Today we noticed that Tesla pulled another demand lever on its best selling vehicle. (Well, it’s expected to be Tesla’s top selling vehicle soon in the US, but that is unconfirmed.)
Tesla has done several things to increase demand on the Model Y after getting it to market sooner than expected earlier this year. It has pulled these demand levers a lot faster than it did on the Model 3. Some of these things include adding a trailer hitch, adding the car to its referral program, implementing a small price reduction recently, and now offering a leasing option.
I noticed a couple of weeks ago that the Model Y was even offering a shorter estimated delivery time than the Model 3, which has been produced for about 3 years. In that article, I mentioned the lack of a leasing option as one of the 4 reasons that demand would be a little less for the Model Y. Tesla consumers lease at a much lower rate than consumers of other brands (more on that at the bottom of the article), but a portion of the market does certainly wait for this option.
The lack of the more affordable Standard Range (or Standard Range Plus) version was another option mentioned, but that can no longer be considered a lever waiting in the wings since Tesla CEO Elon Musk tweeted that a Standard Range version of the Model Y isn’t coming at all — instead, however, a slightly more affordable Model Y Long Range with rear wheel drive should be available in a few months.
I configured a Model 3 at the exact same price as the lowest priced Model Y ($49,990) and, interestingly, the lease payment was $14 higher. It looks like they are using psychological pricing to make the lease pricing a bit more attractive on the Model Y. A lease starting at $499 sounds better than a lease starting at $513.
Comparison to Lexus RX Lease
The Lexus RX is the king of sales in the luxury crossover market, which is why it was one of the first vehicles I compared the Model Y to when it came out in March.
Last week, we compared the total cost of ownership of the RX with the Model Y, and the highly desirable Model Y came out on top in a big way. Maybe that is the reason Toyota is so shy about releasing its Q2 sales — the Model Y is likely to have taken a big bite out of the Lexus volume leader. In the first quarter of 2020, the Lexus RX was by far its best selling vehicle, making up about 30% of its sales volume. We don’t know how many RX units were sold in the second quarter.
So, how do the two models compare when it comes to leasing?
For those who just look at the lease payment, Lexus looks cheaper at $409 a month vs. the Tesla Model Y at $499 a month, but our Total Cost of Ownership model suggests you could save over $120 month on maintenance costs and $125 a month on fuel costs. (Input your own assumptions in that Google Sheet after duplicating it.)
The Model Y is a much sportier drive, has more luggage space, and has a lower cost of ownership. Is it any wonder if this new Tesla model is dethroning the leader?
Editor’s note regarding leasing: Tesla reported that 5% of its sales in the second quarter were subject to lease accounting, and the figure was 4% for Model 3 and Model Y vehicles (which are reported combined). CleanTechnica writer Frugal Moogal pointed out that “the average automaker leases around 30% of its vehicle sales.”
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