Are Tesla's financing offers discouraging?

With very high rates, should long-term rentals or lease with purchase options be considered at Tesla?

Here’s a real dilemma. At Mobiwisy, we are convinced that buying an electric car doesn’t make much sense. Technology evolves too quickly, prices are falling so fast that the risk is ending up owning a vehicle worth less and less, which no one will want as a used car very soon.

This is the “raw” postcard view. In reality, any car, even old or technologically outdated, retains value and interest. That’s why excluding the idea of buying your Tesla shouldn’t be a serious hypothesis. Nevertheless, it’s important to sit down and ask the right questions.

Let’s take the example of the Tesla Model Y, the best-selling electric vehicle worldwide in 2023, especially in Europe. Recently discounted from 3,000 to 5,000 euros (January 17, 2024), it is now available from 37,990 euros in France, after ecological bonus of 5,000 euros is deducted.

At Tesla, 4 solutions are offered:

CASH PURCHASE: if you have the cash, you pay and leave with your car. This involves tying up your money, but why not. This option is increasingly less chosen by French buyers. Maintenance is then the owner’s responsibility.

CREDIT: Let’s assume a median repayment period of 60 months (5 years). With a fixed Annual Percentage Rate (APR) of 6.25%, a loan of 37,990 euros will have monthly payments of 735.87 euros. At the end of the repayment, the Tesla Model Y will cost 44,152 euros, which is an additional 6,162 euros (+16.2%). Maintenance afterwards remains the owner’s responsibility.

LEASE WITH PURCHASE OPTION (LOA): Rent your Tesla Model Y, and at the end of the lease, you have the option to buy it outright, start a new lease with a newer model, or switch to a competitor. Assuming again an annual mileage of 20,000 km, the initial 10,000 km does not match the expectations for such a family vehicle, especially electric. Savings come from lower recharge costs compared to fuel. Here, the starting price isn’t 37,990 euros, but 42,990 euros. The first of 60 installments reflects the ecological bonus Tesla receives. Remember, you’ll own the car afterward… The remaining 59 installments are set at 494.92 euros (470.07 euros/month if 10,000 km/year). If you decide to buy the car at the end, the option would cost 17,626 euros, bringing the total to 51,826 euros (+13,836 euros compared to outright purchase). Warning: LOA, like LLD, requires a condition of car condition at the end unless you are meticulously careful over 5 years, which is unlikely… It’s advisable to include this factor from the start. Tesla does not specify any other services included in its LOA. This means maintenance is at the client’s expense.

FINANCIAL LEASE (LLD): Like LOA, assuming an annual mileage of 20,000 km. Here, you lease the Model Y and return it at the end without the option to buy (theoretically…). Be aware that depreciation costs (condition, mileage…) will apply. Tesla’s LLD includes services such as maintenance, assistance, breakdown or towing 24/7, a replacement vehicle, and the financial guarantee (theft, fire, weather, natural disaster…). No down payment is required, as the ecological bonus covers it. The client simply pays 60 monthly payments of 602 euros each, totaling 36,120 euros (assuming no end-of-contract fees…). This is nearly the initial sale price of the new Model Y. What about the maintenance costs for an electric car?

In the end, LOA and LLD seem primarily aimed at professionals who do not want the hassle of reselling their company car. And recovering VAT is also a significant factor.

For private individuals, buying outright or taking a loan with a Tesla presumes that after the loan is repaid, the client still owns a vehicle worth roughly 20,000 euros.

CALCULATE YOUR OWN (and take some Panacea).