Tesla CEO Elon Musk said the loan program is designed to make the Model S "affordable to a much broader audience" than most people expect. The CEO is riding a wave of publicity this week after announcing the EV company will be profitable for the quarter after selling more than expected Model S EVs. [Read that story here.]
Most critically, though, the program gives people who lease a Tesla the $7,500 tax break that the government gives out for electric and hybrid cars. Until now, Tesla lease customers lost out on that rebate, which went instead to the bank that provided the lease.
Leasers (who have excellent credit) will get that rebate from US Bank and Wells Fargo, which have agreed to provide the 10 percent down payment required to lease a Model S. Monthly lease payments are based on how much the buyer leaves as a down payment, and then calculated by how much the car should be worth when the car is turned back in. So Tesla is promising the Model S will be worth the same as a Mercedes S Class.
There are specific lease payment costs – $1,199 a month for the 85-kWh Model S, $1,421 for the 85-kWh Performance model and $1,051 for the 60-kWh version – but Tesla is putting up invisible asterisks all over the place. Instead of highlighting those numbers, Tesla's online calculator talks about the "true cost of ownership." Tesla factors in the value of your time, cost of gas and EV incentives when arriving at that $500 per month press-release-worthy number.
Members of of the Autobloggreen.com and Autoblog.com staffs (sister sites to AOL Autos) configured leases for the Model S and came up with a range of monthly costs. Autobloggreen editor Sebastian Blanco calculated his own numbers for the 85-kWh model and came out with an effective monthly cost of $1,133. Other Autoblog writers calculated theirs, and came up with results between $834 and $688.
Part of the Tesla offer is that drivers have the right to hang on to the car after three years rather than give it back, Musk said. Buyers will continue paying off the loan, which lasts for five years. Many luxury car makers already offer a similar type of leasing model, but Tesla's is different because it works more like a five-year car loan instead of a three-year lease.
"I think we've got something pretty great," said a demure Musk.
Musk said one of his companies, Solar City, used used a similar lease-to-own program. It was hard to get people to buy solar panels outright, said Musk, even with promises that the panels would be worth it in unspent electricity costs after three years. But once the company began offering leases, sales went up, he explained to reporters on Tuesday.
"It's a much simpler approach," he said.