Tesla Model 3 To Lease For $200 Per Month?

JAN 15 2015 BY ERIC LOVEDAY 50

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.”

A No Option Tesla Model S 60 kWh Leases For Nearly $800 Per Month

A No Option Tesla Model S 60 kWh Leases For Nearly $800 Per Month

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).”

Tesla Logo

Tesla Logo

$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.

Source: Jalopnik

Categories: Tesla

Tags: , , ,

Leave a Reply

50 Comments on "Tesla Model 3 To Lease For $200 Per Month?"

avatar
newest oldest most voted
Lustuccc
Guest
Lustuccc

Lots of assumptions… Will Tesla want to lease the new Model 3 ? We don’t know.

Did Elon Musk ever stated that he was targetting the BMW 3 series ? I think it is the journalists who supposed this, and repeated it over and over… and now take it for granted. But Tesla is targetting ICE cars in general, not a specific model.

It is like the assumption that batteries cost over 400$ per kWh… It is all speculation since nobody except companies involved personel knows for sure how much is the real cost of the batteries. And it is a good strategic move to let float rumors of high prices to keep the cars price tag high.

Robb Stark
Guest
Robb Stark

Elon has said on Camera he is targeting BMW 3 Series and Audi A4 more than once.

Anybody can comb through youtube videos to see that.

Of course he expects conquest sales from LEAF,Prius,Camry,Accord etc. But the specifications and price is targeted at those luxury entry level sport sedans.

I guess since MB is a partner he never mentions CLA Class.

I don’t expect lease deals until demand starts to wane. Why lease if you can sell every car you make?

For those small business owners that want to lease for tax purpose it will be available but not subsidized at great rates.

Mike
Guest
Mike

The 3 series and the A4 typically sell for $40,000+ after options.

Robb Stark
Guest
Robb Stark

Options are optional.

You can buy a BMW 3 Series for $33k or an A4 for $35.5k.

You will be able to order a base Model 3.

Fully loaded versions will get priority shipping.

But you will be able to buy a base Model 3 just like you can a base Model S.

Tesla Fan
Guest
Tesla Fan

Who gets a car with no options?

ModernMarvelFan
Guest
ModernMarvelFan

Or the base model will be launched and soon cancelled due to production limit and lack of demand…

LOL.

MDEV
Guest
MDEV

That is what I think the Model 3 will sell for in the 40K range.

Spider-Dan
Guest
Spider-Dan

Similarly, you “can” buy a Model S for $71k but the average sale price is $90k.

Because if you have $70k+ to spend on a car, why not get the good version?

Lustuccc
Guest
Lustuccc

@Robb Stark I checked and I was wrong. Tesla did announce the Model “E” (at the time) as a competitor for the 3 series.

Pete Repete
Guest
Pete Repete

Ehhh is this just me or is there seriously not anything more exciting going on in the electric driven automotive newscycle? Speculating on a – not even at a prototype stage – car’s eventual lease price 3 – 4 years from now, or whether some race driver, that quite frankly not a lot of us have ever heard of, has been tested positive for Columbian Marching Powder – seems a little off message IMO. Shouldn’t we really chase the non existing prototypes of the next great white hope – MODEL X???

Just thought I’d bring it up.. Great site otherwise

Jason
Guest
Jason

You have been around the past week right? New Volt, Bolt and a bunch of new things from the Naias and CES. Newscycle has been amazing so far this year

Pete Repete
Guest
Pete Repete

I have been around since the beginning (and this is truly a great site, thank you Eric) and granted there was some good new regarding the Bvolts and some plug-ins from Naias, but frankly this was covered by most auto media – I’d like something less speculative – lease price on a maybe car .. release date still unspecified… Maybe it’ll be $400 – maybe $50.. Nobody knows!! Go and find Moby Dick, there must be a camera shy production ready X-type running around somewhere with swirls on….

Marshal G
Guest
Marshal G

It’s of great interest to me, as the Model 3 is my absolute first choice of next car, but I’m on the lower edge of middle class and depending on price, options, and tax credits leasing might be my only hope of acquiring it. Otherwise I’m stuck with Leaf 2. I’ll be very anxiously watching the tax credits drain away from Nissan while I wonder if I should even wait for a car I might not be able to afford. Every little bit of information is important to me.

