Lease prices way too high?

[Robert A]

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!

You can mitigate the impact of high money factors with a bigger cap reduction. However, an RV of 62.5% with no BO option is quite low for a car that only sells for MSRP. If the car ends up being worth 70%, you've just left $$$ on the table.

 

[Mattopotamus]

It's a pretty hard sell to lease a Tesla. The biggest benefit to a lease with other manufactures is that you can get so much bang for your buck. You can easily negotiate the price to your wants, and you can get things like tire protection/etc. added in.

 

[Forensic]

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!

I think bringing the lease rate to 2.99% and adding in the option to buy at the end of the lease would make it a much more compelling offer. It still wouldn't be a "good deal" because you'd be leasing based off MSRP with no incentives, but at-least it would make more sense then what they're offering now.

Also when the first batch of leased vehicles start being returned to Tesla and their robo-fleet isn't ready, I think they may start giving people the option to buy at the end of the lease. At that point they'll have a lot of Model 3s being returned.

It's a pretty hard sell to lease a Tesla. The biggest benefit to a lease with other manufactures is that you can get so much bang for your buck. You can easily negotiate the price to your wants, and you can get things like tire protection/etc. added in.

For sure. Plus if after your 36 months are up you can decide if you want a new/different car and it's no-hassle to just lease another vehicle, or if you're still happy with your car you can buy it and keep it, something not available on the Model 3. Tesla needs to get with it with their leasing.

 

[SlimJim]

When my Tesla lease is up i am getting a faster model 3. I am not interested in being stuck with the same car for another 3 years.
Lease return is still better than taking Tesla’s lowball trade in offer when getting a new Tesla.

 

[jjrandorin]

I think bringing the lease rate to 2.99% and adding in the option to buy at the end of the lease would make it a much more compelling offer. It still wouldn't be a "good deal" because you'd be leasing based off MSRP with no incentives, but at-least it would make more sense then what they're offering now.

Also when the first batch of leased vehicles start being returned to Tesla and their robo-fleet isn't ready, I think they may start giving people the option to buy at the end of the lease. At that point they'll have a lot of Model 3s being returned.



For sure. Plus if after your 36 months are up you can decide if you want a new/different car and it's no-hassle to just lease another vehicle, or if you're still happy with your car you can buy it and keep it, something not available on the Model 3. Tesla needs to get with it with their leasing.

As I said earlier, they dont WANT you to lease a model 3. They started offering leasing once they caught up with production, but they dont really want you to do so (if they did, they would make it more financially lucrative). They want you to buy it. They have the option for those that WONT buy it, but they are not incentivizing them in any way to do so.

You may not like it, but thats what they are doing, and will likely continue to do so until they decide customers leasing their cars is better for them than their customers buying their cars (like BMW did for years).

 

[SlimJim]

Lease with minimum up front payment and buy stocks. I bet TESLA, AAPL and AMZN are going to $2 trillion within a few years. Thats still 8x growth for TSLA.

 

[Forensic]

As I said earlier, they dont WANT you to lease a model 3. They started offering leasing once they caught up with production, but they dont really want you to do so (if they did, they would make it more financially lucrative). They want you to buy it. They have the option for those that WONT buy it, but they are not incentivizing them in any way to do so.

You may not like it, but thats what they are doing, and will likely continue to do so until they decide customers leasing their cars is better for them than their customers buying their cars (like BMW did for years).

I would think this has to change at some point though. I guess right now they still have high demand and a lot of orders, so maybe it doesn't make sense at this moment, but I don't think that can go forever. According to Edmunds, 58% of BMW sales were leases, 52% Audi, 50% Mercedes, 63% Infiniti, 55% Lexus. It seems like they'd be leaving a lot on the table to not cater to lease customers.

 

[CapeOne]

An advantage of leasing a Tesla, or basically any car, is that it can provide protection against significant unexpected drops in value down the road. If a car is expected to be worth $55k in three years but the market changes for whatever reasons and it's only worth $40k, with a lease you can simply walk away but if you bought it, you take the full (additional) resale value hit.

