Official Tesla Model S thread

[edatoakrun]

The WSJ deconstructs the $500 a month Tesla announcement.

Great news for those who have been coveting the 2013 Car of the Year but can’t quite pony up the $60,000+ price tag: the Tesla Model S now has a lease option, announced today after some online hype from founder Elon Musk.

And what a deal it seems to be. Head to teslamotors.com and you’re greeted with this up front:

$500 a month — a pretty nice deal, if you can get it. So let’s go ahead and try. Click through and you’ll find the mid-range model coming in at a little more: $543 a month. Fair enough. But note the actual finance payment you’ll be committing to – $1,199 a month. That is slightly above the $500 a month you might have expected.

It turns out that $500/month is really based on estimating the total cost of ownership. You start with the $1,199, and then factor in a bunch of savings or discounts...

There’s a reason this kind of pricing isn’t widely used in advertising: think of a restaurant advertising $1 meals, conditional on customers valuing the time saved in not walking to another restaurant at $100 an hour.

Tesla stock is down 1.7% in after hours trading.

http://blogs.wsj.com/corporate-intelligence/2013/04/02/the-strange-maths-of-teslas-500month-model-s/?KEYWORDS=tesla" onclick="window.open(this.href);return false;

 

[Stoaty]

$500 a month — a pretty nice deal, if you can get it. So let’s go ahead and try. Click through and you’ll find the mid-range model coming in at a little more: $543 a month. Fair enough. But note the actual finance payment you’ll be committing to – $1,199 a month. That is slightly above the $500 a month you might have expected.

It turns out that $500/month is really based on estimating the total cost of ownership. You start with the $1,199, and then factor in a bunch of savings or discounts...

That sort of dishonest advertising--kind of a bait and switch--is not going to win friends and influence people. A big step down for Tesla.

 

[Valdemar]

$1,199 payment for a 60kWh model? Sounds a bit high. 70k car is a 70k car, you don't need a college degree to figure out a ballpark monthly lease payment and not pay attention to all this marketing noise.

 

[evnow]

$1,199 payment for a 60kWh model? Sounds a bit high. 70k car is a 70k car, you don't need a college degree to figure out a ballpark monthly lease payment and not pay attention to all this marketing noise.

Well, people expect "lease" to cost less than financing. Apparently not Tesla.

That is the reason stock is down 8%.

I'm sure Tesla will be forced to do normal leases within a year.

ps :

A leaf like residual & lease would get us to about $900 a month w/ 2k down, 15k miles a year. If the residual was 43%, it would be $1,000 a month.

BTW, my "dashboard" now shows I've chosen 60 kWh model, even though earlier it was 40 kWh model. I guess I had to finalize quickly, if I really wanted to buy the car.

 

[GeekEV]

Everybody keeps calling it a lease, which isn't accurate. I don't think Tesla's calling it a lease. It's a hybrid financing arrangements. It functions like a traditional loan (with traditional loan payments), but provides you an early out with a guaranteed residual (like a lease). The press (and others) need to understand that and stop calling it a lease.

 

[LTLFTcomposite]

Everybody keeps calling it a lease, which isn't accurate. I don't think Tesla's calling it a lease. It's a hybrid financing arrangements. It functions like a traditional loan (with traditional loan payments), but provides you an early out with a guaranteed residual (like a lease). The press (and others) need to understand that and stop calling it a lease.

That's the problem. People were looking to get into the car for $699 a month, and this ain't it.

And stop with $500 monkey business. Even the gas savings, of course it better give a savings, if you're just going to give it back in higher payments a lot of people will say forget it, I'll just get the Merc/audi/bmw.

 

[evnow]

That's the problem. People were looking to get into the car for $699 a month, and this ain't it.

Yes.

BTW, they can "easily" offer a $699 a month lease : MSRP $63,570, $4,500 down, 49% residual, 0.001 MF.

 

[edatoakrun]

Everybody keeps calling it a lease, which isn't accurate. I don't think Tesla's calling it a lease. It's a hybrid financing arrangements. It functions like a traditional loan (with traditional loan payments), but provides you an early out with a guaranteed residual (like a lease). The press (and others) need to understand that and stop calling it a lease.

I wonder.

IF Tesla structured this program as a conventional lease, might the future (potential) liability be required to be accounted for differently, quite possibly making Tesla's future projections of profits, look a bit...different?

 

[mitch672]

Pay attention now...

Tesla is NOT Nissan or Toyota

NO bank was willing to take a risk on them staying in business, or residual values.
The only choice they had was for Elon to personally guarantee the residual value, so he did.

Once Tesla is more established as an auto manufacturer (in several years), and the market has shown what the actual real value is for a 3 year old Model S, THEN they will be able to offer a traditional lease through many banks.

Tesla does not have the financial resources of Nissan or Toyota to offer the lease and carry it themselves, yet. This is the best they could come up with for now. Take it or leave it, it is what it is, as they say.

 

[evnow]

This is the best they could come up with for now.

They had a proper lease for Roadster.

 

[palmermd]

This is the best they could come up with for now.

They had a proper lease for Roadster.

And I'm sure you can work with a leasing company to get one with the Model S, just not a "Tesla Financial" (which does not exist) lease. I don't know why so many people are so upset about this. They now offer buyers a guaranteed minimum resale value for the car in 36 months. Seems pretty good to me. I'm sure it will help Tesla secure a few more sales. Once a bank decides to step up and offer a traditional lease I'm sure Tesla will offer that as well. Small steps for a growing new company. Elon and the rest of Tesla seem to be moving forward at a nice pace. Not too fast and not too slow. Of course you see people on both sides complaining, which really just means they are going at the right pace.

