Elon mentioned the demand for model 3 is unbelievable but they need to do more to make it more affordable. Out of two levers: price cut and leasing, they chose price cut and I think it is the wrong lever.
Firstly I think there are two groups of potential model 3 customers: the first is aware of/fond of model 3 and they are waiting for the lower price. The second is not aware of it and has not realized the imminent EV transition. The second is much larger than the first. The first can be tapped by using levers while the second can only be transformed by awareness enhancement, which is constantly happening with more model 3 on the street.
Now I want to calculate a residue model for model 3 leasing. Let's consider an extreme case. What is the residue value for a 10 year old/200k miles model 3? Since the drive train is supposed to go 1m miles and let's be conservative and only consider 500k miles as limit. Compared with an average 10 year old sedan with 200k miles, a similar model 3 is at least worth the gas savings from 200k miles to 500k miles. Using 30 mpg, $2.2/gallon, 26kwh/100mile and 12c/kwh as base case, the savings is at least $12.6k. Even ignoring cheaper maintenance/safety, a 10 year old/200k model 3 is at least worth $12.6k. It could be easily higher for europe, where gas is much more expensive.
Using the similar method, a 6 year/100k mile tesla is at least worth $16.8k. For MR $42k, a 6 year super long lease(only applicable to EV because of its high residue value) has a monthly payment of about $450 with 0 down payment. Lots of people in US prefer leasing because they only consider monthly payment. It is especially popular for people in new England. More than half of the BMW sold are lease.
I understand tesla does not want to put too much cash into lease program but 4% interest could be lucrative for outside leasing companies. Tsla just sells the car to the lease company and can recognize the sale all at once. By introducing lease, tlsa can maximize the sales and the profit.