On the flip side, if the market is more favorable than expected for a particular car then you can buy the car at lease end (when given that option which is typical for most leases, although not the M3) and potentially sell for a "profit." However, I think it's pretty rare for a lease buyout number (including any additional taxes) to be higher than market wholesale value at the time.

 

[jjrandorin]

I would think this has to change at some point though. I guess right now they still have high demand and a lot of orders, so maybe it doesn't make sense at this moment, but I don't think that can go forever. According to Edmunds, 58% of BMW sales were leases, 52% Audi, 50% Mercedes, 63% Infiniti, 55% Lexus. It seems like they'd be leaving a lot on the table to not cater to lease customers.

They already have (normally) a 2-4 week delivery time line. They cant make them fast enough. Why should they leave money on the table, especially when they dont price the cars to "sell them twice" because they have to appease some dealer network?

All of those manufacturers with high lease numbers are playing that game. They simply make the MSRP higher on those cars, to then subvent the lease. Although I am well equipped to play that game ( I know how its played), that has nothing to do with tesla. The issue is, Your expecations have been set because you expect to get " a certain payment" for " a certain Sales price".

Maybe you enjoy playing the game, but I dont, even though I know how to.

 

[Robert A]

I also happen to think that BMW's aggressive lease programs (which jjrandorin and I are experts at exploiting) have been largely responsible for poor resale values due to oversupply of used cars. If Tesla has decided not to play that game, more power to them and the owners of their cars. I would just like to see a BO option, however.

 

[DBV1]

I would think this has to change at some point though. I guess right now they still have high demand and a lot of orders, so maybe it doesn't make sense at this moment, but I don't think that can go forever. According to Edmunds, 58% of BMW sales were leases, 52% Audi, 50% Mercedes, 63% Infiniti, 55% Lexus. It seems like they'd be leaving a lot on the table to not cater to lease customers.

It will definitely change. I am a leaser, as I like new cars every 3 years. EV market is going to get super competitive soon and if they don’t have a good lease program, then I will not ever be getting a Tesla. Sure there are lots of others like me too.

 

[DBV1]

I also happen to think that BMW's aggressive lease programs (which jjrandorin and I are experts at exploiting) have been largely responsible for poor resale values due to oversupply of used cars. If Tesla has decided not to play that game, more power to them and the owners of their cars. I would just like to see a BO option, however.

Unless you keep your car for a long, long time, it is very rarely worth owning it. Leasing is so much better, unless you keep your car 8 plus years.... I would never own any car that long, especially an EV, as that technology is changing so fast. Even ICE cars tech is too.

 

[acarney]

Unless you keep your car for a long, long time, it is very rarely worth owning it. Leasing is so much better, unless you keep your car 8 plus years.... I would never own any car that long, especially an EV, as that technology is changing so fast. Even ICE cars tech is too.

Really? I've always seen the tipping point much closer, like four or five years....

 

[jjrandorin]

Really? I've always seen the tipping point much closer, like four or five years....

The math normally works out that its about 6 years on average. Said another way, for the average car deal, when someone completes 2 leases, they could have bought the first car and then not have payments. That only works if you are one to own a car that long. Some people are and some are not.

I normally leased BMWs cause I would always get frustrated that the "new tech" would be in "next years car", and I didnt trust them to own them long term. I took a leap of faith buying the model 3 in 2018 when coming off like my 4th or 5th set of BMW leases for my wife and I. I guessed that, with the way that tesla does the updates, my "FOMO" would not kick in, and I would have a car that was both faster, AND more comfortable when NOT driving it fast than my 435.

I was correct on both accounts, for myself. My car tech has changed quite a bit since I got it, all for free (or "included in the purchase price" if you prefer to think of it that way). I saved $2200 in "commuting costs", I never have to go to a gas station. People who keep talking about "5 minute fill ups" amuse me, since that may be the time AT the pump, but the whole process is like 20 minutes... or said another way, when I needed to go "get gas" to drive to work, I had to leave 20-25 minutes earlier to be on time to work. I had to fill up every 3.5 to 4 days, with a 20 minute process of driving there, waiting in line, then filling up, so 40 minutes a week average that I got BACK in time... and people always talk about how EVs take more time to fill up... for me its MUCH MUCH less.

