Tesla Announces Model S Leasing From $500/Month* – But Not Really (Video With CEO)

5 years ago by Jay Cole 30

Tesla Introduces New Leasing Program

Tesla Introduces New Leasing Program

Elon Musk Announces Leasing Program For Model S (finally)

Elon Musk Announces Leasing Program For Model S (finally)

What was Elon Musk’s big announcement he was so excited about last week?   Leasing.  Or at least something that resembles leasing.

After the market closed today, Tesla announced that they have started a new leasing option on the Model S.

“Most people throughout the world prefer to own their belongings, rather than rent what is essentially someone else’s property via a lease.  However, leases do provide some key benefits, particularly a low initial payment, tax deductions, lower risk on resale value and the convenience of returning a car without the hassle of reselling it personally.”

The leasing program starts as low as $500 a month with 10% down according to company….sorta.  That is if you factor in a whole bunch of intangibles, along with federal and state tax incentives.  It appears as if the actual cost to least the new entry level Model S (60 kWh) still starts at $1,051/month factoring in only the $7,500 federal credit.

Tesla has provided an online calculator to aid you in figuring out the true cost (as well as actual cost) to lease a Model S.  You can find that resource here.

It should be noted that if the entry level 40 kWh (starting from $59,900) was not cancelled just 48 hours ago, the cost of leasing a base Model S would have been 20% cheaper.

Here is how the Tesla CEO explains the “world’s best financing product for the world’s best car” program:

  • US Bank and Wells Fargo have agreed to provide 10% down financing for purchase of a Model S (on approved credit.)
  • The 10% down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000.  New Jersey, Washington and DC also have no sales tax for electric vehicles.  These advantages are not available when leasing.
  • When considering the savings from using electricity instead of gasoline, depreciation benefits and other factors, the true net out of pocket cost to own a mid-range Model S drops to less than $500 per month.
  • After 36 months, 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, one of the finest premium sedans in the world, made by Daimler (also a Tesla partner and investor)

The residual guarantee is available between months 36 and 39 on the 66 month lease, and is for 43% of the purchase price.

Update:  Tesla apparently was not aware of the terms of their own program (or the applicable math calculation), as a company spokesperson says the lease-long is actually 63 months…making the the monthly payment even higer.  (making the lowest possible price now around $1,100/month)

 “We made a small change to the site overnight – changing the 66-month term to a 63-month term. We were incorrect with putting 66 months initially. I believe this is the reason for the discrepancy.”  –  Tesla spokesperson Shanna Hendriks told AutoblogGreen

Tesla's Resale Guarantee Agreement

Tesla’s Resale Guarantee Agreement

Earlier Tweet On Today's Leasing Announement In Which Mr. Musk Vows To Back Up Lease Guarantees Personally

Earlier Tweet On Today’s Leasing Announement In Which Mr. Musk Vows To Back Up Lease Guarantees Personally

The Tesla CEO explains (in a video below) that the guaranteed residual doesn’t just come from the company, but from himself personally as well; which now makes sense of Mr. Musk’s “putting his money where is mouth is” tweet from last week.

The after-hours news (and previous event over-hyping) didn’t impress the market much, as shares traded off by over a $1.00 (real-time quote).

The immediate after-market reaction to the news had the stock trading lower almost immediately, and investors punished the California company during the day by over 7%, with the stock falling $3.24 to $41.10 (real time quote here)

Fine print on the conditions and terms of the lease:

terms

And here’s a look at how the lease numbers play out for the 60-kWh Model S under what we’ll say is a “typical” scenario ($7,500 tax credit, 12,000 miles per year and so on)

model-s-calculator

Tesla Model S 60-kWh Lease Calculator

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30 responses to "Tesla Announces Model S Leasing From $500/Month* – But Not Really (Video With CEO)"

  1. Robster says:

    That’s pretty cool. Affordable for ‘normal’ affluent people. This will certainly increase their sales volume. I hope they will start a similar deal in Europe! I’m afraid not though:-(

  2. kdawg says:

    So for us non-lease experts, what would my out of pocket cost be to drive a Tesla for 3 years (not counting insurance)?

    1. kdawg says:

      And by having to buy the car, I’m stuck with the sales tax (6% in Michigan), And why would they give me cash after 36 months? Shouldn’t they just take the car back and I stop making payments?

    2. Bonaire says:

      You have to count insurance. That’ll be at least $2-3K per year. I estimate $37-40K for a 3-year “rental”. The car should last 10 years without too much abuse, so it may be better to buy and hold 6+ years. Out of my ballpark, though. I saved and couponed in order to get my Volt for $25K out of pocket. I am not even close to a Tesla 🙂

  3. David Murray says:

    So I wonder what the real monthly payment would be. One of the great things about a Leaf is that you can lease it and the payment is so low you can almost say you drive the car for free due to the gas savings. With the Tesla it will definitely be a bigger chunk of change. And I’m not sure how the insurance company feels about insuring a car that costs $80,000.

    1. scottf200 says:

      LEAF is generally considered utilitarian so your comparison is for a different targeted audience. Tesla owners are looking at other reasons than ROI and time to break even.

