Today's lease announcement was anticlimactic

[Johan]

The down payment is 10%. For example, $8,000 on an $80,000 car. You still have to pay the $8,000 at time of purchase. You'll get the tax credit later (depending on tax year, etc). You can think of it as an offset, but can't apply that offset at time of purchase.

Or, am I missing something?

The 'inventive' thing I see here is structuring it as a loan, not a lease, but with a lease-style buy-back option. The problem with a lease is that you don't own the car, so don't get the tax credit.

I believe Elon said during the call that in some states you will get the credit "immediately" and other places not until you do your tax return for the past year.

I agree with other posters that this is to regarded as generally a positive thing and a good offer from Tesla for those who need this kind of financing, but that the "$500/month" is dubious marketing and should be toned down. Remeber Tesla wanted to be different than all the traditional car makers and dealers... well, don't go acting like a traditional dealer and make rosy statements that don't really hold up.

I hope they do something similar in the EU. In Norway traditional leasing will not be successfull since leasing as a service carries a VAT (25%) while the purchase of an fully electric car by an individual is excempt from VAT. With this model though, the customer IS the buyers, Tesla just facilitates the loan and makes a optional buy-back guarantee along the way. I'd consider this type of financing over upping the loan on my house for example if the terms of the buy-back option were attractive and if the mortage interest rate was not to much higher than what I can get with my home as security...

 

[markwj]

All they say is

US Bank and Wells Fargo have agreed to provide 10% down financing for purchase of a Model S (on approved credit.)
The 10% 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.

I think some of it depends on the state, but the $7,500 is federal and definitely applied at tax file time. I don't see how it is offset from the loan down payment - just "covered or more than covered".

 

[deonb]

I could be wrong on this (lord knows that they were not 100% clear) but I got the impressions that there is no money due up front, and the bank somehow claims the tax credit. Hopefully Tesla can provide a little more clarification on this, and it really is not 100% clear.

Elon was clear in the conference call, unfortunately. The $7500 federal credit you'll only get back at tax time "3 to 12 months later". You will get some state tax credits immediately on purchase though. (Not sure for which states).

 

[markwj]

Elon was clear in the conference call, unfortunately. The $7500 federal credit you'll only get back at tax time "3 to 12 months later". You will get some state tax credits immediately on purchase though. (Not sure for which states).

If it helps, you get gas savings immediately

 

[montgom626]

i think this forum hyped it up, not elon

We hyped here and now we wonder why our hype failed to live up to our expectations.

 

[AnOutsider]

We hyped here and now we wonder why our hype failed to live up to our expectations.

He hyped it up. Not only the forum was in a tizzy, the stock, blogs etc. Elon gets far too excited about things that most find mundane -- that and if we SHOULD be excited, he does a poor job at communicating WHY.

As for the "time saved" going into TCO... Really? OK. I want to drive to Massachusetts next weekend. I can SC in CT (barely making it) and then hit a J1772 about 6 miles from my destination. Going by their calculator, I'll spend $100 of my time in CT and at least $600 in MA. One way. Or, I can take a cheaper ICE and stop once for 5 minutes to refuel in each direction. Stop shooting yourself in the foot Tesla.

And in all this kerfuffle, the performance plus package was an afterthought. Some details there might have helped.

 

[Yuri_G]

He hyped it up. Not only the forum was in a tizzy, the stock, blogs etc. Elon gets far too excited about things that most find mundane -- that and if we SHOULD be excited, he does a poor job at communicating WHY.

As for the "time saved" going into TCO... Really? OK. I want to drive to Massachusetts next weekend. I can SC in CT (barely making it) and then hit a J1772 about 6 miles from my destination. Going by their calculator, I'll spend $100 of my time in CT and at least $600 in MA. One way. Or, I can take a cheaper ICE and stop once for 5 minutes to refuel in each direction. Stop shooting yourself in the foot Tesla.

And in all this kerfuffle, the performance plus package was an afterthought. Some details there might have helped.

Musk only said that the announcement was exciting and he felt it was more important than the Q1 profitability, TMC and other media took to over-hyping from there. I agree that the true cost to own calculator is reaching, but realistically you're going to spend less personal time 'fueling' the car since the vast majority of charges will be at home. The financing announcement is an overall positive because of the buyback option and guarantee of reimbursement for any severe depreciation. That will attract new buyers.

