Maybe with the Performance PLUS Pkg it drops the time to 4.2
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Don't forget the $7,500 Fed Tax Credit and any Local Tax Credits which the bank will get since they own the car.
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Something is happening (Tesla website down) - Leasing Option News
- Thread starter sflahert
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Maybe with the Performance PLUS Pkg it drops the time to 4.2
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Don't forget the $7,500 Fed Tax Credit and any Local Tax Credits which the bank will get since they own the car.
Actually if you listen to the transcript that whole downpayment thing is just more Tesla spin. It's a totally normal loan with a totally normal 10% downpayment. They just point out that you will get at least that amount of money back through (i.e. the downpayment is "covered" by) the various rebates and tax credits. The only novel thing here is the guaranteed buyback agreement (which is only available if you take their loan, otherwise you can get better loans elsewhere).
Here is a way I analyzed the new finance to own program that Tesla introduced today. Assume that you get a Model S Performance nicely optioned out at $102,520. Since I live in Washington state, I'll assume a $7,500 Federal tax credit and no sales tax on the EV purchase.
If I put down 10% of $102,520 that is $10,252 out of pocket. I get $7,500 of that back from the Federal tax credit when I file my taxes. So my initial cost in on the buying program is $2,752 (assuming I can get financing for the rest of the balance of approximately $92,268). A loan of $92,268 at 2.95% over 66 months is about $1,516 a month. So 36 months into the loan I'll have $54,582 into the payments and another $2,752 from my upfront payment for a total of $57,335. My actual loan balance remaining at that point in time would be $43,797.
If we assume that the residual value is about 43% of the initial price of $102,520, that means Tesla would pay you $44,083. You could pay off the loan and walk away from the car. But say the car retains a 65% value because of the premium an EV might have because of less risk of engine trouble, transmission trouble, exhaust trouble etc. That residual value becomes $66,638. If I turn in the car for a check from Tesla, I would get back about $22,841 (this is the part where Elon is putting his money where his mouth is, I believe he said on the conference call that Tesla would pay the market price of the car when someone turns it back in). Amortizing that back over 36 months, that would reduce my monthly payment from $1,516 a month by $634 to about $881 a month. Now the WAG i'm making here is in the residual value. But I would think that the Model S would retain more value over 3 years than a conventional ICE.
Then factor in the gas savings or say $100 to $200 a month depending on your driving habits and the mileage of the car you are moving from and factor that into the monthly payment and you are looking at a very interesting proposition for someone who wants to run the numbers and make an assumption that the residual value of the car will be higher than 43%. What if the value is in the 70% range? Then it drives the cost down even more to about $739 a month over the 36 months of ownership (I'm not including any fuel savings in the $739). Very interesting indeed...
(Note, all this applies if you buy the car outside the Tesla program, but Tesla is mitigating the risk on the downside through their program by guaranteeing the residual value)
If I put down 10% of $102,520 that is $10,252 out of pocket. I get $7,500 of that back from the Federal tax credit when I file my taxes. So my initial cost in on the buying program is $2,752 (assuming I can get financing for the rest of the balance of approximately $92,268). A loan of $92,268 at 2.95% over 66 months is about $1,516 a month. So 36 months into the loan I'll have $54,582 into the payments and another $2,752 from my upfront payment for a total of $57,335. My actual loan balance remaining at that point in time would be $43,797.
If we assume that the residual value is about 43% of the initial price of $102,520, that means Tesla would pay you $44,083. You could pay off the loan and walk away from the car. But say the car retains a 65% value because of the premium an EV might have because of less risk of engine trouble, transmission trouble, exhaust trouble etc. That residual value becomes $66,638. If I turn in the car for a check from Tesla, I would get back about $22,841 (this is the part where Elon is putting his money where his mouth is, I believe he said on the conference call that Tesla would pay the market price of the car when someone turns it back in). Amortizing that back over 36 months, that would reduce my monthly payment from $1,516 a month by $634 to about $881 a month. Now the WAG i'm making here is in the residual value. But I would think that the Model S would retain more value over 3 years than a conventional ICE.
Then factor in the gas savings or say $100 to $200 a month depending on your driving habits and the mileage of the car you are moving from and factor that into the monthly payment and you are looking at a very interesting proposition for someone who wants to run the numbers and make an assumption that the residual value of the car will be higher than 43%. What if the value is in the 70% range? Then it drives the cost down even more to about $739 a month over the 36 months of ownership (I'm not including any fuel savings in the $739). Very interesting indeed...
