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Model X California Leasing

engle

In 1976 Looking ahead to 2030!
Since I have a very early P83 production reservation, I spent 2.5 hours at the Fremont Factory Store on Saturday morning, 9/19/2015, to learn as much as I could about Model X in order to prepare myself to configure and lease it for my business. This post covers what I learned about Model X business leasing in California. I have considerable experience leasing various Mercedes business vehicles, so I'm very familiar with converting a money factor to an interest rate, and how residual values work, etc. Fortunately, when dealing with Tesla Sales, I won't have to haggle over the gross capitalized cost of my vehicle anymore, which will be a great time-saver. (Instead, I've spent 3 years and 7 months reading this forum :biggrin:.)

Basically, Model X leasing will work "pretty much the same way as it does for Model S today". I spoke with the most senior product specialist available. He called Tesla Finance. They said that leasing will not be available until production. In fact, their own internal software doesn't even show "Model X" yet since the code hasn't been released to them. Someone that has configured and ordered their Signature can confirm whether or not Leasing was an option offered to you?

I was told that the majority of leases are done through US Bank, so they don't have to tie-up TSLA's money. I requested a sample copy of the lease agreement for Model S, which is attached below. They just whited-out the buyer and VIN. I didn't get a copy of the 4 pages of fine print. If anyone would like to read it, I can get that, too.

Like Model S, all leases will be for 36 months, with the customer having to choose between 10K, 12K and 15K miles per year. Any mileage driven above this times 3 years will be charged when the vehicle is returned at the rate of $0.25/mile, the same as Mercedes.

I was told the $7,500 Federal tax credit is claimed by US Bank as the owner, and they appear to be using it to raise the residual value, otherwise it wouldn't be so high. This lowers the depreciation cost and hence the monthly lease payment by approx. $208/mo. The $2,500 California rebate is taken by the lessee.

Since agreed upon value of vehicle as equipped on line 12.A is $130,200; it looks like the sample Model S lease customer purchased a P90DL with 10,000 miles per year on line 9.

If anyone would like more information, please call Tesla Finance directly at 1-650-681-6789. On Monday, I'm going to call them to get the money factor and residual value percentage formula they are using for Model S, confirm they are indeed increasing the residual value by $7,500 on S leases, and ask them to call or email me as soon as they have details on Model X production business leasing so I can submit my application.

Russ

Tesla US Bank CA Sample Lease Agreement.jpg
 
Last edited:

shokunin

P85 & M3
Feb 28, 2012
1,199
630
Irvine, CA
Looks like the $7500 credit raises the residual rather than reducing the capitalized cost reduction. The amount due at signing would be a lot lower if it was somehow included in the cap co
 

ptsagcy

Member
Nov 4, 2013
528
176
NJ
Looks like the $7500 credit raises the residual rather than reducing the capitalized cost reduction. The amount due at signing would be a lot lower if it was somehow included in the cap co

It still works to our benefit. Increasing the residual reduces the monthly payment as Engle stated above. I ran the numbers and he is correct.
 

vjlvjl

Bluebird
Apr 17, 2015
57
73
San Jose, CA
Based upon the numbers in the sample lease agreement posted by the OP, the effective interest rate is 3.84%, with a MF of .0016.

MF = ((Rent Charge/Lease Term)/(Adjusted Cap Cost + Residual))

MF = ((10031/36)/(97650+76506)) = .0016

Effective Interest Rate: .0016*2400 = 3.84%
 

engle

In 1976 Looking ahead to 2030!
I've never leased before. If you go over the miles and choose to buy the car at end of three years, what is the process/price ?

If you :love: your Model X and decide to buy it outright at the end of your lease, and if you went go over the mileage you paid for, you don't have to pay the $0.25/mile fee. Instead, you would pay the residual value plus a purchase option fee of $350. See paragraph #10 in my OP for Model S Sample Lease, above.

