Last week Tesla Motors announced a new pseudo-lease program claiming a true cost of ownership of just $500/month. That would be considerably less than I am paying right now for a car that would be comparable to their mid range, but that low figure comes from the entry level model of course.
Unfortunately, their way of getting to that number is stretching the truth quite a bit, and the program they announced is not really a lease at all; just a relatively high interest rate car loan with a buy back guarantee. We'll get to that later though. First, I'd like go go through the calculator web site they presented to get to that figure of $500/month; I am going to use the mid range model though as I suspect that is a more realistic option (the low end model has serious range limitation as the price difference comes from cutting the battery capacity).
Here is what they estimated as my monthly cost on that vehicle, after I removed the dubious business tax allowance, but leaving the high monthly mileage and average gas price in place:
Quite a lot more than the $500/month, and quite a lot more than I am paying now.
Perhaps the biggest difference in the Tesla plan to my conventional lease is the amount of the monthly payment.
That is around double my current lease payment. Worse than that, it is also a higher interest rate than my current lease rate by over 50%. And somewhat confusingly, it is a 63 month term. Even though the guaranteed buy back is at 36-39 months. I guess the idea is to sell the car back to them at 3 years and use that money to pay off the remaining balance on the loan.
Down Payment & Incentives
In addition to that massive monthly payment, they also want a 10% down payment. But they are offsetting that by using the EV incentives from the federal government ($7,500) and those available in some states. I am in California, giving me a $10,000 total incentive which covers the down payment and leaves just under $2,000. That they spread over the first 36 months of ownership, bringing the monthly just under $1,200.
Now things start to get interesting. I left the default values in the form for my first pass through, though I don't think any of them apply to me.
My dilemma with the miles per year part is that I might be more inclined to drive to work given a Tesla than I am today. Currently, I drive on average less than one day a week, I work from home one day and take public transit on the other three days. If I drove all four days, that would be 10,000 miles a year of commuting, and probably another 2,000 or so non-commute miles.
Based on their number for electricity cost, driving 4 days a week would cost me $275 in electricity per month, plus $40 in tolls (assuming I can use the car pool lane). My current commuting costs me about $45 in gas, a maximum of $24 in tolls (it is cheaper if I go in later) and about $200 in fares. I think that means the Tesla would cost more if I use it for commuting.
If I don't, and I use it the same as my current car, then the savings per month come down to a more modest $58.
Guaranteed Resale Value
Not sure about this one at all. I don't see how this gets amortized over a three year period. With a conventional lease this is simple to understand: I pay for the purchase price less the residual value (basically the depreciation). I can pay that up front or I can pay it monthly with interest added (in my case, at a lower rate than this Tesla loan).
Business Tax Benefit
This is actually checked by default on this form which is the most dubious default option by far (and that's going some given the prices they used on the fuel calculator section). I don't know how many of their buyers would be eligible for the full business deduction, but I can't see it being that many. In my case, I wouldn't be eligible for this at all.
OK, I take it back, the business tax was not the most dubious thing on this calculator! The two time saving ideas are even more of a stretch.
Shortening my commute by gaining access to the car pool lane might be nice, but it certainly doesn't save me money. I am not going to make any more money because I got to the office 10 minutes earlier.
Worse than that, using a car for my commute rather than taking public transit actually means I get to the office having done nothing. Right now, by the time I get to the office all my email is sorted and important emails have at least received preliminary responses, if not a full response; I am able to answer most directly from my phone, but some need more investigation. I have even been known to break out the laptop & USB cable and actually work on an app from the train. Can't do that if I am driving, no matter the vehicle.
Avoiding the gas station is even more ridiculous. I am not even going to comment further on this one.
Overall I am disappointed both by the terms of this pseudo-lease and also by the way they chose to try to package what is essentially a regular car loan as an alternative lease scheme. If you want to offer a lease (and in this segment of the market, they really should have a lease option), make sure it is a real lease with comparable interest rates and terms to those offered by the competition (Mercedes, BMW etc).
I would love to replace my current car with a Tesla model S (or perhaps even the Model X since I still have a couple of years left on my current lease). Maybe they will come to their senses and offer a real lease program with sensible rates by the time I am ready.