23/15, vehicle was delivered 4/23/15. I had: $5000 CCR + $150 TR + $700 AF + $1300 FMLP + $6450 ST - $2500 DP = $11,100 due at signing. Tesla had the registration and plates ready about a month later, I took the vehicle in to have license plates installed (I had them put the front one on, I didn't want to risk a ticket), had them install the 2nd charger, and a few other items.

The on-board chargers are a somewhat confusing issue because I don't think Telsa explains it very well. Here's the explanation in a nutshell:

To charge the battery, you need DC power. But, the commonly available power at any wall outlet is AC. So somehow, we need to convert AC to DC. The car's on-board charger (or chargers) do this. The car comes with a single charger that can convert up to 40A of AC power to DC. There is an option to add a 2nd charger, which allows it to convert up to double that (80A) of AC power to DC, so the charging times can get cut in half. But, to take advantage of this, the AC power source (the outlet or EV charger) must also be capable of greater than 40A, otherwise the 2nd charger wouldn't be used.

The typical AC power source that can do greater than 40A is the Tesla High Power Wall Connector (HPWC). It can be wired to deliver up to 80A. Some public chargers (with the J1772 connector) can also do more than 40A, but they're not that common.

Now, note that this applies only to AC power sources. If you use a DC power source, like a Tesla SuperCharger or DC Fast Charger (with Chademo adapter), this does not apply. Those types of chargers do the AC to DC conversion before the power gets to the car, so the on-board chargers aren't used or needed.

So, to sum up, when does the 2nd charger result in faster charging?

1. When using an AC power source to charge, AND
2. When that power source itself is capable of >40A

I have an 80A HPWC in my garage, so for fastest charging, I opted for the 2nd on-board charger.


By the way, if you're not driving the car for business purposes, you might really take a strong look at buying the car instead of leasing. Buying the car gets you the $7500 federal tax credit, which you can't get with the lease, and on top of that, Tesla's lease terms are not real good as far as leases go. The capital cost reduction amount is fairly high, and the residual value (amount you'd pay if you want to buy the car at the end of the lease) is probably going to be a bad deal if you want to buy the car at the end of the lease.

I only leased because I can come out ahead with the business tax deductions.

 

[supersnoop]

Also be aware that some cities will collect annual property tax on leased cars. It's "business personal property" and charged to the leasing company since the car is an asset that they own and use to make money. They pass (usually) pass that tax on to you.

Then, there's the sales tax. I'm not sure the above is accurate, or at least not for an individual. You will have to pay sales tax on the full value of the car, but you pay it to the leasing company, who pays it to the state. And, because of that, you don't get to write it off. Luckily, if you buy out the lease at the end of the term, you won't get hit with sales tax a second time.

These two issues make leasing a pretty terrible option in Texas.

 

[TexasEV]

I agree, if it's not for business use I don't see any point to leasing and paying the sales tax on the full value of a very expensive car that you may not be keeping past the lease term. Financing is really cheap now, well under 2%.

 

[Vgsllc1]

Thanks for the info gents. I would consider leasing Model X next time.

As of now, I use Model S for business and looking for an CPA.

 

[ReturnZero]

Thanks everyone, that clears up a bunch of stuff.

I wasn't aware of the $7500 not being available on a lease, other EVs I was looking at (like the i3) gave you a credit for most of the tax credit (around 5k of it) so you still got to take advantage of a majority of it. The poor residual, sales tax situation and no tax credit really do make leasing a bad option for me.

 

[jkfuel]

New to leasing [through my business] so please go easy :]

I thought that if you decide to lease a vehicle, instead of deducting a portion of the purchase price of the vehicle, you can deduct the business portion of the lease payments. Your deductions are only limited by the amount of “personal” miles you drive the vehicle. Whether you lease or buy, your total deductions on the vehicle usually come out to where there’s not a significant advantage of one method over the other. Is this assumption correct?