The moral of the story is don't expect huge, game changing, announcements on the internet.

 

[Norbert]

Musk only said that the announcement was exciting and he felt it was more important than the Q1 profitability, TMC and other media took to over-hyping from there. I agree that the true cost to own calculator is reaching, but realistically you're going to spend less personal time 'fueling' the car since the vast majority of charges will be at home. The financing announcement is an overall positive because of the buyback option and guarantee of reimbursement for any severe depreciation. That will attract new buyers.

The moral of the story is don't expect huge, game changing, announcements on the internet.

Right, I don't think he said "game-changing". It does appear to do very well at combining advantages of a loan and a lease. Probably really good for what a company like Tesla could hope to achieve/offer for an electric car.

Some questioned the Mercedes S class as a reference. However, I think the point is to offer a guaranteed resale *minimum* value which allows paying off the remainder of the loan, approximately, after 36 months, if one so wishes. That part guarantees a high level of protection for the buyer against the risk of losing money due to unexpected depreciation or degradation.

The monthly costs seem to compare reasonably even without the (optional) time savings shown in the calculator.

Someone buying a car for business use, probably already deducts the business savings for any existing ICE, so it makes sense to apply the same savings to the electric car. It is a real saving, in that case, and where else would you put that number? It reduces cost for *both* ICE and electric car.

- - - Updated - - -

And regarding the objections to use $100 as the hourly value: That time counts as overtime. Actually worse, since it is lost time which doesn't produce any value, and one can't do anything else during that time either.

 

[neroden]

Musk only said that the announcement was exciting and he felt it was more important than the Q1 profitability,

From the POV of Tesla's sales and marketing, and for the long-term future of the company, it is more important than a random quarter's numbers. It's a profitable program which increases the number of cars they can sell, long-run. (Actually, I have to go figure it into my long-run earnings estimates, now that I mention this.)

From the average buyer's POV, it's less important; the Q1 profitability is the sign that the company will be around in 10 years, which we all know, but which casual people not paying attention worry about.

 

[JakeP]

Aside from the ridiculously disappointing hype and the "cost of ownership" shenanigans, I am left with just one question: Why doesn't Tesla offer an *actual* lease? As a business owner myself, I know plenty of people who only lease vehicles for their business, due to the advantages and simplification of being able to deduct the lease expense. This whole arrangement doesn't allow you to do that...and just try depreciating a Model S for business, with the Section 179 limitations. If they are guaranteeing a buyback after three years pegged to a certain residual value, then why not just offer a lease with appropriate financing terms and that residual?

 

[ElSupreme]

Aside from the ridiculously disappointing hype and the "cost of ownership" shenanigans, I am left with just one question: Why doesn't Tesla offer an *actual* lease? As a business owner myself, I know plenty of people who only lease vehicles for their business, due to the advantages and simplification of being able to deduct the lease expense. This whole arrangement doesn't allow you to do that...and just try depreciating a Model S for business, with the Section 179 limitations. If they are guaranteeing a buyback after three years pegged to a certain residual value, then why not just offer a lease with appropriate financing terms and that residual?

Because then they will be on the hook for these cars today. This way Tesla gets all the cash at purchase time, and doesn't have to worry about paying back until 36mo later. Tesla cant afford to lease cars at the current time. I don't think they could get anyone else to lease cars for them. So they did the next best thing, a promised value after 36 months (the main advantage of a lease) and then setup some financing to match a traditional lease.

 

[vfx]

...
You shouldn't build so much hype on twitter unless you can back it up. You lose credibility. I predict stocks will drop 3 to 6% tomorrow.

-10s of thousands of people who had never heard of Tesla saw them make news.
-This plan is for people on the fence. Both on buying an untried company and buying an untried powertrain. Not many of those on TMC.
-Of course the stock has dropped. This is a long term announcement.

-I see the big picture here that Tesla has added dollar values to EV advantages many people never even knew existed. Watch Phil. Even though you and he may argue the value of not standing in a gas line or the savings from not buying gasoline, there are still millions who know about EVs but think that plugging-in is difficult and that "my power bill will go up". Tesla has now framed these percieved disadvantages as money savings features, informing a whole new swath of consumers what we in the EV community tell one person at a time.
By making the loan/lease"overhyped" announcement Tesla just got the disruptive word out to millions.