(Note, all this applies if you buy the car outside the Tesla program, but Tesla is mitigating the risk on the downside through their program by guaranteeing the residual value)
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This is a huge announcement. I used to work in the car leasing industry and to have this option for potential owners is huge. I'm sure the phones will be ringing off the hook with potential buyers inquiring about leasing the Model S. Production rates will rise and hopefully costs will drop. When you think about the overall maintenance on the "S"......very minimal. It's not like an ICE where you have to worry about the engine, radiator, transmission, exhaust system, oil system after 36 months. All of that is removed thereby maintaining the residual value. I actually think 43% is low.
A 36 mo. lease RV for a MB is between 53-56% but then again you have historical data on the fair market value of the cars. I do know when we started in the leasing industry we were conservative with values which is what Tesla is doing. Plus you only have 2 competitors which makes things better.
Another AMAZING factor is that Tesla will control the secondary market. Since they are the only ones taking the car back and reselling it - they control the FMV. Overall this is EXCELLENT news for Tesla and potential owners.
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Actually you're talking about 2 different options. Leasing vs financing. If you're financing the car you own it at the end of the LOAN. If you are leasing you have the option to purchase the vehicle or give it back. Yes you can go elsewhere and shop for a LOAN but you can't for a LEASE.
I'm disappointed in the news. No more 40kwh option and "leasing" isnt all that cheaper than owning. This might bring more wealthy folks into the mix scared of new tech...but middle income people will be left out in the cold without the 40kwh option or pricepoint. Autoblog nailed it in their article posted earlier today.
Tesla announces lease option for Model S starting at $1,050/month
Tesla announces lease option for Model S starting at $1,050/month
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.
I think this is a very shrewd move for Tesla. They created the perception of a leasing program but are not really doing anything other than to be willing to buy their car back in 3 years. I'm pretty sure they're confident that MS will hold its value better than an S class, so they will either be getting a good deal on a used car or have to do nothing at all (because most buyers will sell it privately for more).
Wrong. YOU own the car. The bank will be the lienholder. It's just like any other regular loan purchase. The only difference here is that there is an opt-out clause that goes into effect between 36-39 months with a guaranteed floor buyback value at 43% of purchase price. That has never been done before on a loan purchase. That is what is unique. And *THAT* is the deal in a nutshell. As a 'regular' purchase where 'you' own the car, 'you' are entitled to the $7500 federal credit.
WhiteKnight
_____ P85 #549 _____ Sig Red / Sig White
Tesla is guaranteeing they will buy the car back from you for 43% but Elon also said (on the conference call) they would buy it back for Fair Market Value OR 43% whichever is higher. My guess is that their offer to buy it back for FMV is IF you are trading it in for a new Tesla. But perhaps they want to buy used Tesla's back to control the secondary market (like a previous poster said) and to have inventory to sell to people.
Who needs Gen 3 when you can buy a Tesla P85 for $45,000 in 3 years!?
You don't have that correct. The difference between a Lease and a Loan is who owns the car.
When you finance (get a loan) the car you own it.
When you Lease a car the leasing company owns it.
This is actually a loan with a buyback guarantee. It works like a lease but isn't a lease.
I'm sorry, but it's bulls--t like this that makes it really hard to like this company sometimes. It's like they don't know to stop when they're ahead... If they had called it "financing with a guaranteed buyback" and put something like $800/month in red letters on the front website, folks here and elsewhere would have been ecstatic. Instead they don't think that's good enough and call it "almost a lease but not" and market it at an unrealistic $500/month. Hey Tesla, not everyone is a business owner. And I have to say, I have skipped the gas station plenty and driven the car pool lane plenty the last couple of months, but no one has come forward to pay me $100/hour for that gained time to help out with a car payment. Holy cow, talk about reaching.
It's like the NYT article, when they caught the reporter red-handed exaggerating charging time, but didn't think that was enough, so they made up baloney about him trying to drain the battery when he was really just looking for the supercharger. Or when they account for the Federal tax credit in their pricing, even though not everyone qualifies. Or making a really cool car and putting on over-complex error-prone door handles. Over and over... they don't learn. Ga... frustrated.
Phew. End rant. Sorry everyone.
It's like the NYT article, when they caught the reporter red-handed exaggerating charging time, but didn't think that was enough, so they made up baloney about him trying to drain the battery when he was really just looking for the supercharger. Or when they account for the Federal tax credit in their pricing, even though not everyone qualifies. Or making a really cool car and putting on over-complex error-prone door handles. Over and over... they don't learn. Ga... frustrated.
Phew. End rant. Sorry everyone.
