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Prepay Model 3

RussellJ

Member
Sep 18, 2014
12
1
Australia
Would it be a great idea if Tesla allowed you to begin prepaying your Model 3 costs now?

May help some afford the upgrades/options/extras, reduce loan costs and could possibly be a source of cash that Tesla is looking for?
 
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dsvick

Closed
Jun 10, 2016
2,198
2,281
NE Ohio
Would it be a great idea if Tesla allowed you to begin prepaying your Model 3 costs now?

May help some afford the upgrades/options/extras, reduce loan costs and could possibly be a source of cash that Tesla is looking for?
What makes you think Tesla needs cash?
A better way for anyone to save would be to just open a savings or money market account, put their money there and earn some interest on it. Granted it won't be much but it would be better than the zero interest you'd get from Tesla.
 

wilhelmspencer

Model 3 Reserved 3/31/16 In Store 10:20 PST
Jan 30, 2015
95
134
Lynnwood, WA
You are better off putting it in a money market savings account or something. You might as well make some interest (even if just a little bit). Just use it all as a bigger down payment when the time comes.
 

jgillispie

Member
Sep 12, 2016
377
189
Illinois
Certainly those are better financially but there are many people out there that aren't as responsible with money or just don't trust themselves.

It would benefit Tesla a tremendous amount to start taking cash now(cash now is worth more than cash later) but I'm guessing there's legal reasons behind not allowing larger deposits? Someone else would know more, like Google, but I'm too lazy to look.
 

BluestarE3

Active Member
Apr 2, 2016
4,088
5,213
Norcal
May help some afford the upgrades/options/extras, reduce loan costs and could possibly be a source of cash that Tesla is looking for?
Not sure I understand how prepaying makes the car more affordable... unless you're suggesting Tesla should offer a discounted price for those prepaying?
 

cpa

Active Member
May 17, 2014
3,246
4,409
Central Valley
Tesla would have to track your periodic payments. Right now all you have is a reservation number. Your $1,000 deposit is associated with that reservation number, period. The reservation system is set up, and Tesla's accounting system is set up to be able to refund your deposit upon demand. Your deposit is reflected as a current liability on Tesla's books as I type.

Tesla's system is set up to convert your reservation number to a VIN shortly after you configure your car and pull the trigger. Your deposit becomes non-refundable at that moment, but is used to reduce the final purchase price of the vehicle. I am making an assumption here, but I would presume that Tesla's general ledger system with its subsidiary sales ledgers are equipped to recognize a potential sale upon the execution of an order. Certainly payments that are associated with a firm order can be accepted any time in any amount before delivery. Those payments will also appear as a current liability (likely deferred revenue or some such description) until the car is picked up by the purchaser.

I am going to make a further assumption that refunds of deposits for the Model III can easily be processed through Tesla's accounts payable system upon proper authorizations and approvals. It is easy to review refunds before the checks are issued as they will always be $1,000 a pop.

If Tesla were to sell their cars on "layaway", a whole new layer of accounting ledgers and controls and systems would have to be designed to be able for Tesla to accept periodic payments that would amount to a fraction of the final value of the car.

In short, this creates another accounting headache for Tesla that likely would cost them more to develop and administer than they would receive any sort of benefit from.

Just my opinion from my forty years wearing a green eyeshade and sleeve garters.
 

Jayc

Member
Mar 28, 2016
599
554
UK
Can you imagine how many of those who put down the deposit felt for whatever reason, that they really had to ask for a refund. Now imagine if Tesla allowed us to pay more upfront, how many more would have felt they really needed their money back. And Tesla has to allocate resources to deal with refunds and even deal with the consequences and bad PR when some people complain that their refund process has taken longer than amazon or ebay's.
 

RussellJ

Member
Sep 18, 2014
12
1
Australia
Thanks for the replies fellas.

I suppose I am thinking more along the lines of this as a method of building up your deposit and the benefit is Tesla getting cash right away.

I suppose the scenario of say in 18 months time or whatever depending on my "prepayment" plan having paid a 20 percent deposit sitting only to realise now that "hey I can add on an AP package or whatever". I just thought this could help Tesla as well...since we all want them to continue to succeed. :)

I appreciate the Admin concerns mentioned as well as the other methods of saving your deposit.

I see Elon hinted at a new round of funding as a precaution anyway.

#GoTesla
 

dsvick

Closed
Jun 10, 2016
2,198
2,281
NE Ohio
Thanks for the replies fellas.

I suppose I am thinking more along the lines of this as a method of building up your deposit and the benefit is Tesla getting cash right away.

I just thought this could help Tesla as well...since we all want them to continue to succeed. :)
It wouldn't really help Tesla anyway. Since the deposits are refundable they are a liability on the balance sheet. While there is no reason Tesla can't use them, they have to be able to, potentially, give them all back on short notice.

Buy stock if you want to help Tesla.
Buying stock only helps the company if you buy it during the IPO, after that you're usually buying it from someone else.
 

jbcarioca

Well-Known Member
Supporting Member
Feb 3, 2015
5,745
32,050
Would it be a great idea if Tesla allowed you to begin prepaying your Model 3 costs now?

May help some afford the upgrades/options/extras, reduce loan costs and could possibly be a source of cash that Tesla is looking for?
Most people might diss this, but such plans have been around for a long time, especially with direct-ordered large purchases, like airplanes and industrial equipment. Progress payments are not really rare. I recall their use only for seriously custom-builts cars though. Tesla certainly could generate earlier cash from some of us by allowing us to pre-configure our cars as an inducement. Such an approach might help with production planning too.

It's probably a bit premature, but I still think the idea is interesting.
 
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