 

[evnow]

And I'm sure you can work with a leasing company to get one with the Model S, just not a "Tesla Financial" (which does not exist) lease. I don't know why so many people are so upset about this. They now offer buyers a guaranteed minimum resale value for the car in 36 months. Seems pretty good to me. I'm sure it will help Tesla secure a few more sales. Once a bank decides to step up and offer a traditional lease I'm sure Tesla will offer that as well. Small steps for a growing new company. Elon and the rest of Tesla seem to be moving forward at a nice pace. Not too fast and not too slow. Of course you see people on both sides complaining, which really just means they are going at the right pace.

People are upset about the BS $500/month - which Musk still claims is not BS !

About that lease - I'm sure the same banks would have offered the lease. All a bank has to do is buy the car, lease it to the customer and when he returns it, sell it back to Tesla for the "guaranteed price". No other financial risk for the bank (except for usual credit risk etc).

Musk actually thought this was better than the usual lease deals. It isn't.

 

[cwerdna]

People are upset about the BS $500/month - which Musk still claims is not BS !

Agreed, because the BS $500/month intended to grab headlines requires a lot of assumptions, some of which are ridiculous and/or not available to most folks (http://www.businessinsider.com/can-you-really-get-a-tesla-model-s-for-under-500-dollars-per-month-2013-4" onclick="window.open(this.href);return false.

Even if I were making an effective $100/hour on a full-time job, can I now batch up the time saved from having a Model S to take on more $100/hour work?

While CA offers a $2500 CVRP, good luck averaging $0.11/kwh for electricity in CA unless you already have or will install PV, which isn't free. There are obviously plenty of cheaper BEVs and PHEVs that will shorten your commute (via HOV stickers) and help w/avoiding the gas station...

 

[mitch672]

To some its better, to others not so much.

It offers the ability to turn in the car in 36 months, like a lease, but you don't have to.
You can just keep paying and you own it in 63 months. It's really a purchase with a guaranteed out after 36 months. They shouldn't even call it a lease.

Just ignore the page with the calculator, that really has very little to do with the deal, it's just marketing...

 

[cwerdna]

From http://green.autoblog.com/2013/04/03/tesla-increases-lease-calculator-costs/" onclick="window.open(this.href);return false;:

Musk is confident that his numbers are right – he told Automotive News that "Even if you don't count the time savings, you can own the car for net cash out of pocket for $500 a month, no marketing gimmicks. Some people wanted to call bull---t on us because we had certain default [calculations] set up on the site, and we have fixed them" and also "I just want to make sure people really do appreciate that $500 is a real number and not some sort of marketing fiction" – and is promising more announcements throughout all of April. Next week, we'll learn something about servicing and the week after that will be one about Supercharging and after that, Musk said, "there will be a mystery announcement. Then we'll shut up and hopefully people won't be sick of us." It all depends on what those announcements will be.

(added emphasis)

 

[evnow]

It offers the ability to turn in the car in 36 months, like a lease, but you don't have to.
You can just keep paying and you own it in 63 months. It's really a purchase with a guaranteed out after 36 months. They shouldn't even call it a lease.

Right, they shouldn't call it a lease. It is definitely a positive step overall.

I think any financial institution should be able to offer leases - now that Tesla guantees a value at the end of 3 years (the biggest difficulty with offering a lease). As I said, I'm sure Tesla will announce just that in a few months - esp. now that this "lease" offer has not been well received.

 

[cwerdna]

I received an email earlier today from Tesla titled "Tesla Unveils Revolutionary New Finance Product".

AFFORDABILITY
Tesla's finance partners, US bank and Wells Fargo, have agreed to provide only 10% down financing for purchase of a Model S*...

It also has ASSURANCE and CONVENIENCE sections.

I didn't realize this but at the bottom it says:

*Tesla Financing Product is only available in the following states: CA, CO, IL, FL, NJ, NY, OR and WA

 

[evnow]

I didn't realize this but at the bottom it says:

*Tesla Financing Product is only available in the following states: CA, CO, IL, FL, NJ, NY, OR and WA

Yes, I was wondering about that. May be the states where those banks operate ? Also look like the largest EV selling states (TX is missing).

 

[cwerdna]

^^^
TX is another can of worms for Tesla...

See http://insideevs.com/one-more-time-tesla-versus-dealer-association-texas-style/" onclick="window.open(this.href);return false; and http://www.teslamotorsclub.com/showthread.php/15320-Texas-Legislative-update-Please-help-out-if-you-live-in-Texas" onclick="window.open(this.href);return false;.

 

[GeekEV]

About that lease - I'm sure the same banks would have offered the lease. All a bank has to do is buy the car, lease it to the customer and when he returns it, sell it back to Tesla for the "guaranteed price". No other financial risk for the bank (except for usual credit risk etc).

A very astute observation. they don't restrict it to non-business purchases only or anything like that.

Musk actually thought this was better than the usual lease deals. It isn't.

When combined with your other observation, perhaps it IS. It could very well enable a proper leasing market while simultaneously giving those of us who want actual ownership the same easy-out should things not pan out.

But, yes, like you and others have said, the $500/month thing is marketing hyperbole of the highest order... I do think that's a bit of a mistake.