Im not a travelling salesperson though, so am more than willing to trade a slightly longer road trip time for the 40 minutes a week I dont spend going to a gas station and then continuing to work (or coming home).

Anyway, until they come out with HW4 or HW5 or something, and my car cant do something major the new ones can, I think I will be happy with this car for at least 6-8 years... and I can see keeping it much longer than that as a "retirement around town" car, even if I buy a new one later.

 

[jjrandorin]

It will definitely change. I am a leaser, as I like new cars every 3 years. EV market is going to get super competitive soon and if they don’t have a good lease program, then I will not ever be getting a Tesla. Sure there are lots of others like me too.

I think there is a 50 / 50 chance between "it will change to become like BMW leasing" and "you will never be getting a tesla, if you expect BMW like lease programs".

 

[dmurphy]

It's a pretty hard sell to lease a Tesla. The biggest benefit to a lease with other manufactures is that you can get so much bang for your buck. You can easily negotiate the price to your wants, and you can get things like tire protection/etc. added in.

Totally situation dependent.

Here in NJ, for example, there's no sales tax and a $5,000 rebate for EVs ... EVEN ON LEASES. That changes the entire equation. 3 year lease on a LR AWD is $493/mo with no down payment.

Not so bad. Still glad I bought mine, but that's really not bad.

Even more interesting - an SR+ pencils out to $388/mo, again, with $0 down. Insanely cheap. That's a hell of a lot of car for $388.

My niece just leased a pretty basic Civic for $249/mo with, I think, $1k down. Kinda seems silly in comparison.

 

[hakunamattata]

Totally situation dependent.

Here in NJ, for example, there's no sales tax and a $5,000 rebate for EVs ... EVEN ON LEASES. That changes the entire equation. 3 year lease on a LR AWD is $493/mo with no down payment.

Not so bad. Still glad I bought mine, but that's really not bad.

Even more interesting - an SR+ pencils out to $388/mo, again, with $0 down. Insanely cheap. That's a hell of a lot of car for $388.

My niece just leased a pretty basic Civic for $249/mo with, I think, $1k down. Kinda seems silly in comparison.

Agreed it all depends on the situation, NJ especially made it attractive this year to drive an EV. At some point the rebate will be point of sale which will be treated as Cap Cost Reduction for the lease. Just to add these calculations are based on Tesla's standard money factor of 0.002367 and a Residual Value of around 69% for 10K miles per year. If the lenders provide a better interest rate it will just get even better

 

[OCR1]

A traditional lease is a rental with the option to purchase at the end. Since Tesla does not give you the purchase rights, this is really just a “rental program”. They may have a theoretical residual baked into their payments but since you don’t have the right to buy at that residual value it’s irrelevant.

Historically Tesla vehicles have held their value after three years. It’s hard to imagine the current leasing numbers being a better deal than owning, even factoring in the hassle of reselling the car when you are done with it. The benefit to owning is that you get to decide when you want to buy your next car, rather than being on an exact 36 month schedule.

 

[Forensic]

Totally situation dependent.

Here in NJ, for example, there's no sales tax and a $5,000 rebate for EVs ... EVEN ON LEASES. That changes the entire equation. 3 year lease on a LR AWD is $493/mo with no down payment.

Not so bad. Still glad I bought mine, but that's really not bad.

Even more interesting - an SR+ pencils out to $388/mo, again, with $0 down. Insanely cheap. That's a hell of a lot of car for $388.

My niece just leased a pretty basic Civic for $249/mo with, I think, $1k down. Kinda seems silly in comparison.

Honestly if I could lease the Model 3 LR AWD here for $493/mo with no tax or down payment, I'd place the order right now.

 

[DBV1]

I think there is a 50 / 50 chance between "it will change to become like BMW leasing" and "you will never be getting a tesla, if you expect BMW like lease programs".

I don’t expect BMW type lease programs, but I do expect less than 5.25% money factor. That is highway robbery and you must agree to that.

Tesla will need to expand their customer base and they won’t do it, but just selling cars to people that like to own, especially as the EV market becomes more competitive. BMW itself, will be very competitive soon and if they continue their aggressive lease programs and others too, Tesla will have to react. Competition will be good.