Tesla to make "exciting announcement on Thursday" (correction Tuesday)

[ModelS8794]

What's your source for this information? I haven't seen anything that specifies how the down payment is handled.

Here

US Bank and Wells Fargo will provide 10% down financing assuming a good credit rating, and the down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000.

Edit: gregincal is correct, there is no additional financing arrangement. Musk is simply pointing out that the 10% down payment will be offset by your tax rebate in a few (3-15) months post your purchase

 

[Russell]

What's your source for this information? I haven't seen anything that specifies how the down payment is handled.

True Cost of Ownership | Tesla Motors

"US Bank and Wells Fargo will provide 10% down financing assuming a good credit rating, and the down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000. New Jersey, Washington and DC also have no sales tax for electric vehicles. These advantages are not available when leasing."

 

[EV>ICE]

It seems to me like todays announcement was to increase sales to a broader base. But, if you use the online calculator, you are still paying out of pocket close to 1K/month with 10% down, so I am not sure how many more people will be able to afford the model S.

Perhaps the cancellation rate had increased, or the production yields in Fremont had increased beyond 500 cars/week, so Elon had to do something to increase demand with little expense for TM. Based on the last reservation calculations, they were getting about 30 reservations/day which equals about 10,800 new sales for this year. Add that to the 15,000 existing reservations at the end of 2012, and TM sales would just equal sales before any cancellations.

I think that the true resale value of a model S will be higher than 43% in 3 years, as there is less wear & tear on an EV. ICE autos have a lot more issues at the end of 3 years that an EV wont have (loosening exhaust system, more heat issues in the engine breaking down components, cooling system issues, etc.) Thoughts?

 

[tander]

Today's announcement will create more sales. How can people complain about that?

This "Lease-to-Own" program is good for everybody except the people that plan to pay for the car outright.

The reason he compares it to a Mercedes is to get those buyers to take a look at the Model S.

+1, it's a smart move, the more buyers the sooner TSLA can get to Gen III

 

[xtothem]

I agree with everyone on the boards about their suspect calculations to get to $500. I think the "leasing offer" they present will be extremely successful especially once the charging network has been expanded. I do, however, think that this is the correct way to spread the Tesla brand.

Given that the current shift is at max capacity and essentially sold out for 2013, a reasonable bump in demand from this program may trigger production expansion into second shift. Would be a very near term and sizable impact to the bottom line. Will be very interesting to see if there are any comments during the May call on the adoption rate of the program

I think this is exactly where they are going with this leasing program. Demand was likely staying steady from month to month but not enough to justify adding another production shift. Doing this would address slowing demand, decrease customer wait time and significantly boost the production capabilities.

 

[NigelM]

OK, I'm willing to put my money where my mouth is: I'll take a $10 bet from every person who posted a theory here that you are all wrong.

Meaning, we have to pay you only if *all* theories are wrong, while you pay those whose specific theory is correct?

Yup! I'm happy to PM everyone my account details now.....:biggrin:

On second thoughts, I'll emulate Elon and you can all give it to "Doctors Without Borders" please.

 

[gregincal]

True Cost of Ownership | Tesla Motors

"US Bank and Wells Fargo will provide 10% down financing assuming a good credit rating, and the down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000. New Jersey, Washington and DC also have no sales tax for electric vehicles. These advantages are not available when leasing."

That means nothing. Again here's my translation from Teslaspeak: You pay 10% down, the money you get back from the government will more than cover what you paid in the downpayment. Show me one place where it states that you don't need to make a 10% downpayment.

 

[Eeyago]

I am completely numbers challenged when it comes to finances (wife does the bills). Can someone please explain in laymans terms what "US Bank and Wells Fargo will provide 10% down financing" means? Will they apply for the Fed tax credit and they keep it as part of this 10% down?

 

[Russell]

That means nothing. Again here's my translation from Teslaspeak: You pay 10% down, the money you get back from the government will more than cover what you paid in the downpayment. Show me one place where it states that you don't need to make a 10% downpayment.

"US Bank and Wells Fargo will provide 10% down financing assuming a good credit rating,..." Like a traditional loan, they require 10% down.

And the part about "...the down payment is covered or more than covered by US Federal and state tax credits...' means you will get it back during tax time. Essentially nothing down.

 

[gregincal]

Um, I would think "US Bank and Wells Fargo will provide 10% down financing" would mean, well, that US Bank and Wells Fargo will provide 10% down financing. Not sure how that's unclear.

I took it to mean that they will provide a loan with only a 10% down requirement.

 

[swaltner]

US Bank and Wells Fargo will provide 10% down financing assuming a good credit rating, and the down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000.