Lustuccc
Guest
Lustuccc

Don’t forget to include economies of fuel for 10 years in the overall price.

Josh
Guest

It sounds like he was deciding if he could afford a Model 3 or a LEAF 2.0. I am pretty sure they have the same fuel cost over 10 years.

ClarksonCote
Guest

Not entirely true with the robust Tesla Supercharger network, especially if they continue expanding it.

At this rate, I can almost make the trip to my hometown 375 miles away in a Tesla with “free” fill-ups. That’s not possible in a Leaf, despite their free charging program.

Sharky
Guest
Sharky

How long do you believe Tesla intends to offer charging for free?

Jerry
Guest
Jerry

For life would be my guess. No reason to change what they do now for the S.

Tesla Fan
Guest
Tesla Fan

Bolt nor Volt are exciting.

Model S is more exciting than every car and its been out for 3 years already

Spider-Dan
Guest
Spider-Dan

Since we’re including unaffordable EVs in the discussion, I find the Porsche 918 to be pretty exciting…

Jeff
Guest
Jeff

Depends on what excites you. Even if I never drive either one, this explosive growth in the EV sector is a good thing for anyone concerned about our nation’s energy independence or humanity’s environment. I find that exciting.

Mint
Guest
Mint

Tesla won’t need such low lease rates initially. It’s down the road in 2019 or 2020 that they may need financing incentives.

My guess is that they’ll have a subcription-like program. You’d pay something like $3 for a “T-gallon”, which gets you 50 miles (i.e. cheaper than gas). Tesla partners with utilities, and if you charge at night then that covers electricity cost as well.

This works out to about $800/yr revenue for Tesla on each car sold this way, allowing them to either reduce price by $5k+ or advertise a lower lease rate.

David Murray
Guest
David Murray

I’ll believe it when I see it.

Lustuccc
Guest
Lustuccc

You will, simply because an affordable pure EV is the main goal of Tesla Motors. There is no alternative, in contrast of other auto-maker who wont suffer at all not rolling out any good BEV.

Lindsay Patten
Guest
Lindsay Patten

The phase out of the credit still concerns me. As the legislation stands a company like Toyota can wait until Nissan and Tesla use up their quota and then release an EV with a $7500 price advantage. I haven’t heard anything about changing that aspect of the credit.

Sublime
Guest
Sublime

Its a good point. In my opinion, once one manufacturer hit’s the 200,000 limit, the phase out should kickoff for all manufacturers.

Jay Cole
Admin

/this

IMO the credit will convert into a limited time proposition and then start the wind-down clock (as outline after 200k for any manufacturer), but for all the OEMs effective a certain date.

Like allowing only the low volume EV makers (Toyota, Honda, Chrysler, etc) to get the credit over the high volume early movers (GM, Nissan, Tesla), axing it completely would also be far too disruptive to the segment.

The Model 3’s best shot at getting the full credit for any amount of time would likely be if the program changed to hard sunset timing

ie) phase out begins Jan 1st, 2018, then
50 % of the credit for the next 2 quarters, then 25% for the subsequent 2 quarters

This is probably the most logical outcome

ClarksonCote
Guest

A hard sunset would make a lot of sense Jay. That way, the automakers that drag their feet aren’t rewarded, and the ones that are proactive in electrified offerings are not penalized in competing against them.

David Murray
Guest
David Murray

This has been bugging me too. Basically it allows the companies that didn’t bother to take any risk to have an unfair advantage once the market is thriving. I hope something changes to prevent this.

Jeff
Guest
Jeff

That assumes that they can instantly acquire the corporate knowledge to build competitive EVs after staying out of the game all along. Of course they will have it easier than the pioneers did at the beginning, but I don’t think they’ll be instantly up to par.

Spider-Dan
Guest
Spider-Dan

I don’t think it’s that much of a concern.

