Tesla (TSLA) unveils what it calls a "revolutionary" financing option for the Model S. Buyers...


Tesla (TSLA) unveils what it calls a "revolutionary" financing option for the Model S. Buyers can purchase a Model S on credit (provided by US Bank and Wells Fargo) for 10% down and monthly payments - Tesla claims the "true net out of pocket cost" is less than $500/month after factoring gas savings. After 36 months, buyers have the right to sell the car back to Tesla "for the same residual value percentage" as a Mercedes S Class vehicle. Shares -0.4% AH.

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Comments (50)
  • Chemist357
    , contributor
    Comments (256) | Send Message
     
    neither good for shorts or longs
    2 Apr 2013, 05:08 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    Never thought the concept of leasing in 2013 would be called revolutionary.

     

    Its $1,000/month for 3 years with $7k down.... or exactly equal to an M3. Revolution!

     

    I guess you would save money on the gas comparatively but... not that great, IMO.
    2 Apr 2013, 05:11 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (10649) | Send Message
     
    Could be good bargains on 36-month old Model S Teslas in three years.
    2 Apr 2013, 05:11 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    Well that sets a baseline for depreciation. Not too shabby at all.
    Treat the Tesla value as the dealer trade in because essentially that is what it is, then you can get dealer resale and private party values from that.

     

    More or less, you have a car with the same depreciation as an MB, but without the added expense of high fuel costs .
    2 Apr 2013, 05:12 PM Reply Like
  • realornot
    , contributor
    Comments (1263) | Send Message
     
    very nice. I may end up buying one.
    2 Apr 2013, 05:13 PM Reply Like
  • Esekla
    , contributor
    Comments (4478) | Send Message
     
    Wow, financing is the big announcement? That's laughable! Even with the buyback option it's essentially the same thing as a lease.
    2 Apr 2013, 05:13 PM Reply Like
  • KnowLittle
    , contributor
    Comments (5) | Send Message
     
    Pseudo lease with a floor. More importantly access to "US Federal and state tax credits ranging from $7,500 to $15,000."
    3 Apr 2013, 05:57 AM Reply Like
  • berylrb
    , contributor
    Comments (2374) | Send Message
     
    @knowlittle, the tax credits are irrelevant for this "news" the credits have been around since the Roadster days, and apply to any EV or PHEV.

     

    To be even more precise the credits have been around since at least the Honda Natural Gas cars which I think pre-date the Prius Gen I?!
    4 Apr 2013, 02:44 PM Reply Like
  • mrholty
    , contributor
    Comments (1135) | Send Message
     
    Very interesting, a leasing program. Should be good for Tesla in the short term. I think US bank and Wells are going to take a hit on these in three years but getting access to customers in that price range may be worth it.
    2 Apr 2013, 05:15 PM Reply Like
  • 481086
    , contributor
    Comments (3431) | Send Message
     
    current reservation holders eligible for the deal?
    2 Apr 2013, 05:20 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    Doing the numbers now... If I understand, you pay the $1,000 a month, and then at the end of 36 months, if you do not want the car, TSLA buys back for the % depreciation equal to a MB S class? Which according to Forbes is 28% after 36 months:

     

    http://onforb.es/104J5Ms

     

    Is that correct? That is paying $52k to drive a 60kwh cars for 3 years, or $1,444/month.

     

    What am I missing?
    2 Apr 2013, 05:32 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    Think you missed a subtraction there
    7 k down
    500/month + 200 gas savings = about 25 K

     

    Total input it 32 K

     

    They are buying it back for 50 K
    2 Apr 2013, 05:43 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    Okay, 66 month financing, 5.5 years, at $1,051/month, for a total cost of $69,366 plus the $7,200 down = $76,566 for the base 60kwh.

     

    But, if you want out after 3 years, you can sell back to TSLA for ~$20k (based on Forbes numbers).. meaning...