 

[JRod0802]

He hyped it up. Not only the forum was in a tizzy, the stock, blogs etc. Elon gets far too excited about things that most find mundane -- that and if we SHOULD be excited, he does a poor job at communicating WHY.

I thought he did a great job of explaining why this is important. I think he said that around 40-50% of luxury car sales in the price range of the Model S are leases. That means this has the potential to double the demand for the Model S. Doubling demand is awesome!

 

[Norbert]

As for the "time saved" going into TCO... Really? OK. I want to drive to Massachusetts next weekend. I can SC in CT (barely making it) and then hit a J1772 about 6 miles from my destination. Going by their calculator, I'll spend $100 of my time in CT and at least $600 in MA. One way. Or, I can take a cheaper ICE and stop once for 5 minutes to refuel in each direction. Stop shooting yourself in the foot Tesla.

Everyone knows that more infrastructure is needed for (occasional) long trips. However, not everyone is aware that an EV saves time in common daily use. The calculator helps those new to EVs to understand (and quantify) that driving on electricity has a strong time-saving component in everyday use, to counter what currently dominates the discussion, the criticism you hear everyday from those unfamiliar with EVs.

And in all this kerfuffle, the performance plus package was an afterthought. Some details there might have helped.

That's what you are really concerned about?

 

[AnOutsider]

Everyone knows that more infrastructure is needed for (occasional) long trips. However, not everyone is aware that an EV saves time in common daily use.

Fair enough, though I'd still contend it's all a bit murky and more marketing fluff to make the numbers look better.

That's what you are really concerned about?

Well, since I own a Model S, naturally I'm not concerned about a "leasing" announcement. Yes, as a current owner and adrenaline junky, I'm very interested in performance upgrades to my car (which I feel needs improvement in the handling department). Perhaps this could have been unveiled separately (like tomorrow or Friday) so as to not be an afterthought. Why not use more news to keep people (on both sides of the fence) talking?

 

[Zythryn]

The point most have missed here, surprisingly, is that their consumer research has highlighted that these are the concerns that is keeping people from committing to buy the car over a Mercedes ICE Model S. These countermeasures address that. Demand will increase and therefore production will increase. Tesla is identifying problems and solving them. This is excellent.

I would agree with this. The thing bringing the whole announcement into the mud is the $500 fuzzy math. That was foolish and makes Tesla look no better than used car dealers/financiers.

 

[Norbert]

The thing bringing the whole announcement into the mud is the $500 fuzzy math.

I'd prefer the 'business tax benefit' would be checked-off by default, and in consequence, not use $500 as the bottom line number. Then those looking at the calculator could see that "even more" reduction was possible. But then, I'm not a marketing expert. And marketing in the car business sometimes seems to just say "we really want you to buy this product, please take a closer look"...

 

[gregincal]

I would agree with this. The thing bringing the whole announcement into the mud is the $500 fuzzy math. That was foolish and makes Tesla look no better than used car dealers/financiers.

I think the "calculate your true cost of ownership" page is fine, and they can put anything they want on it since it's clear you are just fiddling with numbers. It's just the $500 on the main page that's bogus. They should have just had the link to the other page.

 

[Larry Chanin]

Motor Authority weighs in.

Tesla Model S For $500 Per Month? No. Just No.

So why does Tesla feel the need to attempt to deceive people with its $543 per month ideal scenario? Perhaps the need arises from the same place that saw the brand hawk a 40-kWh model at a price of $49,900-$52,400 for a couple of years before deciding it would be unprofitable to build.

Tesla's continual insistence (including on its retail website) on listing prices after incentives is its own problem. Green Car Reports has explained why that's a deceptive practice.

As much as we love the Tesla Model S, and trust us, we do--it's a hoot to drive, gorgeous to look at, and surprisingly practical--we just can't help feeling like Tesla is out to pull the wool over our eyes at every opportunity.

And that makes us nervous.

Larry

 

[aznt1217]

I share some sentiment with the whole deceptive practice angle, but then I thought about it some more. Usually people get sticker shock just looking at just that, the sticker without taking any other factors into account. I think Tesla is trying to get people to get to the calculators and go... Hmm so it's not that much of a stretch. Perhaps they should change the button to as low as... Or come up with another way to get people to look into it.

Motor Trend weighs in.

Tesla Model S For $500 Per Month? No. Just No.



Larry