"Tom McParland" (tommcparland)
04/08/2014 at 13:49 • Filed to: Car buying, Tesla, Model S, Articles
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"Tom McParland" (tommcparland)
04/08/2014 at 13:49 • Filed to: Car buying, Tesla, Model S, Articles | 7
| 33 |
!!!error: Indecipherable SUB-paragraph formatting!!! Even more importantly Tesla has it's own financing arm, that will better allow them to compete on the same level as other mainstream automakers. When you first look at the estimated lease payments they are bonkers compared to the competition. For example a !!!error: Indecipherable SUB-paragraph formatting!!! Now if you look at what a 65k Model S (60kw) would lease for it says a mere 469/mo with 5000 down ($2500 down if you qualify for certain state tax credits). Not so fast...that 469/mo is calculated with certain "assumptions" namely a fuel savings of $261 and a business tax benefit of $366. Details below-
Of course the example BMW lease is not calculating any fuel savings or cost nor is it factoring in your tax benefit if you were to lease the 535 as a business. When the assumptions are removed and the comparison is apples to apples (or at least close) the your 60kw Model S lease payments would be 1,096/mo. That is a tough number to swallow on a 65k car that you will not own.
As much as I want Tesla to succeed and alter the landscape of car-buying, consumers should be aware of what lease pricing or vehicle pricing looks like in the real world.
!!!error: Indecipherable SUB-paragraph formatting!!! is a professional car buying consultant, lover of all things automotive and a bit wagon obsessed. You can find more ramblings and plenty of carporn !!!error: Indecipherable SUB-paragraph formatting!!!
Brian Silvestro
> Tom McParland
04/08/2014 at 13:52 |
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ddavidn
> Tom McParland
04/08/2014 at 13:54 |
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Yeah, I noticed this back in the payment calculator. It kinda sucks. Mostly because I will never be able to afford $1,100 a month plus insurance.
shop-teacher
> Tom McParland
04/08/2014 at 13:59 |
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An $1100/month lease payment on a $65k car!?! What the duece?
adidas
> Tom McParland
04/08/2014 at 14:01 |
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They assume you drive the gas car in the worst possible scenarios and drive theirs in the best possible. Seems shady but it's marketing as usual.
davesaddiction @ opposite-lock.com
> Tom McParland
04/08/2014 at 14:01 |
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Yup. Bogus...
I'd actually be surprised if it's legal to list pricing like this.
CAR_IS_MI
> Tom McParland
04/08/2014 at 14:02 |
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I saw this when they first released the lease program. I jumped on the site and saw something like "lease for as low as $568 / mo" and thought to myself "that's not much more than the Audi payment, and I would be the first one on the street with a Tesla". Then I read the fine print and realized it was if you factor in gas savings, government tax credits, pennies Al Gore throws at you for saving the environment, etc. but would still cost $1,200/mo in real world monies.
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Tom McParland
> adidas
04/08/2014 at 14:02 |
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Hence my disappointment...I really wanted Tesla to be above these bait and switch tactics.
Mercedes Streeter
> Tom McParland
04/08/2014 at 14:06 |
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Tesla is a smart company, Elon Musk is a smart man. They know exactly what they're doing because they know people are going to lease a Tesla at that absurd rate anyway.
Then, those people can say they're saving almost $300 a month in fuel by switching to a Tesla.
The big hole (for me, at least), is that the calculated fuel savings are based on a yearly mileage that will be more than your lease allows. So you'd literally just be bleeding cash by going with a Tesla lease deal.
And I'm not even mad...
BaconSandwich is tasty.
> shop-teacher
04/08/2014 at 14:13 |
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Well, thinking about it, they need to take the hit on any sort of depreciation, right? From what I recall hearing (and I could be wrong), they do guarantee a particular resale value with the Model S. If that resale value is 80% of the original sticker price, then that means someone, somewhere is having to pay. Might as well pass it on to the consumer, right?
On the flip side, I can only hope that this will result in a ton of off-lease cheaper Model Ses...
jariten1781
> Tom McParland
04/08/2014 at 14:15 |
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They've had the 'True cost of ownership' calculator up for a while as well. I've had a number of folks attempt to convince me that while their finance payment is 1000 bucks, they're really only paying like 500 a month then send me to the calculator. It subtracts things like 'time spent at the gas station' from the cost. It's quite silly.
Here: http://www.teslamotors.com/true-cost-of-o…
PS9
> Tom McParland
04/08/2014 at 14:16 |
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Gas is like $3.50 where I live right now. $261/$3.50 = 74.5 Gallons of gas/month. 18.6 Gallons a week.
A 9,500 mile/year average means about 182 miles/week of driving for the average american. So, since they figure the alternative means consuming 18 gallons of gas for the same week, this means a hypothetical gas powered P85 Model S would get...9 MPG?