     

    $7,200 down
    $1,051 x 36 = $37,836
    After 36 months you owe something like $29,000
    TSLA Buys for $20,000, you owe $9k more..
    Total cost: $54,036
    Per month: $1,501 for base 60 kwh
    2 Apr 2013, 05:46 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    Dan where do you see buy back of $50k? If the forbes numbers are correct, MB S class worth only 28% of original value after 3 years. 28% of $72,000 = $20k, no?
    2 Apr 2013, 06:00 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    And make sure to look at the web site at all the other math. They are including $100/month for time spent at a gas station, and $200/month saved on business tax exemption.
    2 Apr 2013, 06:03 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    thanks for doing the math bbor55!
    2 Apr 2013, 06:06 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    The depreciation is 28%, the value would be worth 72% of the original, thats where the 50 k came from
    2 Apr 2013, 06:24 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    http://edmu.in/Z5m9jk

     

    It losses 13 K in 3 years- roughly 28%.

     

    Do a sanity check, can you pick up a 3 yr old leased MB for 15 K?
    If that was the case id take it over a new toyota corolla any day of the week. :)

     

    Edmunds has the depreciation of alot less for a MB. I think there may be a typo in forbes. A 72 % loss on any car is outrageous, more or less the car is worth scrap metal in a hanful of years.
    2 Apr 2013, 06:47 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    28% of original value after 3 years sounded low to me as well, but you are looking at C class, the Tesla prices are based off S class which apparently do not hold value very well. Mutliple articles on Twitter stating, in fact, they are one of the worst depreciating cars you can buy. Original price is $90-$150k, and looking at ebay at a 2010 they look to be about $50-60k, not a drop to 28% but to about 44% as I see.

     

    http://bit.ly/Z5pUoU

     

    You are right though, Edmounds does not seem to have it out for the S class nearly as bad as the current market seems to.

     

    http://edmu.in/Z73htq

     

    Wonder what Tesla will use as the true determining factor of what the S class depreciation rate is.
    2 Apr 2013, 07:08 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    If the depreciation of the S class leaves the car value at 44% of its original cost after 3 years, that changes my above calculations pretty dramatically, and the buy back option would cost $1,185/month not $1,501.
    2 Apr 2013, 07:12 PM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    As stated in a post below by weccman, Musk stated the value at 43 percent of the original price. So $1,185 for 36 months is about right. Pus $200/month in fuel savings. Makes it slightly less expensive with no downside risk against an M3.
    2 Apr 2013, 07:17 PM Reply Like
  • Retired2thDoc
    , contributor
    Comments (96) | Send Message
     
    Are you sure about the 28% after 3 years Forbes number?
    3 Apr 2013, 06:05 AM Reply Like
  • Glenn Abrett
    , contributor
    Comments (2067) | Send Message
     
    I think that in most states you get at least the downpayment back as a credit. You also get some kind of tax credit from the federal government. However you don't save 200/month on fuel. You are charging the car from your home and you have to pay for that electricity. Unless you use one of their free charging stations but that wastes a lot of time which Musk claims is worth 100/hour.

     

    All and all it is just a deal -- neither good nor bad -- the big plus is that financing is now available for the first time and that should expand the potential market.
    3 Apr 2013, 10:57 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    this was available on their websit at 4:30pm eastern i didnt think that was the announcement though

     

    well it isn't exciting or damning its very blah... way to over promote musk...
    2 Apr 2013, 05:50 PM Reply Like
  • hcsharp
    , contributor
    Comments (22) | Send Message
     
    At least one thing you are all missing is who is underwriting all this. No conventional lease company would write this deal because they don't have enough data on residual value for this car. The buyer has a free option at the end of the lease. In order to do this, somebody had to guarantee it. Tesla can't do that because it's simply too risky at the stage they're in with no cash. No investor would do it without a corresponding high interest rate which would make it unaffordable.

     

    Except one.

     

    GM had the same problem with the Volt leases. Nissan had the same problem with the Leaf leases.
    2 Apr 2013, 06:09 PM Reply Like
  • Locked Down Investments
    , contributor
    Comments (1543) | Send Message
     
    Good point hcsharp. Although I would have preferred if he had personally put his money into expanding the supercharging network.
    Oh well...still big news...and a big thing to put on the line for Musk.
    2 Apr 2013, 06:15 PM Reply Like
  • berylrb
    , contributor
    Comments (2374) | Send Message
     
    To spell it out for you HCsharp, Musk is the guarantor, thus putting his money where his mouth is!
    3 Apr 2013, 02:24 AM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
     
