With a target price of $35,000 before incentives, what are we to believe the Tesla Model 3 will lease for per month?
The folks over at Jalopnik speculate that the Model 3 could lease for as little as $200 per month. We disagree, but here's how Jalopnik justifies that $200 monthly price:
"The following scenario is speculative and is based on a few assumptions. The first is is that the Model 3 would indeed carry a purchase price of about $35,000. The second assumption is that the Tesla would maintain the same residual, or resale value, as a similarly priced BMW 320i sedan, which would be roughly 60%. Given the lease programs that Tesla is already offering on the Model S, I don't think this is too far fetched. I also do not include any tax, title, and tag fees as they vary from location to location."
Jalopnik then assumes the BMW 3 Series is the Model 3's primary target, so the automotive site examines the 320i's lease special: $309/mo for 39 months. The fine print for this 320i lease reveals the following, according to Jalopnik:
"If we look at the fine print we see that this payment is based on an MSRP of $35,300.00 which includes the equipment listed above. For those of you not familiar with leasing lets to a general breakdown on how BMW comes to that $309/mo figure. With a lease you are basically only paying for the depreciation. Here is how it works, the sale price of the BMW 320i is 35,300 we subtract the $2750 down payment and we get $32,458. According to BMW the residual value of that 320 in 39 months will be $21,886.00. The difference between the residual and the purchase price of $32,458 is $10,682, this is then divided by 39 months for a payment of $273. But how did BMW get that $309 number? Well even with a lease you still have to pay interest otherwise known as "money factor." BMW is assuming a money factor of .0013 which multiplied by $273 is about $36, now add that to $273 and we arrive at the payment of $309 (before taxes and fees)."
Lots of maths involved. Jalponik breaks its down in an easier to decipher way:
"Even if your head is spinning from all that math, here is what you need to think about. We know the lease is mostly determined by the purchase price over the residual value, what if the purchase price on a $35,000 is now reduced by $7500? As that is how it works with EV leases, the lease company takes the tax credit and deducts it from the sale price. Now we have a Model 3 that has a purchase price of $27,500. If the Tesla can maintain the same 60% residual value as the BMW for a resale of about $22,000. The difference is $5500 divide that by 39 months and you have a payment of 141/mo, multiply the same .0013 money factor for a total of $160/mo (before taxes and fees)."
$160 will not be the lease rate on the Model 3. Even Jalopnik agrees with us on this, stating that "it is safe to say that with options most cars will come in at about $40,000."At $40,000, the lease rate quickly jumps to $245 (plus tax/fees/etc.)
Besides that there is the assumption that Tesla will, or is willing/able to both lease cars at the same rate and peg the residual at 60%. Using the current Model S as a guide, that number is more likely to be 50% - which alone would add more than $100/month to the number.
And then there's that issue with the $7,500 federal tax credit disappearing for Tesla. Using Tesla and the street's own estimates, we can estimate the company will have sold some 200,000 Model S and X vehicles in America sometime in mid-2017 triggering the phase out - right around when the Model 3 is soon to launch (if everyone goes according to Tesla's plan). For all intents and purposes, there will be no full $7,500 federal credit on the Model 3, or it will be very, very short lived.
That alone would drive up the 39-monthly lease rate by over $200 per month using the scenario described above (60% residual, $35,000 price and .0013 money factor).
If we had to guess, we'd put the base Model 3 lease rate decently over $450 per month.