      1. dick tracy says:

        And that is the main reason most “green” companies fail, they think people buy their product for reasons other than logic and financial gain. I’m not buying an alternative energy car until the numbers make it financially better than gasoline. And with electric cars there is the environmental cost of production and disposal of the battery that bring them even with gas emissions over their respective lifespans.

  4. Anderlan says:

    Wait, what? Why can’t other EV companies also roll the rebate into their financing?

  5. Jon_B says:

    Am I missing something from the conference call…3 year lease at $500. At year 3 turn it in or continue to pay for 2 more years at $500. Isn’t that only $30K?

  6. GeorgeS says:

    I never leased before I bot the Volt….but I like it for the same reasons as outlined above. However the lease numbers that are thrown around are usually before tax, license and options added to the base vehicle.

    So what is the BOTTOM LINE lease payment on the S????…..not the advertised number.

  7. kdawg says:

    I went to Tesla’s website and found out what my monthly cost would be (vs continuing to drive my Volt).

    for the 60kWh version = $1,048 / MO
    for the 80kWh version = $1,224 / MO.

    Still too rich for my blood.

    http://www.teslamotors.com/true-cost-of-ownership

    1. BP says:

      It’s a new game…see if YOU can get it to $500 a month!

    2. GeorgeS says:

      Yeh that figures. only a factor of 2 over the 500$/mo number.
      Count me out.

      1. Eric Loveday says:

        We’ve updated this post several times now to provide the additional and necessary info on this “killer” lease deal. We’d like to add more to the post still, but it’s getting so long that the scrolling wheel on my mouse might soon malfunction….and Jay says we gotta stop at some point.

  8. Anthony says:

    They’re throwing all sorts of crazy stuff at the real lease price ($1100 or so) to get it down to the $500 mark.

    * Gas savings (OK, legitimate)
    * Time spent at gas stations (eh, not really)
    * Shortened commute via carpool/EV lanes ($100/hr for my time? not likely)
    * Business tax benefit (I’m not a business!)

    1. Bill Howland says:

      Agreed Anthony.

      Millionaires (their target audience?) may value their time at $100 / hour, but others couldn’t justify this kind of “hopeful” accounting.

      This was the big announcement? Apparently the fall in the stock price has left others with the same reaction, even millionaires.

  9. evnow says:

    Nice – why not also do a real lease deal for us ?

    12k miles per year & 43% residual. Compare to Leaf’s 15k miles & 49%.

  10. kdawg says:

    I’m trying to figure out why this is big news? What were people financing it for before? Is the big news the 2.95% rate and the offer to buy it back after 3 years? meh.

    Elon, if you want to make news, drop the price to $50K, offer 0% financing, and a buy-back after 3 years.
    Or better yet, offer a real lease, with a payment of $500/month.

    1. Eric Loveday says:

      @ kdawg….Yes…the big news in the guaranteed buyback price, which is listed at 43% of the purchase price. Musk is guaranteeing that amount…provided that the terms and conditions are met…So you can try it out for a few years and, if it’s not for you, then sell it back to Tesla.

    2. zilm says:

      After good Q1 results anouncement quotes rised 15%+. After this it gains 0.93%. So it’s not actually a great news, just a kind of pr.

  11. Eric Loveday says:

    And we should further add that this isn’t a lease. It’s a 66-month finance program with a 36- to 39-month buyback window.

  12. Josh says:

    This is huge news, Elon just guaranteed that the $30k Tesla will be available in 2016!!!

    And it is a three year old Model S ($70k * 43% = $30k)…

  13. derp says:

    “This is huge news, Elon just guaranteed that the $30k Tesla will be available in 2016!!!
    And it is a three year old Model S ($70k * 43% = $30k)…”

    You’re not much of a businessman if you think he will resell them for the same price he buys them back. And yes, a little less than half off the price of a 3-4 year old car is normal.

    1. Josh says:

      Sorry, I guess my sarcasm didn’t make it through in that comment.

  14. derp says:

    “And we should further add that this isn’t a lease. It’s a 66-month finance program with a 36- to 39-month buyback window.”

    5.5 years is a little faster than i’d like to pay back my loan to purchase the Model S, but most fools are paying 1k a month for their bmw or porsche lease, and their car doesn’t save them $$ when they drive it. Not to mention they don’t even own it at the end.

    1. Herm says:

      these BMW leasers are the customers this news release is precisely aimed at..

    2. dick tracy says:

      yes, but they are driving a better car and their neighbors aren’t subsidizing them.

      1. kdawg says:

        They only subsidize the fuel being used inefficiently in them. Oh, and people are killed for it too. And it pollutes. So that’s it. Just the stinky blood fuel.

  15. Herm says:

    “Musk, who has a current estimated net worth of $2.9 billion according to the Bloomberg Billionaires Index, said he is “personally standing behind” the residual value offer “even if Tesla is unable to.””

    From The Detroit News: http://www.detroitnews.com/article/20130403/AUTO01/304030405#ixzz2PSiZUkQ5