Talking tech since 2003

Earlier this week, Tesla Motors came out with a brand new leasing option for the Tesla Model S sedan, which is a completely electric luxury sedan.  A completely electric car, that’s also a luxury car — I know what you’re thinking, it must be super expensive, right?  If you believe Tesla, it’s much more “affordable” that you may think.  But I’m here to tell you: don’t believe Tesla.

Why?  Because the new leasing options for the Tesla Model S are deceiving to say the least.

Tesla says you can own a Tesla Model S for $500/month.  Yes, $500/month for a car that starts at $62,400 to buy outright — sounds a little too good to be true, doesn’t it?  Well, it is.  Here’s how Tesla does the math to get $500/month.

They assume the following to be true:

  • You drive 15,000 miles per year.
  • You purchase premium gas (which averages out to $5.00 over 3 years).
  • Your current car only gets 19 miles per gallon.
  • You will be taking advantage of business tax credits (so you need to be using it for business purposes as well as personal).

tesla-cost-of-ownership

The reality is that most of those aren’t true for many people, except maybe driving 15,000 miles per year, though most drive around or under 12,000. I personally drive under 10,000 miles every year and I certainly don’t use premium gas.

If you unselect the option that you will be using the Tesla Model S for business, you automatically make the “cost of ownership” sky rocket to over $800 per month.  If you then add in normal mileage and the cost of regular gas, you soon will see that “cost of ownership” jump to over $900 per month.

The problem is that regardless of what the “effective monthly cost” says, if you look down one line, you will see that for the lowest end model of the Model S, you will be paying $1,097 per month, every month, for the terms of the lease (which is 36 months), which brings you to a grand total spent of $39,492 when your lease is up.  Oh, plus don’t forget you also had to make a down payment of 10%.  Of course all of that is subject to if you have excellent credit, which is necessary in order to secure the low APR of 2.95%.

At those monthly prices, you might as well be leasing a Mercedes-Benz S 500 or better.

Don’t get me wrong, I’m a fan of Tesla’s innovation, but this is just bad marketing.  It’s deceiving and untrue.  If $1,097 is coming out of my pocket every month for a car, that’s what it is, no matter how much you spin it.  I wish Tesla would just say that outright — there’s nothing to be ashamed of for having your first fully electric luxury sedan be pricey.  In fact, it’s supposed to be pricey — it’s a luxury sedan.  The car isn’t ready for the masses yet and that’s okay.  In fact, I think they would sell more if they made it appear like an “elite” thing to own, which it really is.

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