Russ

PS. I plan to pay my lease off and keep my X since my Production serial number will be < 100 and perhaps even < 50 since I'll pick it up at the factory. I've leased four ICE Mercedes for business, including 2 diesel "Bluetecs" (I wonder if their diesel emissions will be judged honest or not like VW/Audi/Porsche -- has anyone read about this?). My current one is just a stop gap waiting for Model X. I've returned the first three, and the my last and final ICE will be returned, too. :biggrin: I don't know what Tesla's return policy is, but for Mercedes, they use a "credit card test". This means that if damage can be covered by a credit card, it isn't chargeable to you. They never charged me for wheel rash, either. You're supposed to get front windshield glass replaced if it takes a stone hit, but one time it happened right before my lease expired, so I had to get epoxy injection and was not questioned when I turned it in and the lease return guy inspected it. That ML 350 Bluetec was also past its "B" service, etc., etc., but since I was replacing it with another Benz, the sales department ate the cost. When I return my last Benz ICE in 2016, I plan to explain I'm waiting for a 2017 model so they don't nickel-and-dime my return inspection.

- - - Updated - - -

Based upon the numbers in the sample lease agreement posted by the OP, the effective interest rate is 3.84%, with a MF of .0016.

MF = ((Rent Charge/Lease Term)/(Adjusted Cap Cost + Residual))

MF = ((10031/36)/(97650+76506)) = .0016

Effective Interest Rate: .0016*2400 = 3.84%

If you don't want to pay 3.84% interest, if it works like Mercedes, then you can prepay all or part of your lease. That's what I did. Mercedes calls it a single payment lease. I'm not a CPA, but my understanding is you have to spread out the lump sum payment over the tax years the vehicle is "in service" when you deduct. A CPA can correct me if I'm wrong.
 

Jeva

BKINTME
Sep 1, 2015
145
-1
Cincinnati OH
I'm definitely leasing. Battery technology is rapidly changing and odds are pretty good that in the time of the lease duration, some significant advances could come forth which could significantly devalue the car. If you are an owner, you eat that devaluation. If you lease, the residual value it predetermined so no biggie.
 

bwa

Member
Dec 8, 2014
316
4
Aptos, Ca
[FONT=helvetica, arial, sans-serif]A lot of people say leasing rather than buying is financially dumb, but this sure looks like it makes it an attractive option to those who are less wealthy; half price for the understanding you only get it for 3 years and end up with no equity. It becomes a savings and employment contract question, really. If you have a way to recover at the 3 year mark (another way to get another vehicle, etc.), this seems attractive: if you know you can outright pay out half the vehicle's purchase price plus driver's insurance costs, and you have more sufficient income coming after that, then you already know you have something to drive for 3 years and a way to save for the next vehicle after that. No loans to apply for, no home equity needed to tap or use for collateral.

Obviously, there are a lot of people who don't have $75K sitting in savings plus good upcoming income, and a lot of other people who have way more than $140,000 sitting in savings and really aren't interested in lower savings and/or income positions.
[/FONT]
 

Jeva

BKINTME
Sep 1, 2015
145
-1
Cincinnati OH
No question owning is almost always better financially (except maybe in the case where the depreciation is much greater than the residual value set forth in the lease). However, it makes sense for those who change cars every 2-3 years. It also makes sense for retirees and the older crowd...if they should happen to pass away, the family can return the car and walk away and not be stuck with trying to sell it - or worse yet, fight over which family member inherits it.
 

gjunky

Trifecta: Solar and both cars are EVs
Mar 26, 2012
1,251
407
Scottsdale, AZ
No question owning is almost always better financially (except maybe in the case where the depreciation is much greater than the residual value set forth in the lease). However, it makes sense for those who change cars every 2-3 years. It also makes sense for retirees and the older crowd...if they should happen to pass away, the family can return the car and walk away and not be stuck with trying to sell it - or worse yet, fight over which family member inherits it.

I am sure people who leased their VW Diesel cars are happy right now. No worries about resale value for them.
 

engle

In 1976 Looking ahead to 2030!
No question owning is almost always better financially (except maybe in the case where the depreciation is much greater than the residual value set forth in the lease). However, it makes sense for those who change cars every 2-3 years. It also makes sense for retirees and the older crowd...if they should happen to pass away, the family can return the car and walk away and not be stuck with trying to sell it - or worse yet, fight over which family member inherits it.

Agree owning almost always better financially with the caveat that if you are a business owner, you can deduct most of your lease payments x percentage of documented business use. You escape the low "passenger auto" depreciation limits. I've read that Model X will have a GVWR >= 6000 lbs., which puts it into a more favorable IRS depreciation category. There is a separate thread discussing this.

- - - Updated - - -

I am sure people who leased their VW Diesel cars are happy right now. No worries about resale value for them.