    An S-class has resale value? Without the warranty, pass.
    2 Apr 2013, 06:12 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    Yeah this just doesn't come off as much value, your much better off buying it if you can afford it, and like holding a car for a long time.
    2 Apr 2013, 06:18 PM Reply Like
  • weccman
    , contributor
    Comments (41) | Send Message
     
    In the follow up conference call on this, Elon said that the guaranteed residual value after 36 months would be 43 percent based on the same residual value for a Mercedes 560S, and he said that if, for some reason, Tesla Motors could not make good on this guarantee, he would personally back it. Moreover, this was merely an option the customer would have, not a requirement. If the customer wanted to keep the car, he or she could simply keep making the payments to the end of the loan.
    2 Apr 2013, 06:34 PM Reply Like
  • Glenn Abrett
    , contributor
    Comments (2067) | Send Message
     
    Note all long comments on TSLA. Also note very positive article. Now. I must say that i simply hate this. Pure hype. Basically a simple business modification of little significance -- very, very few regular middle class working stiffs are going to buy a Model S no matter what -- the car is for the elite. Who don't care much about 'financing' anyway.

     

    All the build up seems, to this observer, in very bad taste. The real announcement was Sunday night -- now am not so sure how real it actually was. At Tsla's stage of development maybe they should simply shut up and build good cars. The cars seem to sell themselves. They seem incredibly skilled at getting a modern factory running from a standing start. History is on their side. Their tech is terrific. Their business model outstanding. But this hype thing is a real killer. It makes one think that maybe the shorts are right -- maybe it is all smoke and mirrors.

     

    "And one more thing." When SJ said that what came next was always astonishingly wonderful. Not some trivial business tweak. I guess me thinking that EM was some kind of reincarnation of SJ was simply wishful thinking. Sigh.
    2 Apr 2013, 07:41 PM Reply Like
  • futurecartsla
    , contributor
    Comments (579) | Send Message
     
    SJ never hyped anything? I strongly disagree! Forbes went so far as to call him "King of hype!"

     

    http://onforb.es/10tXFw1
    2 Apr 2013, 08:48 PM Reply Like
  • futurecartsla
    , contributor
    Comments (579) | Send Message
     
    EM just disrupted a whole different category, auto leasing! He's found a "revolutionary" way to offer auto leases. That may not seem like a big deal to you, and me because we don't lease cars, but really it IS a big deal in the grand scheme. It's my understanding leasing makes up a huge portion of the luxury auto business (40% of sales for benz?). Maybe it really is a bigger deal to Elon than profitability because in Elon's mind profitability was always a given (probably exactly what SJ believed aswell).
    2 Apr 2013, 09:32 PM Reply Like
  • Randy Carlson
    , contributor
    Comments (3299) | Send Message
     
    No Glenn, THIS is the big deal. The announcement Sunday night was incidental. Very many folks buying $70-80k cars lease or finance them. Without this kind of consumer finance facility in place for Tesla buyers, their whole business model would be in trouble as soon as they run out of customers who can write high-5 / low-6 figure checks when they pick up their new ride. Now that 'doomsday' scenario is no longer staring Tesla shareholders in the face.
    2 Apr 2013, 11:19 PM Reply Like
  • berylrb
    , contributor
    Comments (2374) | Send Message
     
    Yeah, I think the thing that most don't realize is that even though at these prices the car is for the elite, the elite do lease/finance, precisely because they don't hold a car for 10 plus years, they like to have the latest and greatest which means a high turn over. Hence, a lease makes more sense do to depreciation on a short term purchase.
    3 Apr 2013, 02:28 AM Reply Like
  • Glenn Abrett
    , contributor
    Comments (2067) | Send Message
     
    Randy -- Yep -- I read your article. I now understand. I am relatively new to the world of Tesla investing and hadn't realized there was no financing available previously. Now if only the market would understand what you wrote in that article!
    3 Apr 2013, 10:59 AM Reply Like
  • joenjensen
    , contributor
    Comments (701) | Send Message
     
    OK guys,
    I think you all are all thinking the value of the Model S will go down, What if all your calculations are wrong, what if the Model S goes up in value in three years? What then? How do you calculate the additional value especially if you don't know how much it could go up, plus no one knows what the 2014, or the 2015 Model S will cost, could it change everything, or just make it more complicated? Anyone?
    2 Apr 2013, 08:04 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    wait you are saying a car that isn't a "Classic" will somehow appreciate?

