Lease prices way too high?

[KenC]

The lowest MSRP for a 2020 M3 SR+ would be $39,190 as $1,200 destination and doc also needs to be included. Therefore, LEV would be 61% assuming other factors are correct.

To meet the 1% rule (excluding tax) on this car for a 36 month/10k miles per year lease, it looks like someone would have to put down around $3,800. Acquisition fee and first month's payment would also be due at singing for a grand total of around $4,887.
View attachment 560368

Actually, I included the $1200. Didn't show it for brevity.

MSRP $37,990
RV 62.5%
Residual $23,743.75
MF 2.99% or 0.00124583
Term 36months

Depreciation ($37990-$23743.75+$1200)/36 = $429.06
Interest ($37990+$23743.75)x0.00124583 = $76.91

Total $505.97
If you run the numbers using Tesla's lease calculator, you get $506.

In another post, I did earlier in June, I showed the 12k and 15k residuals match what the Tesla calculator shows.

12k Tesla lease calculator shows $526/mo
15k Tesla lease calculator shows $546/mo

Using the same above figs, but adjusting RV to 60.5%, I get $526.13
And, if I adjust the RV to 58.5%, I get $546.29

It's pretty clear that the RVs are 62.5% for 10k, 60.5% for 12k and 58.5% for 15k, when you use a 2.99% finance rate. The numbers wouldn't match perfectly, if that wasn't the case.

 

[SlimJim]

It is funny how negotiation skill level plays almost zero role in buying/leasing Tesla. It only frustrates some more than others.

 

[KenC]

to say my expectations are completely absurd is very unreasonable. If you walked into any luxury car dealer and were looking at a vehicle with a MSRP comparative to the Model 3, and they offered you the same numbers that Tesla offers on the Model 3, any sane person would walk right out the door.

No, it's not. They're offering you 62.5% RV and 2.99% financing. The RV is one of the best in the market, and the finance rate is normal. So, what Tesla is offering is totally normal for a high-demand vehicle that isn't being subvented. Your expectations are for a luxury vehicle that is being subvented. Why would the Model 3 be subvented? So, your expectations are completely absurd.

 

[KenC]

NYers can't get NJ state incentives.

 

[CapeOne]

Sales tax included? is op including sales tax in his figures as well?

Sales tax NOT included and I assume the 1% rule the OP was referring to also excludes taxes.

 

[CapeOne]

Actually, I included the $1200. Didn't show it for brevity.

MSRP $37,990
RV 62.5%
Residual $23,743.75
MF 2.99% or 0.00124583
Term 36months

Depreciation ($37990-$23743.75+$1200)/36 = $429.06
Interest ($37990+$23743.75)x0.00124583 = $76.91

Total $505.97
If you run the numbers using Tesla's lease calculator, you get $506.

Ok, except that destination charge ($1,200 in Tesla's case) is part of the full MSRP and is typically included when calculating residual. It looks like you are taking 62.5% of $37,990 and then adding $1,200 instead of taking a resale percentage of the full MSRP of $39,190.

 

[CapeOne]

It is funny how negotiation skill level plays almost zero role in buying/leasing Tesla. It only frustrates some more than others.

You can buy any car today without having to negotiate on price if you don't want to. Go online or walk into a dealership. find the car you want, get a price and be done. Manufacturers have taken much more control of final transaction prices as markups from invoice to MSRP aren't nearly what they used to be. Trade values are where things can vary a lot more, and this certainly includes Tesla.

 

[OCR1]

You can get some great lease deals on cars that are not selling well. The manufacturer can artificially set a high residual and offer a low money factor to get the pricing down. But you can’t compare these deals to Tesla leases because Tesla is still a high demand vehicle being sold in much smaller quantities compared to the mainstream manufacturers. They have no motivation to take a loss on their lease deals just to move cars because they don’t have that many cars to sell and demand is quite high right now.

So bottom line leasing a Tesla is not going to yield a “great” deal right now.

 

[SlimJim]

You can buy any car today without having to negotiate on price if you don't want to. Go online or walk into a dealership. find the car you want, get a price and be done. Manufacturers have taken much more control of final transaction prices as markups from invoice to MSRP aren't nearly what they used to be. Trade values are where things can vary a lot more, and this certainly includes Tesla.

Invoice and msrp have been available for consumers for decades but negotiating better will result in better deals at car dealerships. Online brokers have made it easier of course but just walking into a dealer and paying msrp is getting ripped off in my opinion. But in teslas case thats what almost everyone has to do.

 

[1windy]

NYers can't get NJ state incentives.

Yeah but we something Most every other state doesn't have...
Dumb and Dumber
Cuomo and DiBlasio or
DiBlasio and Cuomo
your choice.

