Something is happening (Tesla website down) - Leasing Option News

[UMD86]

Except Tesla isn't offering a lease either. They are offering "a financing product that combines the surety and comfort of ownership with all the advantages of a traditional lease."

It's basically a loan with a buyback option.

That's very true. I finally read the terms and yes it's not a "Traditional LEASE" but there are least type terms eg. 12K mi per year and required maintenance which sucks. It would be very difficult to only drive 12K a year in that car.

I don't know how business owners will get to expense the payments as a lease very a financing but I'm sure Wells got several opinions from their outside tax people.

 

[orangem]

It would have been so much simpler if Elon simply guarantees every model S buyback value no matter where you get the loan.... Or just only guarantee the 2013 delivered cars....

Sent from my GT-P7500R using Tapatalk HD

 

[brianman]

and this deal is backed by Elon personally, for those who aren't 100% sure about Tesla surviving

Interesting "insurance policy" for Elon as well. A few thousand (?) Tesla owners wanting to make sure he's still alive in 3 years.

 

[Jhall118]

I think the "backed by Elon" is pretty meaningless. Hypothetically, if Tesla went bankrupt and didn't exist anymore, Elon would probably have poured every last penny he had. If Tesla doesn't survive, why would we expect him to make good on his deal, with nothing but his word?

I don't see how it's him putting his money where his mouth is, or anything special. In fact, this news probably qualifies as the "leases available in the summer" announcement, which means there probably won't be any real sort of lease through Tesla. This makes me sad.

 

[gregincal]

I think the "backed by Elon" is pretty meaningless. Hypothetically, if Tesla went bankrupt and didn't exist anymore, Elon would probably have poured every last penny he had. If Tesla doesn't survive, why would we expect him to make good on his deal, with nothing but his word?

I don't see how it's him putting his money where his mouth is, or anything special. In fact, this news probably qualifies as the "leases available in the summer" announcement, which means there probably won't be any real sort of lease through Tesla. This makes me sad.

I assume we have more than his word, but it would be interesting to know what the legal agreement really is. I assume if Tesla declares bankruptcy and Elon then declares personal bankruptcy that you'd still lose out.

 

[Longhorn92]

Also, what if Tesla does fine, but Elon eventually leaves Tesla? I'm not saying that this is likely, but would his "guarantee" still stand?

 

[qwk]

I assume we have more than his word, but it would be interesting to know what the legal agreement really is. I assume if Tesla declares bankruptcy and Elon then declares personal bankruptcy that you'd still lose out.

I don't even think Elon would need to file for personal bankruptcy for you to be SOL, just Tesla. A regular lease has the leasing company as the owner, so if something happens, it's not your worry as you arent the owner of said vehicle. In this case you would be the owner, and on the hook for the rest of the balance owed. The risk is very small, and extremely unlikely though.

 

[Krugerrand]

Also, what if Tesla does fine, but Elon eventually leaves Tesla? I'm not saying that this is likely, but would his "guarantee" still stand?

At some point down the road, there will be no need of a personal guarantee by Mr. Musk. The guarantee was needed now for the financial institutes to do the deal as he wanted it to be done. In 3, 5, 8 years when the car, the company, the batteries etc... all prove to be viable then the personal guarantee won't be needed.

 

[ElSupreme]

Also, what if Tesla does fine, but Elon eventually leaves Tesla? I'm not saying that this is likely, but would his "guarantee" still stand?

Probaby not. I bet Elon has personally backed WF and US Bank loans to where they will be paid back at the end of 36 months. My guess is that Tesla has to take over that promise before Elon can leave.

But his personal guarantee is more a guarantee that Tesla will still be around (or the intrinsic value of the battery and metals will exceed 43% of purchase price) after 36 months. I have a feeling that Elon basically tied a Tesla bankruptcy with a personal bankruptcy. So if Tesla goes belly up, he will too, and will no longer be on the hook buying back Model Ss.

 

[gregincal]

I don't even think Elon would need to file for personal bankruptcy for you to be SOL, just Tesla. A regular lease has the leasing company as the owner, so if something happens, it's not your worry as you arent the owner of said vehicle. In this case you would be the owner, and on the hook for the rest of the balance owed.

Except that the buyback agreement is supposedly personally guaranteed by Elon Musk, so presumably you have legal recourse against him if Tesla declares bankruptcy. Otherwise what the hell is he talking about?

 

[qwk]

Except that the buyback agreement is supposedly personally guaranteed by Elon Musk, so presumably you have legal recourse against him if Tesla declares bankruptcy. Otherwise what the hell is he talking about?

Maybe. An attorney is not cheap, and can be an expensive lesson. Wells Fargo is the shadiest bank on this planet, and BOA isn't far behind IMO. You can bet that they give a rats a$$ about your interests.

