Tesla hasn’t done much that’s conventional in the car business. Just being successful as an independent U.S. automaker is unconventional enough, but the feisty maker of sexy electric cars has shunned the traditional dealer network and, now, debuted a whole new way to finance a Model S.
Well, mostly new. It’s essentially a lease. And a purchase, but with all kinds of asterisks and “true cost of ownership” numbers involved. But is the new financing program truly revolutionary, as Tesla CEO Elon Musk has suggested?
Well, yeah, the idea actually is. Don’t expect to drive a new Tesla for dirt cheap (not even close), but Tesla’s new financing plan should pique the interest of more than a few potential buyers.
At its most basic level, Tesla’s new lease is actually a purchase, financed through a bank, but with the option of selling the car back to Tesla in 36 months at a pre-determined price. Of course, there’s lots more to it than that. Actual lease prices are $1,421 a month for the 85kWh Performance Model S, $1,199 a month for the 85kWh trim and $1,051 a month for the 60kWh version. With the help of an online calculator, Tesla factors in the price of premium fuel that won’t be needed, tax incentives, the guaranteed resale value, a potential business tax credit and even time spent at the gas station to determine a true cost of ownership.
Calculations on a 60kWh car for me in my state worked out to a true cost of $686 per month. It’s tricky math, to be sure, since the amount coming out of my account every month would still be the $1,051.
Tesla worked with Wells Fargo and U.S. Bank to offer lease-like benefits while still offering drivers the opportunity to own their cars. For people with good enough credit, the banks will provide a 10% down payment, covered by U.S. Federal and state tax credits. The loan term is 66 months, but after 36 months, Tesla says, “You have the right, but not the obligation, to sell your Model S to Tesla for the same residual value percentage as the iconic Mercedes S-Class.”
In my very humble opinion, this is an innovative idea, but it seems more like innovative marketing than financing. Tesla has basically said, “We’re going to let you buy this car, at this price, with the option of selling it back to us later.” That’s cool, and I suppose many people will take advantage, but I tend to think news of the cancellation of the 40kWh Model S, and Tesla’s first-quarter profit, were bigger stories.
Is Tesla’s new financing option something you would consider?