Published on April 2nd, 2013 | by Zachary Shahan


Tesla’s Big Announcement

April 2nd, 2013 by  

tesla model soBelow is Tesla’s big announcement, which many people have eagerly been waiting for since Elon sent a tantalizing tweet last week. We’ll probably add some commentary onto this in the next day or two, but I think it’s pretty straightforward, and a big benefit for Tesla buyers. Here’s the full announcement (note that there’s also a calculator on Tesla’s website that allows you to compare this option with other options):

PALO ALTO, Calif. – April 2, 2013 – Tesla Motors announced today that, in partnership with Wells Fargo and US Bank, it has created a revolutionary automotive financing product that provides the best elements of ownership and leasing to Model S customers.

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.

Working with some of the largest and most respected banks in the country, Tesla has been able to create a new kind of financing product that combines the surety and comfort of ownership with all the advantages of a traditional lease.  Like the Model S, this product was created from the ground up to provide maximum benefit to consumers, rather than simply duplicating other financing programs that tend to favor companies at the expense of the individual.

How does it work?

  • 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).
  • Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing.

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is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

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  • I’m not sure it was a good idea. Leasing will create a demand he probably is not prepared to handle. He barely is able to turn out 500 a week. This leasing will allow practically anybody to lease. This means there perhaps will be a demand that can’t be met unless he can produce 10,000 a week. Sure he has *LOTS* of space to expand in the factory. Apparently only a small section of it currently has been cleaned up and has the lights on. They’ll need the whole darn factory cleaned up, filled in with robots, and a huge staff of employees. Yesterday.

    It seems similar to feeding a patient through a tube. However the tube turns out to be attached to a fire hydrant. I’m surprised nobody is asking him what he’s going to do to handle such demand.

    • I am not sure why creating more demand than supply can handle would be bad news. I am quite sure that most of the competition would be quite happy to have that particular problem.

    • RobS

      Demand must always precede supply when discussing such a huge expansion. If he were to buy the equipment and hire the staff to produce 10,000 cars a week and the demand did not materialize then he would bankrupt the company. Very few businesses would consider huge demand growth a problem and if it occurs then wonderful and they should grow the business accordingly.

      • He already has a backlog of close to 12 months getting him in lots of trouble. Now he wants a 5 year backlog? When is he going to expand his factory to handle more?

        • RobS

          The backlog of 1 year was built up over three years and can you provide any basis for your comment that it is “getting him in trouble”? Are you really asking would Elon prefer a longer backlog of orders or to grow the staff and facilities for a speculative surge in orders risking bankruptcy if the surge never materialises? Yeh, that’s not really a question, the longer backlog wins every time.

          • What a strange response. First off I’m a big supporter of Tesla. I recommend the stock to everybody. The company is going to be one of the largest auto manufacturers in the years to come. However that does not mean I don’t notice the articles about the many customers that are irritated about waiting. Some of them have been very vocal about the delays and Elon has at several points addressed these frustrations.

          • RobS

            I don’t see what is strange about what I said, in summary,
            Your 10,000 cars per week figure is nothing but pure speculation, making enormous infrastructure investments on the basis of pure speculation is a very quick way to ensure a business fails.

          • “Are you really asking would Elon prefer a longer backlog of orders or to grow the staff and facilities for a speculative surge in orders risking bankruptcy if the surge never materialises? Yeh, that’s not really a question, the longer backlog wins every time.”

            No I’m not asking that and I didn’t say that. However if putting words into peoples mouth and then slamming them for it is what you do I can’t stop you. I find it strange you’d do so though.

            Has Elon addressed the backlog problem. Allowing people to make impulse leasing decisions and then not being able to deliver for nearly a year is a problem. If you are going to enable impulse decisions you have got to have a plan. Elon is a smart guy and probably has plans. I’d like to know them.

  • Ross

    Sounds like a PCP personal contract plan with added tax benefits.

    If it is like that they only give back the difference in residual value between the Model S and a mercedes s-class. You’re not selling them the car, only trading in your equity ($18,000 = $500 x 36) portion of it so you need another PCP contract at the end of three years to keep rolling it over.

    It does sound like a good finance deal. I hope they do it in Europe too.

  • agelbert

    Hey! How about that? My guess of a new lease arrangement was right on the nose! Of course $500 a month is a bit higher than the $300 a month I proposed, but maybe the lower priced model will be in that range so it can compete with the Leaf.

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