As a TSLA investor, I hope the general public is aware that VW also owns the Audi and Porsche brands so the brand damage will extend to them by association! :scared:
 

AnOutsider

S532 # XS27
Apr 3, 2009
11,957
200
As a TSLA investor, I hope the general public is aware that VW also owns the Audi and Porsche brands so the brand damage will extend to them by association! :scared:

Not to take this TOO far off-course, but I "like" VW on Facebook, and each and every post they make about this issue seems to get overwhelmed with supporting messages from owners. It may be having some effect, but not everyone seems to care.
 

FlatSix911

Porsche 918 Hybrid
Jun 15, 2015
6,652
6,112
Silicon Valley
Thanks for posting the numbers!

Since I have a very early P83 production reservation, I spent 2.5 hours at the Fremont Factory Store on Saturday morning, 9/19/2015, to learn as much as I could about Model X in order to prepare myself to configure and lease it for my business. This post covers what I learned about Model X business leasing in California. I have considerable experience leasing various Mercedes business vehicles, so I'm very familiar with converting a money factor to an interest rate, and how residual values work, etc. Fortunately, when dealing with Tesla Sales, I won't have to haggle over the gross capitalized cost of my vehicle anymore, which will be a great time-saver. (Instead, I've spent 3 years and 7 months reading this forum :biggrin:.)

Basically, Model X leasing will work "pretty much the same way as it does for Model S today". I spoke with the most senior product specialist available. He called Tesla Finance. They said that leasing will not be available until production. In fact, their own internal software doesn't even show "Model X" yet since the code hasn't been released to them. Someone that has configured and ordered their Signature can confirm whether or not Leasing was an option offered to you?

I was told that the majority of leases are done through US Bank, so they don't have to tie-up TSLA's money. I requested a sample copy of the lease agreement for Model S, which is attached below. They just whited-out the buyer and VIN. I didn't get a copy of the 4 pages of fine print. If anyone would like to read it, I can get that, too.

Like Model S, all leases will be for 36 months, with the customer having to choose between 10K, 12K and 15K miles per year. Any mileage driven above this times 3 years will be charged when the vehicle is returned at the rate of $0.25/mile, the same as Mercedes.

I was told the $7,500 Federal tax credit is claimed by US Bank as the owner, and they appear to be using it to raise the residual value, otherwise it wouldn't be so high. This lowers the depreciation cost and hence the monthly lease payment by approx. $208/mo. The $2,500 California rebate is taken by the lessee.

Since agreed upon value of vehicle as equipped on line 12.A is $130,200; it looks like the sample Model S lease customer purchased a P90DL with 10,000 miles per year on line 9.

If anyone would like more information, please call Tesla Finance directly at 1-650-681-6789. On Monday, I'm going to call them to get the money factor and residual value percentage formula they are using for Model S, confirm they are indeed increasing the residual value by $7,500 on S leases, and ask them to call or email me as soon as they have details on Model X production business leasing so I can submit my application.

Russ

View attachment 94836
 

Jeva

BKINTME
Sep 1, 2015
145
-1
Cincinnati OH
Agree owning almost always better financially with the caveat that if you are a business owner, you can deduct most of your lease payments x percentage of documented business use. You escape the low "passenger auto" depreciation limits. I've read that Model X will have a GVWR >= 6000 lbs., which puts it into a more favorable IRS depreciation category. There is a separate thread discussing this.
You can do the same by buying...my wife is currently doing it with a Touareg.
 

Blastphemy

Member
Jan 11, 2012
641
277
Los Angeles, CA
Is the drive off really $38,033??? What happens if he/she totals it next week?

Exactly. No one in his/her right mind who knows how leases work would be so dumb as to put down $32,550 towards the reduced cap cost! People gotta understand that it's not the monthly payment that's most important, but the total cost of ownership and potential liability. While saving interest by putting down a large deposit is nice, one has to also factor in what happens if the car gets totaled - that $32,550 is GONE if the car is condemned. This isn't a purchase where the insurance company would indemnify you for all costs associated with replacing the vehicle. Rather, insurance is only going to pay off the remaining balance of the lease payments plus the residual value, not the entire total original cost of the lease. Anyone who leases should always put down the minimum amount of money required at signing.

For those who already know this, apologies for lecturing. For those who disagree with the above, flame on!
 
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