 

[1windy]

Considering coming back to Tesla. Years ago I got a better deal from Benz by fully paying upfront on a 2 year lease on a '12 S550. A couple of things fell in place, it was the last year of the old design, and by prepaying the lease I saved a substantial amount on the payment. Does Tesla have an option to fully prepay? and if so is there a decent benefit?
Thanks

 

[jjrandorin]

Considering coming back to Tesla. Years ago I got a better deal from Benz by fully paying upfront on a 2 year lease on a '12 S550. A couple of things fell in place, it was the last year of the old design, and by prepaying the lease I saved a substantial amount on the payment. Does Tesla have an option to fully prepay? and if so is there a decent benefit?
Thanks

I dont think so, and even the german brands dont offer that much of an incentive for a 1 pay lease (which is what those are called). Back in the day they used to incentivize that, but there is very little (not "none", but "little" incentive to do that with the german brands now (check it out yourself).

EDIT: This is based on US information, no idea if they offer substantial 1 pay incentives elsewhere in the world, but I doubt it. The incentives were usually around interest rate reductions, and interest rates are already fairly low most places.

 

[KenC]

Ok, except that destination charge ($1,200 in Tesla's case) is part of the full MSRP and is typically included when calculating residual. It looks like you are taking 62.5% of $37,990 and then adding $1,200 instead of taking a resale percentage of the full MSRP of $39,190.

I dunno. I've never seen the RV calculated adding the dest charge into the MSRP. Besides, I'm doing it the way Tesla's calculator is doing it, and isn't that what we're trying to understand? The lease offers Tesla is making.

 

[CapeOne]

I dunno. I've never seen the RV calculated adding the dest charge into the MSRP. Besides, I'm doing it the way Tesla's calculator is doing it, and isn't that what we're trying to understand? The lease offers Tesla is making.

Yes, we are talking about Tesla leases. For better or worse, Tesla does sometimes do things differently and this could be an example as I've never seen a lease that based the residual on anything but full MSRP and full MSRP includes destination charge. The BMW example I posted earlier based on full MSRP including destination…..Mercedes-Benz, Porsche, Honda, Subaru and more base on full MSRP including destination.

 

[hakunamattata]

I have always seen a lease being calculated with Destination fee included in MSRP. I just checked my past few Audi and BMW lease documentation and it has been done that way.

Tesla's website does not include the Destination fee However the Destination fee is shown in the sticker price (Federal mandate) and is also included in the lease contract. Tesla further breaks down the $1200 fee into Destination fee - $1125 and Doc fee - $75

 

[nealh]

Tesla lease rate is 5.25%

 

[Robert A]

Just an observation, being mindful that correlation doesn't mean causation. Teslas, at least Model 3s, seem to have really good resale value in the used market and very poor leasing programs. BMWs used to have good resale values, but that all changed around the time that they incentivized their leasing policies. I suspect that the aggressive leasing programs have been responsible for poor resale values. Teslas may depreciate more slowly because the resale market isn't flooded with lease turn-ins.

FWIW, I would never lease a car without a buyout option. If just makes no sense.

 

[SlimJim]

Just an observation, being mindful that correlation doesn't mean causation. Teslas, at least Model 3s, seem to have really good resale value in the used market and very poor leasing programs. BMWs used to have good resale values, but that all changed around the time that they incentivized their leasing policies. I suspect that the aggressive leasing programs have been responsible for poor resale values. Teslas may depreciate more slowly because the resale market isn't flooded with lease turn-ins.

FWIW, I would never lease a car without a buyout option. If just makes no sense.

I am curious.
So have you leased?
If so, how many?
Out of those, how many times did you buy at the end of lease?
If you didn’t buy, what made you not buy?

 

[Robert A]

I am curious.
So have you leased?
If so, how many?
Out of those, how many times did you buy at the end of lease?
If you didn’t buy, what made you not buy?

I assume you mean BMWs? My last two cars were leased (the 2007 530i and the 2014 535d). I bought both of them out at the end of the lease at significant discounts to residual. I didn't buy when new in either case because BMW incentivizes leases with inflated residuals, which basically constitutes a buyout option at a minimal cost. If Tesla offered buyout options on the Model 3 even with low residuals, I would likely lease so I wouldn't have to worry about resale. I do tend to keep my cars about 7 years.

 

[DBV1]

No, it's not. They're offering you 62.5% RV and 2.99% financing. The RV is one of the best in the market, and the finance rate is normal. So, what Tesla is offering is totally normal for a high-demand vehicle that isn't being subvented. Your expectations are for a luxury vehicle that is being subvented. Why would the Model 3 be subvented? So, your expectations are completely absurd.

Tesla lease rate is around 5.25%. If they were offering 2.99 then it would be a much stronger lease program. Their lease program is a ripoff. No way lease rates should be that high. Highway robbery!