Anyone lease their Model S?

Anyone lease their Model S?

My reservation number looks like it is coming up in Feb. 2013. I was hoping Tesla would have a lease program available by the time my number came up. It looks like that will not happen in time. Has anyone arranged a lease for their Model S yet? If so, could you post the contact information for those of us that would like to lease?

petero | October 23, 2012

I tried with two, large, independent, leasing companies in Los Angeles. Neither would lease me my “S.” It seems they piggyback on a manufacturer’s program. TM would have to set up some guarantees such as a 50% residual value after 36 months and 36K miles, for a lease buy back before these companies would consider a lease program.

I suspect leasing will be a TM option in late 2013 or 2014. I am surprised TM hasn’t embraced leasing sooner than later. It is an effective sales tool, will overcome many potential buyer's fears, won’t tie up capital for 36+ months, and provide its’ dealerships with ‘certified pre-owned’ used cars that will be a great profit center for TM, not to mention selling extended warranties.

mrspaghetti | October 23, 2012


But remember, Tesla has no dealerships.

petero | October 23, 2012

Mrsphaget. Very true as of now. TM is gearing up to resell their ‘lease return’ Roadsters. Store models change, they evolve. Eventually, TM will probably modify some of their “show and tell stores" to permit selling pre-owned vehicles or create regional resale centers. You don't need a showroom, several parking spaces in a secure area of the parking structure will do just fine.

Leasing will be a powerful tool when GIII hits the market. One of the reasons BMW is so successful in North America is their excellent 3 Series lease program. When I worked for a MW dealership in CA probably 75% of my 3 Series sales were leases.

BYT | October 23, 2012

Sales Tool? You assume Tesla Motor's has a problem selling these cars. I haven't seen that to be true yet... :)

petero | October 23, 2012

BYT. The operative word is “yet.” Today, TM probably has a backlog of approx. 9 months (based on a 20K annual production). By the end of 2012 the backlog will be12 months. People who see and drive the car will reserve them, but I suspect the reservations may not keep pace with the 20K production rate. I sure hope I am way off. I want the “S” to live up to our lofty expectations and demand far exceeds supply – forever!

The point I am making, is leasing will help TM log additional reservations that they might not get. TM will want to appeal to as wide an audience as possible. Leasing a car removes a number of the worries/concerns from an ‘on the fence’ potential customer. Many BMW, MB, Audi, Lexus, Infinity, Jaguar, etc. vehicles are leased. Why do these prestige/ luxury car companies lease their cars?

An interesting question down the road is going to be, which would you rather purchase a 3-4 year old “certified pre-owned loaded “S” (lease return) or a new, fully loaded G III?” They will probably be similarly priced.

BYT | October 23, 2012

@petero, that is why I like TM's current plan to have a leasing program starting sometime next year. By they time they have an list that is 3 months or less for new reservation holders, the lease will be an option. To me that makes the need for this post irrelevant. It will come, it is planned to come, and it will come in time (if not even sooner) then the market for leases comes for the Model S, because at this time, we all want to own one. I don't disagree with your point, I just see TM handling it the right way and it will come in time. It's an expensive car and there are those that aren't sure about it. For those people, those who will be ready to lease will not accept the 6 months wait time otherwise.

petero | October 23, 2012

BYT. Personally, I would have preferred to lease my "S" rather than buy. I am not willing to wait 9 months (+ or-) for that 'luxury.' Also, leasing would make it convenient for me to transition into the G III when it comes to market.

Brian H | October 23, 2012

Elon commented on this, basically making two points: they are 'production constrained' at this point, not 'demand constrained', and TM takes a bit of a cash or capital hit up front when leasing, and sees no need to do that just yet.

nickjhowe | October 23, 2012

Why would TM take a revenue/cash/capital hit? If they are using a 3rd party lease company then TM should be able to recognize the full revenue at time of delivery - it is the lease company that carries the up front cost.

jbunn | October 23, 2012

Tesla deployed the S without a dealer network intentionaly. Regarding leasing, why share profit with a 3rd party at this point when you are suppy constrained? The lease company is just planning on taking some of that cash and passing additional cost on to you. Does not benefit Tesla and inflates the TCO of their cars to the consumer.