We’ll see for sure in a few months when the Volt2 pricing is unveiled, but the Volt has already had a $5k price drop during the first-gen. So whatever advantage Toyota may have in not having used up their 200,000 rebates, they’ll lose in being behind on their technology progression/cost reduction.

Keep in mind that Toyota has already burned over 30,000 credits on $2500 rebates for the dead-end Plug-in Prius.

IDK
Guest
IDK

“And then there’s that issue with the $7,500 federal tax credit disappearing for Tesla.”

That just pushed GM’s Bolt into the $40k range! Nooooooo!

Billy L
Guest
Billy L

There will still be a reduced tax credit available on Teslas even after the first 200,000 vehicles are sold. http://www.irs.gov/Businesses/Plug-In-Electric-Vehicle-Credit-%28IRC-30-and-IRC-30D%29

Lustuccc
Guest
Lustuccc

$35000 – $7500 = Yummy yummy!

Sublime
Guest
Sublime

Eventually, I expect that EV residuals will be higher than ICEVs. As battery longevity improves and expected technology improvement decreases (as the products mature), there’s no reason a 3 year old EV wouldn’t be worth 70% or even 80% of it’s sale price.

Spider-Dan
Guest
Spider-Dan

Eventually, sure. But short term, anyone who actually bought (as opposed to leased) an EV is going to face some sticker shock when they go to sell/trade in their car. The combination of available rebates on new cars and technology advancement will not be kind to resale values.

Suppose the 2G Volt comes out at a base MSRP of $29,999. That puts the price of a brand new 2G Volt at $20-25k after incentives. So what is the value of a used 2011 1G Volt in that scenario… $15k? $10k? That’s some mighty steep depreciation for a car that stickered for $40k 5 years ago.

And if you think that’s bad, wait until the 2G Leaf comes out. What value will a BEV with a usage-degraded 65-70 miles of range have when there are brand new 150-200 mile Leafs sitting on the lot for a net price of $25k or less?

Murrysville EV
Guest
Murrysville EV

You’ve got to be kidding.

A 3-year-old Leaf has a KBB trade-in of about $11500, which is roughly 30% of MSRP, or 39% after incentives.

The same car is retailing at $12-16k.

Its battery will be nearly useless in another couple years. My ’12 Leaf’s battery has degraded to the point where my winter driving range is about 25-30 miles.

So not only will battery technology have to improve by a lot, normal market depreciation curves would have to be disrupted to make your 70-80% prediction come true.

The only way that could happen if there is high demand for the product, but limited supply. Neither of these things will happen. Otherwise, who would pay 80% of new car prices for a 3-year-old car – of any kind?

Anton Wahlman
Guest
Anton Wahlman

Pardon my skepticism, but I wonder what kind of car Tesla will be able to sell for $35,000 profitably. And I don’t mean “gross profits”. I mean “net profits.” For if it isn’t profitable, it’s not sustainable. And if it’s not sustainable, what happens to warranties and support if Tesla can’t sustain its existence? For this reason, I suspect the $35,000 price, if it happens at all, will be very short-lived. They may take a few orders at the $35,000 price “just to say that they did it.” But then the price would be higher after that. In any case, it won’t be available for years, and we have no idea what $35,000 will buy in terms of looks and overall performance. So it’s a little early to speculate…

Spider-Dan
Guest
Spider-Dan

They did the same thing with the S40: initially offer a cheap version for a low price, then say “not enough demand” and cancel it.

Given that they are facing delivery shortages anyway, Tesla could cancel the S60 tomorrow and say “not enough demand,” but from a PR perspective, that would be bad. Still, it didn’t make sense to produce S40s when they could be making more profitable S85s and P85s instead.

I can’t see why it would be any different with the Model 3.

