On Wednesday, April 3, Tesla amended the Model S loan period through USBank and Wells Fargo from 66 months to 63 months.
LOS ANGELES -- Tesla Motors has joined forces with US Bank and Wells Fargo Bank to create vehicle financing and leasing products that allow consumers to lease a Model S electric sedan for a net payment of about $500 a month after a 10 percent down payment and calculated savings.
The 10 percent down payment often will be covered by federal and state tax credits available on electric vehicles.
However, the $500 a month payment is an "effective" monthly payment. The actual monthly payment is $1,199 month. But once other factors, such as incentives and not having to pay for gasoline and oil changes are factored in, Tesla calculates the equivalent cost to a gasoline car would be about $543 a month for an 85-kilowatt car.
But some of those equivalent factors are a bit hazy, including items such as a potential business-tax benefit as well as the value of the owner's time saved by driving in the carpool lane and not spent pumping gas.
"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," Tesla's statement on Tuesday said.
After 36 months, the residual value will be tied to that of the Mercedes-Benz S-class sedan, which is 44 percent according to ALG. The S-class is competitive with BMW and Audi high-end products for residual value -- the segment leader is the Lexus LS 460 at 49 percent.
The customer is technically not leasing the car. He is building equity in the car over the course of a 63-month loan, with the option to walk away after three years with a guaranteed residual value. The customer can also pay off the balance of the loan at any time.
"You do not have to worry about buying a car. You can trade it in after three years," CEO Elon Musk said during a press conference Tuesday. "[It has] all the convenience of a lease, but the value of ownership. It gives you the right to give it back to us, but not the obligation."
Musk said he is personally guaranteeing the value of his cars, on top of the assets of Tesla Motors, in case EV values fall below those of an S-class. Forbes magazine recently placed Musk's net worth at $2.7 billion.
"No matter what happens, people should feel confident that the residual value of the car will remain. Not only is Tesla standing behind that, I am personally standing behind that," Musk said.
The interest rate through Wells Fargo is 2.95 percent.
PRESS RELEASE: Tesla Unveils Revolutionary New Finance Product; Combines best aspects of car leasing and ownership
Tuesday, April 2, 2013
PALO ALTO, Calif.-- 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.
About Tesla
Tesla Motors' (NASDAQ: TSLA) goal is to accelerate the world's transition to electric mobility with a full range of increasingly affordable electric cars. California-based Tesla designs and manufactures EVs, as well as EV powertrain components for partners such as Toyota and Daimler. Tesla has delivered almost 10,000 electric vehicles to customers in 31 countries.
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