     

    April Fools day was yesterday...
    2 Apr 2013, 08:55 PM Reply Like
  • viktorobert
    , contributor
    Comments (87) | Send Message
     
    The shorts, critics and cynics don't even consider basic inflation when making outlandishly dire predictions for Tesla.

     

    Oil will keep inflating and meanwhile Tesla batteries will decrease in price per KVH due to performance increases already in the works at Panasonic. So the cost of oil gets higher and the cost of Tesla in terms of performance keeps decreasing. Hmmm. Me thinks this makes for some interesting growth prospects for Tesla. Maybe like Apple, Starbucks, and Amazon.
    2 Apr 2013, 09:20 PM Reply Like
  • Ed Lewis
    , contributor
    Comments (69) | Send Message
     
    bbor55, where did you get that the price of a Model S can go as high as $150K. The model S performance version, with all the upgrades and without the kids' seats, sold for roughly a few dollars under $100K; without counting the sales taxes and plate taxes.
    2 Apr 2013, 09:30 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (6945) | Send Message
     
    "After 36 months, buyers have the right to sell the car back to Tesla "for the same residual value percentage" as a Mercedes S Class vehicle."

     

    And how much is the Mercedes S Class? I assume it is 1/2 that of the Telsa car.
    2 Apr 2013, 10:08 PM Reply Like
  • Locked Down Investments
    , contributor
    Comments (1543) | Send Message
     
    Around $90,000 brand new
    2 Apr 2013, 10:31 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (6945) | Send Message
     
    Okay, so it is more like 3/4.
    2 Apr 2013, 11:24 PM Reply Like
  • mate41
    , contributor
    Comments (98) | Send Message
     
    to be sure, take an electric generator in the car ......
    3 Apr 2013, 04:45 AM Reply Like
  • madhaus
    , contributor
    Comments (154) | Send Message
     
    Revolutionary how?
    3 Apr 2013, 05:43 AM Reply Like
  • vornehm
    , contributor
    Comments (4) | Send Message
     
    It's supposed to boost sales over the next month to build the critical mass. I do not think there is so much profit thinking behind the financing concept itself ...
    3 Apr 2013, 05:44 AM Reply Like
  • Tojones1949
    , contributor
    Comments (5) | Send Message
     
    Want more suprchargers
    3 Apr 2013, 05:54 AM Reply Like
  • Retired2thDoc
    , contributor
    Comments (96) | Send Message
     
    After hour stock price shows the disappointment. Maybe a good night sleep make flatten out the drop but not expecting it. Another drop coming??
    3 Apr 2013, 06:04 AM Reply Like
  • Fuelsbros
    , contributor
    Comments (4) | Send Message
     
    This is a big deal for those of us concerned about spending $80k for a car with no long term value history. It appears much like a lease, though probably cheaper. The guaranteed buyback percentage is 43% of purchase price (http://bit.ly/13QKQBR). Some of the "savings" elements they claim are a bit sketchy: business tax benefit applies to any car
    Shortened commute - assumes being able to use carpool land is worth $167/month

     

    Even so, this is almost as good as the lease I've been waiting for. Guess I'll finally be able to exercise my reservation.
    3 Apr 2013, 06:24 AM Reply Like
  • 123man
    , contributor
    Comments (1612) | Send Message
     
    bbor55 - I read the Forbes article - the numbers are based on a MB S65 ($205,000+) - and the trade value is supposed to be compared to an S class 550 (of similar value), correct? - I never thought any Mercedes was worth $100,000, much less $200,000 (which may account for the huge loss in value) - what is the value on a 36 month old $100,000 MB S550? -
    I assume the buy back will be based on %, not on actual dollar cost -
    As I figure it, Tesla's buy/lease versus a new car loan @ say 1.5-1.75%, the buy/lease cost is about $5000 over the straight purchase+interest price of the Tesla - with a much smaller down payment - not bad, plus the guaranty of a buy back - allows one to buy a newer Model S in three years and change color, just in case you don't like what you originally ordered - IMHO
    My Model S should be delivered in the next two months so this program is compelling enough to take a serious look - the only question remaining is if one decides not to sell back, how is the balance payout handled?
    3 Apr 2013, 09:57 AM Reply Like
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