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Will Tesla ever offer Lease buyout?
- Thread starter 240vPlug
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- lease buy-out
I wish it was that simple, but trust me, it can never happen. Once a closed end lease is signed, that's it, the terms can't be changed, even if it is to the consumers benefit.
Just like in any contract, contractual terms for a lease can be changed if both parties agree. You should see verbiage in the lease contract that states no changes can be made unless both parties agree in writing. The best example is when you extend your lease. The leasee and leaser both agree to extend it for a certain period of time.
I’m not saying Tesla will ever allow lease buyouts, but it could be changed in the middle of a lease.
Hey, I hope it happens just as much as you. It's something that is literally unprecedented in US automotive history, so it would be fascinating should it come to fruition
I have a 2019 MX and my lease does permit a buyout. Last July I ordered a new one (delivery's now been pushed to July) but I'm going to buy this one because Tesla won't permit buyouts on new MX leases. The reason is obvious--it there's such a profit to be made on the resale, they want it.
Smart move buying your 2019 MX, buy it out early though and save yourself some money. Tesla's Money Factor is terrible. I bought my MS lease out last August, 7 months early since it was about $20k positive equity and I got a 1.99% rate compared to Tesla's ~6% MF to APR comparison.
Interesting that they won't allow MX lease buy outs on new ones. There's a profit to be made now, but things will be vastly different 3 years from now when the current leases end. The economy will be in a vastly different place, chip shortage should be over, Teslas manufacturing ability will have increased and more competition in the EV market. Tesla may end up losing money by having to take back all the X leases 3 years from now. Would be interesting to know what they're setting their residuals at for current leases.
Can’t speak to MX but as of about 3 weeks ago resisual on a MY with 15k allowance is 62%. I mean 1 year ago was bad enough but how can they set such a low residual on a vehicle that’s more popular than M3 when worst case shows M3 only depreciated 10% over the same term and mileage. They are saying the MY is going to depreciate almost 4 times that amount 38%.
Ill answer it for you. Its a way for Tesla to drive up the cost of the lease. They will never let you buy it out so they could set the residual to anything they want. Ill go even further to say they set the residual and MF so that leasing payment is just slightly lower than financing it.
Ill answer it for you. Its a way for Tesla to drive up the cost of the lease. They will never let you buy it out so they could set the residual to anything they want. Ill go even further to say they set the residual and MF so that leasing payment is just slightly lower than financing it.
If both parties to a contract agree to a change, they can do whatever they want. What cannot happen is unilateral change. You can’t change your mind 2 years after you lease that you wanted to buy the car any more than Tesla can decide they wanted to charge $900/ month instead of $500/ month.
I doubt it will happen, but it is certainly possible. Tesla could for example decide they don’t want to deal with excess inventory and send out an offer to all lease-holders.
If you buy your car, you own that resale risk or upside. If you lease, Tesla does. Of course they are going to go with super conservative estimates of resale value.
Leasing has always been a bit of a sucker’s game. They only make sense if you can expense the car or just don’t mind paying extra to have a nice car.
I see what your saying and agree about the risk/upside. I don't feel 3 to 4 times the depreciation is conservative though. That is just a way to inflate the leasing cost to charge the customer more. If depreciation was 10% and they claimed 15% I would have no issue. They are claiming 38%. That is using the 2019 Model 3 as an example for depreciation. If I look at a 2020 Model Y the vehicle has actually appreciated about 7% since it was introduced.
We will have to wait and see what Tesla does but I can only imagine a lot of folks are unhappy right now that are nearing the ends of their M3 leases. I would be interested how Tesla justifies it now that there are clearly no robo taxi.
There is zero need for Tesla to justify anything. They had a contract and it’s ending.
Some people might regret they didn’t buy the car instead of leasing it, but that’s not something Tesla can fix in post.
If the resale market was in the toilet would you be saying “Tesla isn’t going to be happy taking all these cars back they are upside down on, I wonder how the leasees are going to do?”
Well if that’s the choice Tesla makes (not to justify anything) then we will have to wait and see how it works out for them.
Probably would be concered about Tesla in that case as well. Neither scenario is good for Tesla IMO.
Tesla will never change the verbiage in existing lease contracts to allow for buyouts, I would literally bet my life on it. Kind of comical even debating it. Now could they change the paradigm in the future? Maybe... but even then I don't see how that would be a needle mover for them given the volume that they are pushing.
This is how leases work. You are renting a car for 3 years. Most people who lease understand this and aren’t going to be upset at Tesla because they would have been better off buying it.
It’s like you go to a vending machine and buying a Snickers bar for $1.50, then after you eat it, getting angry at the vending machine because you over-paid. Tesla is giving people exactly what they agreed to. No more, no less. Getting upset about that is just bizarre.
I don’t totally disagree with you i really don’t. I would say this isn’t typically how leases work. That is where i take issue with Tesla policy.
If the goal is to further the transition to sustainable transportation then Tesla is on the wrong path here and i have already stated why I believe that earlier. If the goal is to extract every penny out of each customer with little regard for future loyalty or long term success then i say Tesla is doing exactly what they should be doing.
Im really hoping they change the policy not for my own personal gain bit for the long term success in reaching that goal.
Forgetting about Tesla for a moment I think the way a lot of the dealers are behaving is terrible as well.
Its interesting to read everyones thoughts on this even though we may not all agree on all points.
I would be interested to see where Tesla value stands in 3 years. The used car market should be corrected by then due to the pandemic supply shortages. If the competition increases and volume of cars Tesla makes increases, their value will decrease. The supply will be more than demand. Pre-pandemic, car manufacturers would rather have the lease purchased at the end. The majority of lease returns were just sent to auction since they aren't big money makers on the used car market.
Don't really understand your analogy with the Snickers bar. You would be buying the Snickers from the start, not leasing it.
When you are done with a lease. You’ve already gotten what you paid for. Why would you expect more?
Doesn’t matter lease or buy. You made an agreement to pay an amount of money for a thing. You got the thing (in the case of the Tesla the thing was use of a car for 3 years). What is the complaint?
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