Tesla Model S waffling

[Rob]

Which part? The part where they offered a model they discontinued (but will still honor the orders they have already taken from customers) or the part where they put options on that are disabled unless you pay for them?

[Plaz]

http://www.thedailydolt.com/2013/04/...-irony-ensued/

[ZBB]

So Tesla announced a leasing package today (technically a loan, but it has a buyback clause at a specified residual). Interestingly, they are using a residual based on the Mercedes S Class. This may be worth looking into...

Info and calculator is here... http://www.teslamotors.com/true-cost-of-ownership

And a link to the guaranteed resale value doc. Looks like 43% residual after 3 years... http://www.teslamotors.com/sites/def...-guarantee.pdf

They also released a "performance plus" package for the P85. $6k. Not interested...

Edit:
I looked into this a bit more. Its not a lease. Its a loan combined with a buyback option between 36 and 39 months (so Tesla will buy the car back at the owner's option). The buyback option requires financing through the Tesla loan partners (Wells Fargo or US Bank) -- and holding that loan in good standing for a minimum of 6 months. But they include the federal tax credit as part of the down payment (otherwise I'd have to front that...). I'm thinking this may be the way to go -- finance it through them, then refinance 6 months later if I can get a better deal elsewhere. That would lock in the buyback option at the 43% residual. The downside is that the interest rate is about 1.2% higher than some of the credit union deals avail now (2.95% vs 1.75%), but the difference is ~$300 over six months (hence why it may make sense to refinance just past the 6 month mark...).

I'll have to update my financial models tonight before I finalize the order. Glad I waited a couple days...

[JST]

Originally Posted by ZBB

So Tesla announced a leasing package today (technically a loan, but it has a buyback clause at a specified residual). Interestingly, they are using a residual based on the Mercedes S Class. This may be worth looking into...

Info and calculator is here... http://www.teslamotors.com/true-cost-of-ownership

And a link to the guaranteed resale value doc. Looks like 43% residual after 3 years... http://www.teslamotors.com/sites/def...-guarantee.pdf

They also released a "performance plus" package for the P85. $6k. Not interested...

I don't really understand what is revolutionary about this. Sounds like a typical balloon payment financing structure that everyone in NY was using for a while and that BMW introduced many years ago.

I suppose the financing of the downpayment amount based on tax credits is sort of interesting, but hardly "revolutionary."

As for S-class residual, that sounds like a marketing gimmick more than anything else. I would think that the true resale value of the S-class is pretty bad--expensive cars like that depreciate pretty rapidly in the absence of any subvention on the part of the manufacturer. Or is the residual the same as Mercedes captive finance arm is offering on leases? And, if so, does it change from month to month?

All of that said, this seems like the way to buy one of these cars. Having a put option on an expensive, relatively untested piece of tech that might be obsolete in 36 mos is pretty nice peace of mind.

Might have to look into this.

EDIT: Teach me to quote something without reading it. The guaranteed resale doc answers many of my questions, above. 43 percent after three years does not seem particularly compelling.

[JST]

The Tesla I would want is $84,770 (including the credit). That works out to be $1342/mo using the guaranteed buy back. That's a lot of cheddar.

[ZBB]

Originally Posted by JST

I don't really understand what is revolutionary about this. Sounds like a typical balloon payment financing structure that everyone in NY was using for a while and that BMW introduced many years ago.

I suppose the financing of the downpayment amount based on tax credits is sort of interesting, but hardly "revolutionary."

As for S-class residual, that sounds like a marketing gimmick more than anything else. I would think that the true resale value of the S-class is pretty bad--expensive cars like that depreciate pretty rapidly in the absence of any subvention on the part of the manufacturer. Or is the residual the same as Mercedes captive finance arm is offering on leases? And, if so, does it change from month to month?

All of that said, this seems like the way to buy one of these cars. Having a put option on an expensive, relatively untested piece of tech that might be obsolete in 36 mos is pretty nice peace of mind.

Might have to look into this.

EDIT: Teach me to quote something without reading it. The guaranteed resale doc answers many of my questions, above. 43 percent after three years does not seem particularly compelling.

Yep... I agree on all your points. Except that I don't think this is a balloon loan like BMW offers -- just a regular loan with the residual. I'll have to include that in the model (ie compare the amortization schedule with the 43% residual at 36-39 months)...

I think they decided on the S class since it doesn't have a particularly high residual -- so its a CYA on their part. But at least it puts a floor on the residual of a Model S. But it sounds good from a marketing perspective (ie we'll guarantee this will be worth the same as leasing a Mercedes). It may end up holding its value better. But if it drops more than that, its basically "residual insurance".

[ZBB]

Originally Posted by JST

The Tesla I would want is $84,770 (including the credit). That works out to be $1342/mo using the guaranteed buy back. That's a lot of cheddar.

Mine is $72,540 ($80,040 before tax credit) -- and shows a payment of $1184. So that payment assumes financing ~$72k (ie 90% of the purchase price less rebate).

My own calcs include a higher down payment (ie after selling the Boxster). Plus I've already paid the $5k reservation. I'll need to re-do my financial model and loan estimate tonight based on this.

But I think it makes sense to use this program. Less cash up front (since they count the tax credit as part of the down payment).

[clyde]

Originally Posted by Rob

Which part? The part where they offered a model they discontinued (but will still honor the orders they have already taken from customers) or the part where they put options on that are disabled unless you pay for them?

More the latter and a little bit of a different conclusion on the former.

Tesla's costs are the same no matter what I pay since the parts are the same, it's just a matter of whether a figurative switch is flipped to the left or right.

If the 40kWh version represents 4% of their orders and they sold 4,750 last quarter and the current wait time is 3 months (I know ZBB posted an anticipated wait tim, but I can't find it right now, so let's just go with 3 months), that suggests 190 40kWh cars currently on order that no have the option of taking a hobbled 60kWh car or forking out an additional $10k. It costs Tesla nothing either way. I'm sure Tesla sees it as an opportunity for up to $1.9M in free profit, perhaps even more from those that pay another 10% more later. Tesla could have just as easily said, "Well, no more 40kWh cars, but if you have one on order as of this morning, you're going to get a 60kWh car instead. No extra charge." Instead, they said, "Well, that wasn't gonna make us enough money, so we want to see how much further we can stick your hand down your pocket."

If I buy the more expensive version, I'm going to feel like a dolt when I meet some guy at cars and coffee who bought the cheaper version and hacked his so it's the same as mine for a whole lot less money.

If I buy the less expensive version, I will always have the internal debate about whether to hack it and run warranty and DMCA-violation risks...until the warranty runs out and I hack it anyway. And I'll always be a little pissed about the whole thing.

[Jeff_DML]

They should of never mentioned it publicly.

My company does the same thing, makes a full feature chip then disables part of it if the customer does not want to pay for all the features.

Sounds better to me, gives you the option to the buy the cheaper model and hack it. Kind of like buying the cheaper turbo version of a car and turning up the boost.

[Rob]

I don't see it any differently than a variety of software purchase options that exist on a bunch of levels. In fact, I don't see it any differently than the performance options from BMW that will turn up the boost on your turbo. Even options you would not normally think would be built like this are starting to appear - some car companies are switching Nav to "dealer install" and you can add it any time. It's a software flip of a switch.

It would have been better to never have sold the option they discontinued before they built any, but this doesn't bother me all that much. Getting stranded without a battery . . . that will make for interesting stories.