I know performance cars consume more fuel, but a new M5 can get almost double that. So I guess Gas powered model Ss would have carbureted 600 CID big blocks then?
I want Tesla to succeed as much as anyone, but they are being super-duper generous with that gas savings factor, and hiding the true monthly costs seems very two-faced to me. For $1k, nevermind M5s and AMGs - this thing better outrun an Aventador for that kind of money every month on a car I will not own.
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Tom McParland
> jariten1781
04/08/2014 at 14:16 |
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This is true especially for the monthly payments on traditional financing. It looks like they are using the same tactics for leasing.
Jonathon Klein
> Tom McParland
04/08/2014 at 14:20 |
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Same here.
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jariten1781
> Tom McParland
04/08/2014 at 14:37 |
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For fun I just ran the calculator with all savings on (in the supplied default values) from WV as a business. Little did I know, Tesla will effectively be paying you 4 dollars per month to drive the 60 kwh model. What a steal......
ncasolowork2
> Tom McParland
04/08/2014 at 14:41 |
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Holy crap $1100???? Who said Tesla can't compete with dealerships? That seems like classic dealer doublespeak to me.
shortyoh
> Tom McParland
04/08/2014 at 14:41 |
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$4.90 per gallon for premium? How much were they smoking to come up with that figure?
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shortyoh
> CAR_IS_MI
04/08/2014 at 15:01 |
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And they only get to the $568 figure by figuring business credits, the majority of which you get with ANY car that you lease.
For example, in the screenshot above, for the payment of $1096 they give a "business tax benefit" of $366 per month. But most of that appears to come from the deduction against income you get for car expenses - namely that they assume 70% of the vehicles use is for business purposes, and you have a 40% tax rate, so 40%*70%*$1096 = $306.88 per month in lower income taxes on the business because of the lease. Add in even more for fuel use and amortization of the down payment/acquisition/disposition fees. You're at that $366 pretty darned fast... And every last bit of those costs would be deductible with ANY other vehicle on the market, meaning that you could give the same credit against costs for a BMW, an Audi, a Toyota, etc... but none of those makers will so boldly claim it as part of their effective pricing.
NotUnlessRoundIsFunny
> Tom McParland
04/08/2014 at 15:50 |
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Actually it probably gets even worse once you factor in your local price of electricity, and the fact that electric rates will also increase over time, etc.
One example: electric car sellers usually use the "national average" of $0.11 / KWh for their calculations of cost, but in my area the marginal cost is actually about three times that. (I'm not sure what figure Tesla uses, to be fair).
Doing the math, comparing current gas and electrical costs, I'd be better off buying a plug-in hybrid...and never plugging it in. Surprising.
All that said, I also want Tesla to succeed. But this calculator is just bogus.
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NotUnlessRoundIsFunny
> Mercedes Streeter
04/08/2014 at 15:52 |
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Plus, how much are you paying for electricity to replace that $300 / month in fuel? It's probably not zero. :-)
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jariten1781
> NotUnlessRoundIsFunny
04/08/2014 at 15:57 |
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They use .11/KWh in the financing calculator (not sure what they use in the leasing one). They do allow you to change it to whatever, but that's the default.
Edit: They also use 11 for the leasing calculator.
GreenN_Gold
> Tom McParland
04/08/2014 at 16:03 |
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Just curious, does the 85 or P85 fair any better? They're more expensive, I realize, but I assume they also retain their value better because I've heard the take rate on the 60 is really quite low.
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Tom McParland
> GreenN_Gold
04/08/2014 at 20:04 |
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Not really, if you go to Tesla's website and you play with the models and lease payments it is all relative
Xelmon
> Tom McParland
04/08/2014 at 23:18 |
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One of the guys sent this over my way earlier today, I immediately laughed and said "At that rate, you may as well buy the damned car."
Shows that it's never worth to rent something.
... Mmmm, lemme take that back. Never worth to rent something such as this. There are very large machines that you use once or twice that are def. rent worthy.
The S as it is, is still a bit of a rich mans toy. Simple as that. It is a very nice and eco-friendly toy, yet still a toy.
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GreenN_Gold
> Tom McParland
04/09/2014 at 13:00 |
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OK thanks.
gabdere
> Tom McParland
04/13/2014 at 09:59 |
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I'm surprised that the incentive in Cali is $2.5K... Is that for leasing only?
In Quebec the tax credit at purchase is $8k + an other credit for installing the charging thing
axiomatik
> PS9
04/14/2014 at 14:23 |
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FYI - Your 9,500 mile/year average is too low. If you look at that graph, it is miles per capita, meaning the total miles driven divided by the total number of people in the country. However, tens of millions of Americans don't drive (either below age 16, too old to drive, incapable of driving, etc). The actual average mileage per driver is probably more like 14,000.
thecatman
> axiomatik
04/14/2014 at 19:37 |
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The average is 13,476 mi per annum, however it varies depending on the demographics you're looking at:
http://cars.lovetoknow.com/about-cars/how…
The average man drives 16,550 miles per year, while the average woman drives 10,142 miles.