Lensman
Guest
Lensman
Anton Wahlman said: “Pardon my skepticism, but I wonder what kind of car Tesla will be able to sell for $35,000… if it’s not sustainable, what happens to warranties and support if Tesla can’t sustain its existence? …I suspect the $35,000 price, if it happens at all, will be very short-lived. They may take a few orders at the $35,000 price ‘just to say that they did it.'” If you look at what Tesla Motors spokesmen actually say when interviewed, the price for the Model ≡ is usually (not always) quoted as “35 to 40 thousand”. I don’t think it’s reasonable to claim that Tesla has locked itself into selling the Model ≡ for $35k, regardless of anything that develops. Also, look at what happened with the Roadster: Tesla raised the price by 10% after the debut, but despite that price increase, Tesla essentially made no overall profit on the Roadster program. I think Tesla has learned a lot since it started selling the Roadster. The Model ≡ will be priced to make a profit; a smaller profit margin than the Model S. It’s reported that the Model S has about 25% gross profit, and I think Musk was quoted… Read more »
Grendal
Guest
Grendal

Tesla will have tens of thousands of orders of the base level Model 3. But just like the Model S they will send out Signatures and fully loaded Model 3’s with the largest battery pack for as long as they can. I would reasonably expect six to nine months of fully loaded cars leaving the factory as they ramp up to full production. So expect 20,000 or more $50K+ Model 3’s long before a $35K version ever leaves the factory. They absolutely will never drop the $35K car unless no one is buying it and there will be plenty of buyers unless Tesla really blows it.

Rick Danger
Guest
Rick Danger

I think it’s a pretty safe bet that the average price of a Model ≡ is going to be $40-50k, with a 300 mile 3 sec 0-60 D variant possibly hitting $60k or even $70k.
That said, I’m sure the base model will be available (at least for awhile) at $35k. Who knows? The base model may end up being popular, with people stretching up from their normal $25k range to buy a car that will more than likely make automotive history.

SIvad
Guest
SIvad

Maybe I’m missing something here but is the math correct?

$35,000 x .4 = $14,000 depreciation
$35,000-$14,000 = $21,000 not $22,000

Then $27,500 purchase – $21,000 resale = $6,500

Then $6,500 / 39 mo. = $167 mo.

Finally $167 x .0013 = .217

So shouldn’t the final monthly be $167 + $22 = $189 (less taxes and fees)?

Steve S.
Guest
Steve S.

It seems to me the even larger error is this assumption that you get to reduce the purchase price by $7500 but the residual is not affected by the rebate. I own a 2011 LEAF, so I understand first-hand how that is simply “bad math”. If you are selling a lease return, you are competing with those who purchased and are reselling — they got the rebate, too. So basically they are arguing that this car will dramatically less depreciation than basically any other mainstream car ever sold. Not sure I buy that one.

taser54
Guest
taser54

Still waiting for this Model III to materialize into a solid form.

Scott Franco
Guest
Scott Franco

More like $300

Nix
Guest
Nix

With the exception of the Model S, depreciation on EV’s currently are more accurately calculated AFTER subtracting the 7500 off the top of the car’s price. We’ll see how the Model III does…

Mr. Electric
Guest
Mr. Electric

It will be difficult for Tesla to offer a lease at $200. Remember that for a long time Tesla couldn’t find a single bank willing to underwrite leases on the Model S, and it doesn’t have the cash to run it’s own lease program. Thus the ridiculous “guaranteed buyback” program which required full financing on the part of the buyer, with no recourse if Tesla itself went out of business.

Leasing is riskier for banks than buying as it requires them to place a bet on the future resale value of the car, which for new models (and especially electric ones) is unknown. Tesla had no real collateral to offer a bank, only the cars themselves.

Tesla now has U.S. Bank underwriting Model S leases (a miracle), but for a much cheaper car selling in greater volumes, the risk is there all over again. Any leasing bank is unlikely to offer a residual high enough for a $200 lease.

James
Guest
James

quite an assumption that they will pass the federal tax credit directly to the consumer! I have a Fiat EV lease that did not go that way. I imagine sergio uses the federal tax credit to help offset the claimed losses due to the selling of the 500 e. In that case what they do is add the $7500 credit to the residual value making the depreciation factor much lower! However this comes to bite the consumer in the end if they have any inclination of purchasing the vehicle at the end of the lease. Quite sneaky eh?

Steven
Guest
Steven

If it happens, there will be customers for it.