This isn't big news at all. Who really ever thought a Tesla Model S would depreciate faster than an ICE luxury car? With the transmission and the engine etc. Financing through the car company is nice, but Tesla's target market is hardly hard pressed to find money.
The math thing is so irritating. I was excited for two hours thinking I could lease a model S performance for 3 years for only 36,000, and then buy the rest at the end so I don't have to sell as much stock for a down payment (my income is kind of low, but my savings over the years are really high... hey kind of like Elon Musk!). Really irritated when I realized they used magical math to get there (because everyone owns a business right?).
This announcement makes me kind of angry. I wanted an actual lease. The more I think about it, the more I want to just wait a couple years and buy used. After all, it depreciates as fast as a Mercedes S class right?
Not even to mention that he is flat out lying when he says "$500 a month" with the gas savings. It's more than that.
The math thing is so irritating. I was excited for two hours thinking I could lease a model S performance for 3 years for only 36,000, and then buy the rest at the end so I don't have to sell as much stock for a down payment (my income is kind of low, but my savings over the years are really high... hey kind of like Elon Musk!). Really irritated when I realized they used magical math to get there (because everyone owns a business right?).
This announcement makes me kind of angry. I wanted an actual lease. The more I think about it, the more I want to just wait a couple years and buy used. After all, it depreciates as fast as a Mercedes S class right?
Not even to mention that he is flat out lying when he says "$500 a month" with the gas savings. It's more than that.
Actually, not done. One more thing. If they include checkboxes for the $100 time at the pump, where are the checkboxes for license, registration, insurance...? What about the annual service? "True cost of ownership" my foot...
Now end rant. For real.
Norbert
TSLA will win
As I said in the other thread, there have been quite a few articles which cast doubt on the resale values of EVs. I'd guess that for non-early-adapters, it's a major concern: the uncertainty about that. They aren't sure what becomes of an EV after a few years, and it may easily be a major factor if they can rely on being able to sell back the vehicle for an amount that is approx. equal to the amount it takes to pay off the loan remainder. Also in case they are worried that they might not be as happy with it as they hope.
Too early for the Leaf and Volt to determine resale value of them but the Roadster has not fared any better than ICEs. A glut for sale for a year now has not helped but I heard one appraiser basically say a car is a car. New EV battery or new ICE engine/tranny neither helps value at all.
deonb
Active Member
Well, the issue was that with a true lease, you can't get the EV rebates, so the car would be $7500+ more expensive.
But then this was badly negotiated from Tesla's side. Couldn't they get the banks to agree to delay the 10% down payment until tax time? Or negotiate with the IRS that the rebate is directly paid to Wells Fargo / US Bank?
That would at least make it a no-money down lease.
As it is structured, there is nothing in the Tesla offer that makes the car any more affordable to anybody who wasn't able to afford it before.
It gives a lease-like guarantee if you don't want to hang on to the car for long, which is in itself good, but the fundamentals haven't changed:
* You need to have the exact same dollar amount available for down-payment today as you did yesterday.
* You need to have the exact same monthly payment amount available today as you did yesterday.
If there was even so much as a $50 a month difference (e.g. service is included) it may have been a bit more significant.
But then this was badly negotiated from Tesla's side. Couldn't they get the banks to agree to delay the 10% down payment until tax time? Or negotiate with the IRS that the rebate is directly paid to Wells Fargo / US Bank?
That would at least make it a no-money down lease.
As it is structured, there is nothing in the Tesla offer that makes the car any more affordable to anybody who wasn't able to afford it before.
It gives a lease-like guarantee if you don't want to hang on to the car for long, which is in itself good, but the fundamentals haven't changed:
* You need to have the exact same dollar amount available for down-payment today as you did yesterday.
* You need to have the exact same monthly payment amount available today as you did yesterday.
If there was even so much as a $50 a month difference (e.g. service is included) it may have been a bit more significant.
Norbert
TSLA will win
However, according to a CNN article, "about half of all luxury car customers lease their cars rather than buying them". So "lease-like" is really important, especially considering that the resale value of EVs is pretty much an unknown so far (and this deal is backed by Elon personally, for those who aren't 100% sure about Tesla surviving).
If you are in the other half, maybe there isn't much in it for you (it probably simplifies processing the loan). But then, you already bought one.
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.
IMHO the marketing approach should be modified ASAP to be more straightforwardly honest before Tesla's credibility and reputation for integrity is lost.
I don't know, the web page seems fairly transparent to me. There is the "Effective Monthly Cost" at the top, but the actual cost is just below it and the factors that go into the cost are all on the same page where they encourage you to customize it for your particular situation. I agree that I'm not sure about having the top line $500 on the first page, but the details are a click away.
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