!!! UNKNOWN CONTENT TYPE !!!
Americans between 35 and 54 years of age drive 15,291 miles per year on average. Those over age 64 average only 7,646 miles annually.
!!! UNKNOWN CONTENT TYPE !!!
men aged 35-54 drive the most miles. These drivers, possibly commuting to and from work, log 18,858 miles each year.
!!! UNKNOWN CONTENT TYPE !!!
The average American aged 16-19 years old drives 7,624 miles each year. Teenaged boys drive slightly more than teenage girls, with males logging 8,206 miles annually to females' 6,873 miles.
Your State:
High Miles
Wyoming, where the average driver in this state drives 21,821 miles annually
Georgia, where drivers travel 18,920 miles each year on average
Oklahoma, where the average driver logs 18,8891 miles each year
New Mexico, where the average miles per year per driver is 18,369
Minnesota, where the average licensed resident drives 17,887 miles annually
Low Miles
Alaska, where licensed residents drive only 9,915 miles each year on average
Washington, DC, where drivers log an average of only 10,045 miles each year
Hawaii, where licensed residents drive 11,104 miles each year
Connecticut, where drivers travel only 11,595 miles annually
Massachusetts, where the average miles per year per driver is 11,759
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PS9
> axiomatik
04/14/2014 at 19:38 |
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214B Miles / 211M Licenced drivers = 12k miles/year = 234 miles/week. So 12 MPG instead of 9. Still unacceptably low compared to competitors, and still unreasonably generous to themselves for the purpose of hiding the true leasing cost from potential customers.
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axiomatik
> PS9
04/15/2014 at 11:43 |
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calculating hypothetical equivalent mileages is pointless. The only pertinent number is the $261/mo. If, on average you spend less than that, adjust accordingly. If more, adjust accordingly. 18 gallons/week isn't absurd, it's about 1 tank of gas per week depending on what you drive. I don't drive that much, but many people do.
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PS9
> axiomatik
04/15/2014 at 12:27 |
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No it is not pointless. If the mileage doesn't matter, than the figure itself doesn't matter, and the entire $261/month figure is an even bigger smokescreen than we thought.
Bottom line; if the car is $1k/month for a lease, than say that. Stop using smokescreens like this one to obfusticate it. If this looks bad compare to lease terms offered by competitors, than 1) adjust your leasing price accordingly. Can't do that? Then, 2) Run with the price and hope for buyers who either value the Tesla brand enough to swallow it, or have enough disposable income to not care.
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axiomatik
> PS9
04/15/2014 at 17:23 |
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You are arguing two different issues. I agree that Tesla should be upfront about its pricing. I also think that it makes sense for Tesla to highlight the fuel savings versus a traditional car, though they should do it in a more transparent manner.
However, your math exercise in calculating some abstract equivalent mpg of the Tesla based on average cost of gas and per capita miles driven doesn't make any sense either. $261 is the number they used. Using dollars is the easiest way for a potential customer to compare costs. Add up your gas receipts for a few months and see how it compares to that $261/mo. Adjust the savings as required. That's it. Probably half the population doesn't even know how to calculate their mpg, but they can certainly add up their gas receipts.
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PS9
> axiomatik
04/15/2014 at 17:48 |
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No one is arguing two different issues. I have been completely consistent on one issue - Tesla is purposefully hiding the true leasing cost of its vehicles as advertised - this whole thread, and your attempts to obfuscate that are not going to fly.
However, your math exercise in calculating some abstract equivalent mpg of the Tesla based on average cost of gas and per capita miles driven doesn't make any sense either.
It is not abstract. Tesla's estimate on how much you'd save buying gas is directly related to how much gas their estimate assumes you would buy if you go somewhere else. Period. End of story. Their estimate is grossly inflated relative to the competition. That will still be true no matter how you want to choose to explain it.
Probably half the population doesn't even know how to calculate their mpg, but they can certainly add up their gas receipts.
Red herring (and totally unsubstantiated.). $261/month on gas is a gross over-estimate on Tesla's part, for the purpose of obfuscating the true cost of leasing the vehicle. That will still be true, no matter how you want to choose to explain it.
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axiomatik
> PS9
04/22/2014 at 17:35 |
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I am not trying to obfuscate anything. All I did was point out that you used faulty assumptions in your initial calculation.
However, if you want to know the parameters used by Tesla to calculate that amount, maybe read this very article a little bit more carefully. The 2nd image in the article outlines Tesla's assumptions:
"Gasoline savings are calculated assuming $0.11 per kilowatt hour compared to paying $4.90 per gallon for premium gasoline with a fuel efficiency of 20 miles per gallon"
It doesn't list the miles/year, but I can only assume they used the maximum miles per year allowed under the lease in order to maximize the savings.