All You Need To Know About The Tesla Lease Offer, From People Smarter Than I Am

Derek Kreindler
by Derek Kreindler

Yesterday’s Tesla “lease offer”, (which turned out to be Elon Musk’s “big announcement”) was a classic display of Tesla’s penchant for theatrics. On the surface, the move is a smart one; most customers in the large luxury sedan segment tend to lease their cars, so Tesla’s move is nothing out of the ordinary.

The 5 year lease program will allow customers to keep making payments on the car as a means of buying it outright, rather than the traditional balloon payment used by most auto makers. And, as Wired’s Damon Lavrinc notes, you could technically lease the car with nothing down.

Depending on where you live, the initial payment could be as low as … nothing. Tesla’s financial partners in the program, Wells Fargo and U.S. Bank, take the $7,500 federal tax credit offered to anyone who buys an electric vehicle, roll that into the state rebates and include it all as your down payment. In California, for example, that comes to $10,000.

Where it gets interesting is some of the numerical gymnastics that, according to Tesla’s True Cost To Own lease calculator, can leave you with a net lease cost of -$2,000. To find out how that happens, check out EV expert John Voelcker’s excellent take-down of Tesla’s leasing program. Rather than summarize and butcher it at TTAC, you might as well head straight to the source. It’s not to be missed. Especially if your time is worth $100/hour, as Musk thinks.

Derek Kreindler
Derek Kreindler

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  • APaGttH APaGttH on Apr 03, 2013

    I had read that the residual value model was based off of the Mercedes S-class, which makes the resale value of a used Impala rental queen look good in comparison.

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    • Rod Panhard Rod Panhard on Apr 04, 2013

      My thoughts exactly. The S-class resale is terrible. In fact, it's so terrible that I wonder why people by the E-class when there are tons of very low mileage S-class sedans with the CPO etc. But I guess Musk figured he's trying to "upsell" luxury car buyers who self-employed, i.e., surgeons and other well-paid specialists, attorneys, and such. It really was a hilarious pitch. I think they'd have gotten more mileage, so to speak, out of making a splash over the Tesla supplied powertrain in the B-Class Mercedes-Benz. To me, Tesla has a better opportunity as a powertrain provider than a car manufacturer. I've sat in the Tesla and as interesting as the Mega iPad From Hell dashboard is, the rest of the car just doesn't seem that nice. The vast empty space between the front seats reminds me of a commercial van, rather than a luxury car. Really, if Mr. Musk wants to reinvent something, I wish he'd put his best people on reinventing the plumbing for the P-trap under the bathroom sink. Now THAT's something I could use.

  • Redseca2 Redseca2 on Apr 03, 2013

    All in know is that my Tesla stock has wildly outperformed my Apple stock.

  • Ryoku75 Ryoku75 on Apr 03, 2013

    For $1500 a month I could pile up a fine amount of good beaters, or buy one car that'll be out of fashion within 3 months. If I'm honest I'd rather go the beater route.

  • Type57SC Type57SC on Apr 04, 2013

    That calculator looks the something that started as a solid idea. the problem being that people need to think TCO to think these are reasonably priced if a buyer is buying on logic, so what can be done to show the TCO? Then the implementation doesn't get really tested or evaluated and so goes live. Then we all look at it and find the "minutes saved" bits obnoxious. Fail.

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