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Tesla Will Lease You A Model Y For $499 Per Month

gavine

Petrol Head turned EV Enthusiast
Apr 1, 2014
2,614
2,184
Philadelphia, PA
I wonder how the comparison of lease vs buy works out in NJ, where we don't pay sales tax and get $5000 credit no matter whether lease or buy...

I'm not sure how Tesla handles it, but when I leased a BMW i3 in 2015, the finance company (or dealer) took the $7500 federal tax credit and applied it to the lease as a down payment so the lease was based on the depreciation minus $7500. Took a nice chunk off of the payment.
 
I wonder how the comparison of lease vs buy works out in NJ, where we don't pay sales tax and get $5000 credit no matter whether lease or buy...

In three years time a second hand buyer won't get the credit, so if credit is still being offered in 3 years (who knows), buyer is more likely to buy new (you get a $5K discount). But if no credit, then we're better of buying now and selling because second hand buyer is more likely to buy second hand... (Hope that makes sense)

I'm in the same boat in NJ. After much deliberation and looking at it from a bunch of different angles, I decided on the lease. I am putting 5k down "out of pocket" (which is the rebate check i'll receive from NJ) and walking away with a 53k sticker model Y for under $600/month (12k miles). Is what it is. I know I'm not keeping the car past 3 years and, if I just took the $5,000 from NJ and put it towards financing, id be 887/month on a 60 month term (2.5%). Yea I know 3 years from now I might have some nice equity if financed and depreciation is low, but I dont want to deal with the hassle of "what ifs". What if they drop the base price in the Y? What if the NJ rebate doesnt go away and everyone just wants to buy a new Y instead of a used?
 

CapeOne

Active Member
Jun 14, 2016
1,074
758
New England
But of those, how many owners received the $7500 tax credit (or even the lesser ones). That credit made-up for the price drops so it isn't fair to use the depreciation numbers in those cases because the owner collected that money to offset the reduced resale price.

The maximum federal tax credit on Teslas starting a little over a year ago (and through the end of the year) would've only been $1,875 and even with that applied if/when applicable, there have been asking prices around 90% of MSRP or less including on some 2020 models.

I would expect resale values to get worse in the coming years as there will be more competition, new tech, potentially more price cuts, etc. Pricing in the EV market is likely going to continue to be volatile and leasing at least protects against any unexpected additional resale value declines.
 

CapeOne

Active Member
Jun 14, 2016
1,074
758
New England
It’s not expectation, it’s documented based off data. Model 3 only loses a little over 5% after the first year. Compare that to a BMW 3 Series which is over 30%

Of course you will see model 3 selling cheaper. But those cars may have been in accidents, salvage titles, lemons, poorly taken care of or a quick sell.

Sure Tesla could lower prices again, so could BMW or Ford.

It’s not expectations, but the data, which states that resale is amazing for the 3. The Y has the same opportunity to hold its value.

This is why Tesla’s lease is a bad deal for a consumer. You’re better off buying with these numbers.
Data from one source does not make it so now or in the future. There have been plenty of examples of M3s with asking prices (not necessarily even actual selling prices) of already 10% below MSRP that aren't one year old yet and trade/wholesale numbers have been even worse.

This is not to say that the M3 hasn't had good resale values but they're not as good as some seem to think or want to believe. Going forward, it's very likely that resale values will get worse as there will be more competition, new tech, potentially more price cuts, etc. Pricing in the EV market will continue to be volatile and people need to be more realistic about the kind of resales they can expect to see on Teslas in the years to come, and not believe too much of the hype.
 
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CapeOne

Active Member
Jun 14, 2016
1,074
758
New England
I'm not sure how Tesla handles it, but when I leased a BMW i3 in 2015, the finance company (or dealer) took the $7500 federal tax credit and applied it to the lease as a down payment so the lease was based on the depreciation minus $7500. Took a nice chunk off of the payment.
Tesla did an unusual thing when it came to the federal tax credits on leases. They added the tax credit to the residual value instead of using it to lower the cap cost or to reduce/eliminate a down payment. So, if a car had a retail value of $85,000 and a residual of 56% ($47,600), the lease contract would list the residual/LEV as $55,100 ($47,600 + $7,500). This therefore showed an artificially high residual and made the car that much more expensive to buy at lease end when an option to do so like on MS and MX. The only reasons I can think of for Tesla to have done it this was to give the impression of a higher resale value than reality and to discourage lessees from buying (when an option) at lease end.
 
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Reactions: gavine

heysteveh

Member
Apr 3, 2016
178
159
Peoria, AZ
This is one of the better threads I've seen on lease vs purchase pro's and con's regarding Tesla. It's nearly impossible to nail down a definitive answer because many of the variables are constantly changing, not to mention the fact that no one can predict the future (depreciation, etc.). But we each have to take a stab at it when we're ready to get a new car don't we?:)
 

gavine

Petrol Head turned EV Enthusiast
Apr 1, 2014
2,614
2,184
Philadelphia, PA
This is one of the better threads I've seen on lease vs purchase pro's and con's regarding Tesla. It's nearly impossible to nail down a definitive answer because many of the variables are constantly changing, not to mention the fact that no one can predict the future (depreciation, etc.). But we each have to take a stab at it when we're ready to get a new car don't we?:)

Here’s my two cents. 2016 Model X. $105K. Way beyond what I would normally spend on a vehicle. 6-year loan vs. lease. Payment around the same for both options. Lease was attractive because it shielded me from major tech advancement and possible unexpected drop in value. However, I realize that if my financial situation changed during the three year lease term, I had no way out. I figured if I buy, I can always sell if I had to. I did end up selling after 2-years so it worked out for me. I sold for what I owed on the car and got to keep the $7500 tax credit so it worked out great for me.
 
There have been plenty of examples of M3s with asking prices (not necessarily even actual selling prices) of already 10% below MSRP that aren't one year old yet and trade/wholesale numbers have been even worse

Wholesale indicates the purchase of a large amount of products at a discounted rate. Trade-in offers will always be lower than the fair market value. How would companies like Carvana or Carmax turn a profit otherwise? They offer the ‘convenience” of selling your car quickly and easily for a “fair price”. Example: Carmax gave me $11,500 offer on a truck some years back. I sold it privately for $15k

As for listings with asking prices below 10%, I encourage you to contact them, most are bait and switch. Vroom auto is an excellent example. I was interested in a 3 performance listed at a “very good price” (per auto trader), well above the 10% depreciation rate. I called about the car and they had a $4500 acquisition fee on top of the price of the car, bringing it back under 10%

I’d take hard data from one source (though there are many) over someone’s personal opinion (who doesn’t even understand the basics of wholesale or trade-in) any day of the week.

Pricing for non Tesla’s will be volatile, tesla has superior battery and charging network to make prices less volatile. Americans have the memories of goldfish and we forget that gas gets expensive and sell our SUV’s This could raise the value of any EV.

You’re right, we don’t know what the future holds, but right now in the now, the data says Tesla 3 holds its value well enough to warrant a buy over a lease. Same can easily be true for the Y
 
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