Right, Wells Fargo is offering you financing for purchasing a Tesla Model S. The terms of that financing are 10% down and 2.95% over 66 months. This doesn't say that Wells Fargo is going to offering to pay your 10% downpayment. Your downpayment should be mostly or completely paid by your tax refund and other incentives. Wells Fargo want you to pay 10% of the purchase price (minus the $5000 reservation fee, which you've already paid) before you take possession of the car. You own the car with the title in your name with Wells Fargo having a lien on the car.

My local credit union will finance a new car for 63 months at 1.79%. However, if you finance elsewhere did that, you probably couldn't take advantage of Tesla Motors offer of a guaranteed buyback price at 3 years. Carrying a loan to the full term of 66 months with Wells Fargo would cost $5072 in interest on a $60,000 loan with payments at $986/month. Using the local credit union for a 63 month loan at 1.79% would yield total interest of $2908 with loan payments of $998. Pay off the loan three months quicker for the "same" monthly payment. It all depends upon if you think you'll need to take advantage of Tesla's guaranteed buyback price or not.

To me, it seems like a better option to just finance with the local credit union at the lower interest rate. But, nothing wrong with having more financing options out there.

 

[drinkerofkoolaid]

How does a service contract work this these options? Also, unless I'm mistaken, the true cost of ownership on their website does not account for sales tax, that could add $5000-6,000 to the savings. This would take $100-200 off the monthly total.

 

[Russell]

I am completely numbers challenged when it comes to finances (wife does the bills). Can someone please explain in laymans terms what "US Bank and Wells Fargo will provide 10% down financing" means? Will they apply for the Fed tax credit and they keep it as part of this 10% down?

I misinterpreted the press release. With just 10% down, US and Wells will finance the car.


Since this is NOT a lease, you get to claim the tax credits.

 

[v12 to 12v]

Just a guess. I'd be willing to bet there are many people who would love to buy a Model S, who can't afford it. A Signature Model S costs about the same as a $40,000 car. I'd be willing to bet there are many people who would love to buy a Model S that can't buy it. If I understand correctly, Tesla is offering people the opportunity to own the Model S for 36 months, at a normal financing rate, with a guaranteed trade in price after 3 years. This doesn't diminish the cache of the Model S, and makes it possible for more people to buy the Model S. Isn't this very good?

They are going to sell Signatures again? For $40k??
That would give "Signature Premium" a whole new meaning. Ouch.

 

[drinkerofkoolaid]

typo. What I meant to say was performance ^^"
The TCO for a $90,000 Model S is similar to a $40,000-$50,000 car in the same performance league as the Model S, depending on a number of circumstances.
Teslanomics: The Economics of owning a Tesla Motors Automobile

 

[ModelS8794]

I took it to mean that they will provide a loan with only a 10% down requirement.

As I read through the conference call transcript, I see your interpretation is correct, gregincal. Apologies for the misinterpretation!

Unknown Analyst
You'd still be putting money down though because the tax credits only come in a particular time. Right? I mean you still have to front the money don't you?

Elon R. Musk
Yes. It's -- there is some time delay which can vary from 3 months to a year sort of thing, depending upon when you buy the car versus when tax time is. Actually I think the California one is immediate -- sorry the California one is immediate, the federal one is a tax time.

 

[sp4rk]

No one asked 2 important questions about a lease.

1) Is there an annual mileage restriction?
2) Normally a lease includes service. Do you have to buy the $600 year service plan still with this "lease"?
3) They referred to a Merc S class. But which one. Huge difference in price between say S430 and S550.

 

[gregincal]

Your answers are here.

No one asked 2 important questions about a lease.

1) Is there an annual mileage restriction?
2) Normally a lease includes service. Do you have to buy the $600 year service plan still with this "lease"?
3) They referred to a Merc S class. But which one. Huge difference in price between say S430 and S550.

1. 12000 miles. 25 cent deduction per mile beyond that.
2. Yes, service is separate (and required)
3. It's a 43% residual value. ("This resale value percentage is based on an average of the last twelve months of residual value percentage for a three year old Mercedes S550 as established by Automotive Leasing Guide.")

 

[Russell]

No one asked 2 important questions about a lease.

1) Is there an annual mileage restriction?
2) Normally a lease includes service. Do you have to buy the $600 year service plan still with this "lease"?
3) They referred to a Merc S class. But which one. Huge difference in price between say S430 and S550.

1) 12k .25 every over.
2) My guess no, but, "The Vehicle is maintained by Tesla Motors or its subsidiary according to Tesla’s recommended service schedule. You must not have taken any action that would void the New Vehicle Limited Warranty on the Vehicle."
3) S550

http://www.teslamotors.com/sites/default/files/pdfs/tesla-resale-value-guarantee.pdf

 

[drinkerofkoolaid]

If you want to see some fun math, see what happens when you type 30 into the time savings from using the HOV lane, and change stops at the gas station to 5 times per month. The TCO for the 85kwh Model S comes to $253 per month