Again, very slim chance, but not a sure bet like a real lease where walking away in case of emergency has no strings attached because you don't "own" anything.

 

[ItsNotAboutTheMoney]

That's very true. I finally read the terms and yes it's not a "Traditional LEASE" but there are least type terms eg. 12K mi per year and required maintenance which sucks. It would be very difficult to only drive 12K a year in that car.

I don't know how business owners will get to expense the payments as a lease very a financing but I'm sure Wells got several opinions from their outside tax people.

From brief reading, it may be able to be treated as an operating lease, at least for the period with the buyback clause, because it meets key criteria, including a 10% downpayment, a market-value buyback guarantee and a significant part of the value of the item still owed. After the buyback-clauses expires and the buyer accepts an agreement to gain ownership it may have to be treated differently.

Come on, this is a Tesla site, there must be a tax accountant out there familiar with this.

 

[WarpedOne]

I finally read the terms and yes it's not a "Traditional LEASE" but there are least type terms eg. 12K mi per year and required maintenance which sucks. It would be very difficult to only drive 12K a year in that car.

12k limit guarantees you at least 43% buy-back value ie at least $27k for 60 kWh MS with standard options.
Additional 4k miles driven per year "costs" you a thousand bucks. 20k annual miles are guaranteed at $25k BBG. Cars with 120k miles driven after 3 years with almost EOL-ed battery are still at $20k BBG. I find this terms actually pretty good or at least reasonable.

Put yourself in a secondhand buyer's shoes. Would you rather buy a 3yo 60kWh Model S with 120k miles on the counter for 20k USD or a 3yo same model with only 40k miles for 26k USD?

 

[neroden]

Maybe. An attorney is not cheap, and can be an expensive lesson. Wells Fargo is the shadiest bank on this planet,

Reference to Wells Fargo's deliberate violation of court orders:
Wells Fargo naked capitalism

and BOA isn't far behind IMO. You can bet that they give a rats a$$ about your interests.

Others to avoid IMO include Citi, JP Morgan Chase, and HSBC. But yeah, Wells Fargo is not to be trusted; a business relationship with them is almost certainly not worth it.

- - - Updated - - -

The financing plan is brilliant as constructed. But Tesla is making a credibility blunder by marketing it ingenuously. Only a rare subset of business owners will realize a cost of ownership approaching $500 a month. The average buyer will pay much more.

IMHO the marketing approach should be modified ASAP to be more straightforwardly honest before Tesla's credibility and reputation for integrity is lost.

Well, Tesla has already acquired the reputation of "typical car dealer behavior" among some of us. Perhaps they've decided to run with it. This is typical car dealer advertising, y'know?

[SATIRE]Perhaps it's a way of trying to appeal to the traditional car dealers -- "Look, really, we're just like you!"[/SATIRE]

 

[ddruz]

Point of clarification: Does the bank pay the 10% down or does the customer? I am confused about the various interpretations of this.

The way I read it, the bank pays the 10% down out of the tax credit, so that the customer pays nothing down and simply starts in with monthly payments.

I don't understand how it is possible, however, to transfer the tax credit from the car purchaser to the bank unless the bank is the actual owner, like in a true lease.

Would appreciate intelligent clarification of this from accountant types. Thanks.

 

[gg_got_a_tesla]

Interesting "insurance policy" for Elon as well. A few thousand (?) Tesla owners wanting to make sure he's still alive in 3 years.

We have a lot of doctors of all persuasions on here

 

[Doug Martoccia]

The way I read it, the buyer puts the 10% down. Banks don't typically make down payments on their own loans. The buyer does receive the Federal and/or State tax credits - which can be close to the amount that the buyer is putting down. I'm assuming that the $5,000 reservation deposit counts towards the downpayment. I'm also assuming that if you finance through another bank that the 3yr/43% deal does not apply.

 

[jimbakker666]

Except that the buyback agreement is supposedly personally guaranteed by Elon Musk, so presumably you have legal recourse against him if Tesla declares bankruptcy. Otherwise what the hell is he talking about?

His personal guarantee probably holds as much water as his statement that the Model S can be leased for $500 a month.

 

[dsm363]

His personal guarantee probably holds as much water as his statement that the Model S can be leased for $500 a month.

Dealing with Tesla may not be for all people. I hardly think they are the only company that paints a rosy scenario in advertising and for lease terms. Is $500 realistic? Only for a few but it's possible. Just like 300 miles at 55mph is possible but not very likely for most. It's just like other car companies advertising 34mpg* (highway only). In an ideal world, everyone would advertise more realistic numbers but that's not likely. You'll have to start going after hard drive manufacturers next who advertise 1GB=1000MB and the unformatted capacity in order to inflate the capacity. It is just the way advertising works.

 

[Jeroens]

Tesla website down again, changes taking place. Might be an update to the Configurator but might be something else happenings…. (feels like an apple moment