Model 3 lease details and federal rebate

[davidkillion]

Now that my Model 3 allocation is coming up, I'm curious how the lease works. I searched, but have yet to find details on exactly how the Tesla lease works with respect to the federal rebate. Most importantly, does it reduce the Cap right off the top after residual calculation? How this is done could be a significant difference in the total cost of ownership. I leased an i3 6 months ago over a Bolt because of this particular issue. I'm driving a $47,000 BMW for about $170/mo less than the $40,000 Chevy. Here's why:

BMW (i3 15k mi/yr lease):
MSRP: 47,000 (residual is calculated off of this)
Discount $2,000 - so the Cap is $45,000
Residual: 55% ($25,850)
$7,500 Federal Rebate applied as CAP reduction. New CAP = $37,500
Effective finance amount for 3 years & 45,000 miles (diff between CAP & residual): $11,650
Summary (after all other details): $272/mo

Chevy (Bolt 15k mi/yr lease) all numbers except for the monthly payment are approximate.
MSRP: $40,000 (residual is calculated off of this)
Rebate: $2,500 - so the Cap is $37,500
Residual: 20,625
*** No federal rebate passed on to the buyer ***
Effective finance amount for 3 years & 45,000 miles (diff between CAP & residual): $16,875
Summary: Approximately $450/mo. WTF? Significantly more per month for a less expensive car!

I'm looking for someone who understands how Tesla handles the federal rebate on a lease. My guess is that they work it like the Chevy --- so if you plan to lease the Model 3, you're going to pay more per month than someone who buys the significantly more expensive i3. We can debate another time about which car is better --- right now, I just want to talk about the advertised price of the car relative to the actual lease payment.

Thanks in advance ...

 

[Runt8]

According to the FAQ (Model 3 Reservations FAQ) only cash or loan will be available.

 

[C141medic]

Now that my Model 3 allocation is coming up, I'm curious how the lease works. I searched, but have yet to find details on exactly how the Tesla lease works with respect to the federal rebate. Most importantly, does it reduce the Cap right off the top after residual calculation? How this is done could be a significant difference in the total cost of ownership. I leased an i3 6 months ago over a Bolt because of this particular issue. I'm driving a $47,000 BMW for about $170/mo less than the $40,000 Chevy. Here's why:

BMW (i3 15k mi/yr lease):
MSRP: 47,000 (residual is calculated off of this)
Discount $2,000 - so the Cap is $45,000
Residual: 55% ($25,850)
$7,500 Federal Rebate applied as CAP reduction. New CAP = $37,500
Effective finance amount for 3 years & 45,000 miles (diff between CAP & residual): $11,650
Summary (after all other details): $272/mo

Chevy (Bolt 15k mi/yr lease) all numbers except for the monthly payment are approximate.
MSRP: $40,000 (residual is calculated off of this)
Rebate: $2,500 - so the Cap is $37,500
Residual: 20,625
*** No federal rebate passed on to the buyer ***
Effective finance amount for 3 years & 45,000 miles (diff between CAP & residual): $16,875
Summary: Approximately $450/mo. WTF? Significantly more per month for a less expensive car!

I'm looking for someone who understands how Tesla handles the federal rebate on a lease. My guess is that they work it like the Chevy --- so if you plan to lease the Model 3, you're going to pay more per month than someone who buys the significantly more expensive i3. We can debate another time about which car is better --- right now, I just want to talk about the advertised price of the car relative to the actual lease payment.

Thanks in advance ...

When I leased my 2013 Nissan Leaf (2 year lease) the 7500 federal rebate was automatically applied as a CAP reduction. And since I'm in NJ there were no taxes for EV's.

 

[TJtv]

On Model S/X the residual is calculated by ADDING $7500 to the (MSRP * 0.5). That has approximately the same effect as reducing the CAP by $7500 like BMW does it. So the lessee does get to enjoy the benefit of the federal $7500 credit when leasing a Tesla.

But as Runt8 points out, Tesla has no plans to lease the Model 3 at this time. It's cash/finance only for now.

 

[Zaphod]

On Model S/X the residual is calculated by ADDING $7500 to the (MSRP * 0.5). That has approximately the same effect as reducing the CAP by $7500 like BMW does it. So the lessee does get to enjoy the benefit of the federal $7500 credit when leasing a Tesla.

But as Runt8 points out, Tesla has no plans to lease the Model 3 at this time. It's cash/finance only for now.

I assume by MSRP times 0.5 is what the residual value is at lease end? I've always been told the tax credit get incorporated into the lease residual, so I figure that is what you meant.

Yes, the lessee does get to benefit from it by lower payment because of the higher residual value, most people would like to have the credit applied directly to the cap cost reduction so they don't have to plunk down $7000 or whatever it is right away.

Oh and btw, BMW always heavily subsidizes their leases along with alot of other manufacturers. That is why you see such attractive lease offers. Unfortunately, you are not going to see that with Tesla.

 

[TJtv]

Yes, the residual value on a Tesla lease is MSRP * 0.5 + $7500, assuming 3 years 10kmi/yr. So a $50k car has a residual value of $32500.

Lease payments are broken up into two parts:
1)The depreciation. You pay the full amount of the depreciation. It doesn't matter whether you calculate it as $50k - $32.5k, or $42.5k - $25k.
2)The finance cost. You pay on the average value borrowed. So in the way Tesla calculates it it's ($50k + $32.5k)/2, for BMW its ($42.5k + $25k)/2.

So BMW is slightly more advantageous to the lessee due to the lower finance cost, but it's roughly equivalent as I previously stated. It's MUCH different than chevy.

And I agree that other manufacturers play lots of games to sweeten up lease deals. Telsa has a terrible money factor(equivalent to a 5% APR currently), low residuals, and also fairly high lease acquisition and lease end costs. Leasing a tesla is generally a bad financial move(unless you have some unique business situation that lets you write off some of the lease payment).

 

[davidkillion]

On Model S/X the residual is calculated by ADDING $7500 to the (MSRP * 0.5). That has approximately the same effect as reducing the CAP by $7500 like BMW does it. So the lessee does get to enjoy the benefit of the federal $7500 credit when leasing a Tesla.

But as Runt8 points out, Tesla has no plans to lease the Model 3 at this time. It's cash/finance only for now.

Great answer, thank you very much. Yes, not being able to lease the Model 3 is the case today, I hope it changes.