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Published on May 5th, 2019 | by Vijay Govindan

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Tesla Model 3 Lease vs. Loan In UK, Netherlands, Norway, Switzerland, & China

May 5th, 2019 by  


For this piece, I will use the information on Tesla’s website to determine if paying cash, taking a loan, or leasing is the best option if you want a Tesla Model 3 Standard Range Plus (SR+). The twist here is I did these calculations for Switzerland, Norway, the Netherlands, China, and the UK. These were some of the most popular markets for Tesla in Q1 2019. I added in the UK, since it has been suffering for 3 years and deserves some attention.

Note that some markets have leasing options but others do not. The comparisons are based on the options on Tesla’s website.

Suisse (Switzerland)

Tesla Model 3 Standard Range Plus (SR+) lease vs. loan.

Notes:

  • The Swiss options are limited to Purchase or Lease
  • Assumed the 3.4% interest rate used on Tesla’s site
  • The lease is best if you want to hold the Model 3 for fewer than 6 years
  • Purchase is best if you hold the Model 3 for 9 years or longer
  • If you assume depreciation is high for 9 years, the 15,000 kilometre lease is similar in costs to purchase with 40% depreciation
    • The added benefit is you get a new car every 3 years

Norge (Norway)

Tesla Model 3 Standard Range Plus (SR+) full cash vs. loan.

Notes:

  • The Norwegian options are limited to Full Cash or Loan
  • Assumed the 2.9% interest rate used on Tesla’s site
  • Purchase > Loan
    • For all time periods, purchase has a lower NPV than loan payments
  • After 9 years, not only have you earned back your initial purchase price, you continue to save on payments for as long as you hold the car
    • Meaning, the NPV will become more positive if you hold the car longer than 9 years

Nederland (Netherlands)

Tesla Model 3 Standard Range Plus (SR+) lease vs. loan.

Notes:

  • The Nederland options are limited to Purchase or Lease
  • I used a 4.25% interest rate
  • Lease > Purchase!
    • We never see this happen with any other country
    • In fact, you have lower payments if you lease for 60 months than lease for 36 months!
  • Lease @ 60 months > Lease @ 36 months > Purchase
    • At 9 years, the Lease cost is slightly higher than Purchase with 40% depreciation
    • But, you would have a much newer, safer car to drive than if you purchased

China

Tesla Model 3 Standard Range Plus (SR+) full cash vs. lease vs. loan.

Notes:

  • Full cash > Loan > Leasing for NPV at all time periods
  • 8% interest rate to purchase, 7.91% interest rate to lease on Tesla’s site
  • As with all full cash purchases, your NPV becomes positive if you hold it for 9 years or longer
  • It’s astonishing how much more expensive the lease is compared to full cash or a loan
  • Given the high cost to lease, any other option makes sense

UK

Tesla Model 3 Standard Range Plus (SR+) full cash purchase.

Notes:

  • The UK is very interesting. There is a 9,000-pound congestion incentive if you drive into London.
  • If you live in London and purchase a SR+, the incentive is so compelling your NPV breaks even after 6 years.
  • After 6 years, all scenarios have a positive NPV with a full cash payment.

Tesla Model 3 Standard Range Plus (SR+) hire.

Notes:

  • The other option for the UK is a Hire Purchase.
  • 5.4% interest rate for Hire Purchase is used.
  • This option also qualifies for the London congestion incentive, about 250 pounds a month for 36 months.
  • We see the 40% Depreciation scenario always performing worse than the 30% Depreciation, for all time periods.
    • You lose more up front every month, and the car is worth less when you go to sell it after 9 years.
  • The difference between using the SR+ in London versus elsewhere in the UK is substantial.
  • The Hire Purchase option is worse than the Full Cash option in all scenarios.

Final thoughts

  • The shorter your time frame to own, the faster your NPV climbs positive.
  • Full cash NPV is better than a loan, and given enough time, a loan is better than leasing (for most countries).
  • Your NPV is much higher if depreciation is lower while you own. This is due to lower depreciation upfront and a higher sale price when you sell the car after 9 years. Teslas hold their value better than many other competing vehicles, but we don’t yet know Model 3 depreciation over time.
  • Things may be lost in translation, and if there are certain things that may change the results for each country, I always welcome feedback.
  • Country preferences play a large role in which option is preferable. They are not the same for all countries, as this article shows.

You can check out my worksheet here, and feel free to copy it and modify the assumptions as you wish.

If this article helps you decide to order a Tesla, take advantage of my Tesla referral link to get up to 5,000 miles of free Supercharging on a Model S, Model X, or Model 3. (If you order before May 28th, we both get 500% more Supercharging miles than the normal 1,000 miles and five more chances to win a Founders Series Model Y or Roadster.) Here’s my code: ts.la/vijay59877

If someone else helped you more with your purchase, please use their referral code.

Disclaimer: I currently own Tesla shares. A recent discussion with $TSLAQQ folks confirmed they are more worried about Tesla’s finances and profit than advancing the world towards sustainable energy. This article is my opinion and is not meant to be investment, financial, or car buying advice. Please see a properly licensed financial advisor to discuss investments. Follow me on Twitter @vijaygovindan17. 
 
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About the Author

Vijay Govindan is a Cleantechnica writer part-time. Through his writing Vijay seeks to elevate the realized potential of humankind. Against human trafficking. Tesla Model 3 LR owner. His claim to fame is Tesla and Elon have commented, liked or re-tweeted an article he wrote with the Tesla community. Just once. ;) https://cleantechnica.com/2019/06/23/our-new-tesla-myths-page/ #WeChooseTesla, #RenewableEnergy and #YangGang supporter. Long Tesla shares. Has a healthy skepticism of the Q branch of the Tesla investment community. Made it to one $tslaq block list. Follow him on Twitter @vijaygovindan17. If you read this far, wow, 👏🏽 and 🙏🏽.



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