Brian H | October 24, 2012

I'm sure there's admin and fees involved. Don't know, but that is what Elon indicated.

clarkdubreuil | October 26, 2012

Sorry to hear that no one has set up a lease yet. This will probably alter my decision to buy one at this time.

mpottinger | October 26, 2012

Leasing is a profit center, not a cost. The lack of a leasing program probably has more to do with difficulty setting residuals than any cost to Tesla. The lack of a program is disappointing. For me it will have an impact on what battery is spec.

Brian H | October 26, 2012

Elon said TM doesn't need to set up leases yet, though he's very much in favour of them. Next summer.

Invictus | October 26, 2012

I would have some interest in leasing you a Model S. Frankly I am surprised they have not set up a plan yet, and I thought either Wells or BofA would be their arranged option.

A quick back-of-the envelope calculation says the monthly would be roughly $1100-1200 with less than $5000 drive-off on a 3-year lease, depending on the details and options. Is that the price range you were thinking of?

The other issue for a lease is the so-called "lease gap insurance". It covers the gap between what auto insurance pays and the lease in case of total loss. Have you found an insurer willing to do that for a lease on a Model S? The other problem will be "brick insurance" which would be specific to a BEV, basically in case you accidentally brick the battery. I would have to underwrite that somehow.

My motivation for doing this is mainly that this is the future. BEV should in theory be a lower cost of transportation than ICE, and the best way to realize that is through leasing. We have to make it happen to prove it.


nickjhowe | October 26, 2012

@Brian H - much as I hate to disagree with Elon, he made a false assumption/statement. He has said on earnings calls that " we don't need to lease yet because we have lots of people who have purchase reservations". I think plenty of current res holders would lease if they had the choice, but we don't.

rwang | October 26, 2012

Lease would be much easier for taxes.

Brian H | October 27, 2012

The statement was and is true for TM. It's a major initiative for them, and they have plenty on their plate.

jkirkebo | October 27, 2012

I agree plenty of reservation holders would lease if they had a choice, but this is only a problem for Tesla if the same reservation holders will only lease and not buy. This does not seem to be the case so far.

ohaq | December 4, 2012

I got my finalize your order email, but I also waiting for the lease program. Now i am thinking of just buying it and then trade it in at Tesla for Gen III. I heard that roadster owners can trade in their cars for Model S I would assume the same will be true for Model S.

I am not sure yet what to do, got the finalize email yesterday for P9326.

Have 4 weeks to finalize it. Thinking of getting the 60kWh battery and paying up to 700 per month for lease.

How did i figure this out? well Nissan sells for around 30k and lease is for $250 so similarly chevi volt sells for around d35-40k and lease is $330, so basically divide the value of the car by 100

The Tesla I configured come to around 66000, so I am willing to pay 700 per month for it, with my 5000 down payment.

riceuguy | December 4, 2012

Ohaq, unfortunately you're unlikely to find a $700/mo. lease option. Lease costs are based primarily on three factors: 1) the cost of the car, 2) the expected value of the car at the end of the lease (the residual value), and 3) the interest rate built into the lease (the "money factor"). Since this won't be a manufacturer-subsidized lease, figure the interest rate will most likely be 2-5x the interest rate on a Nissan (my Infiniti via Nissan Motor Credit has an interest rate of 0.5%, for example), and the residual has not been well established for Model S, so the leasing company will likely assume it to be low. I would guess that this is a rare case where a 36 month lease will come in around the same cost as a 60 month purchase!

DTsea | December 4, 2012

Simply put, Chevy and Nissan are setting those lease rates very low to 'push the metal'- find customers for cars built. Tesla has no demand problem right now, so no financial incentive to subsidize lease, keep the car on THEIR inventory, and deal with trade ins.

petero | December 4, 2012

“Wanna Lease your S.” A few weeks ago, I posted a lease program from an actual lease/finance company for my “S.” It may answer some of your questions. In my case, leasing, without factory participation, was too rich for me.

P.S. Thanks to nickjhowe, tharasix, and Volker.Berlin. Volkerization helped me find my own forum post. Less is more! I was very surprised that VB is not only a TM hero but is now an urban legend!

mrspaghetti | December 4, 2012

It's only a matter of time before Volker is featured on Mythbusters. [But what will they blow up?]

Brian H | December 4, 2012

I can't think of anything non-fatal, so they'll probably give it a pass.