9 ms·

Tesla’s Model S Lease and Financing Program Expensive, Misleading

133 points by astaire 14y ago

vincefutr23 14y ago
the media seems intent on sinking Tesla. While I agree with the conclusion that they should stick to car instead of loan technology, the tagline under the 500$ seems enough to me to indicate it is a cost of ownership figure. These practices are certainly not more deceptive than what is seen elsewhere in the auto industry
- niggler 14y ago
  Many of the complaints are absolutely legitimate and have nothing to do with sinking tesla. For example: " the fuel savings calculator nestled among these references to the buyback program defaults to driving 15,000 miles per year. Nowhere on the page does Tesla mention that the buyback program explicitly limits mileage to 12,000 per year, and that any miles in excess are charged at $0.25 apiece ... they’d have to pay an additional $2250 in mileage penalties." This is the type of thing you expect from a scummy used car dealer.
- twoodfin 14y ago
  It's not a cost of ownership figure. By definition, if you're paying Tesla or Wells-Fargo $1,200 a month for your car, your cost of ownership is at least $1,200 a month.
  - deleted 14y ago
    [deleted]
  - guiambros 14y ago
    If you're saving $250 on gas, then your total cost of ownership is $950 per month. Also, if the resell value after 3 years is higher than your other option, then the TCO is reduced even further when analyzed over that time period.
    - jacquesm 14y ago
      > If you're saving $250 on gas, then your total cost of ownership is $950 per month. Of course it doesn't. It means the total cost of ownership of the other vehicle is $250 higher.
    - Someone 14y ago
      Rent one from me for $1500 a month. That will save you the $1200 you otherwise would pay to Tesla, so your total cost of ownership is only $300 per month. In other words: your logic does not make sense to me.
- potatolicious 14y ago
  This is silly and borders on conspiracy theory. It would be suspicious if Tesla is being attacked over technicalities or falsehoods, but all of the criticism in this article is true, representative, and on the money. It's not just Car & Driver, there have been recently discussions on HN also where it's been shown many times over that the $500 figure is straight out to lunch and grossly misleading. Why is it that some of us here feel the need to constantly worship at the feet of demigod Musk, He Who Does No Wrong, and anything negative said about him is dismissed as slanderous propaganda by Big Automobile? What is this, the USSR? I appreciate what Elon Musk is doing to advance electric cars and wean us off of oil, but he is a shrewd businessman subject to the fallibilities of all shrewd businessmen. He is neither a messiah nor a saint.
  - pg 14y ago
    "he is a shrewd businessman subject to the fallibilities of all shrewd businessmen." Rather a broad generalization, don't you think? Like most fields, business turns out to have more variation than outsiders think. "Businessmen" range from pure money grubbers who will do whatever makes the most, to people who are in business simply because the thing they want to build can only be embodied as a business. I don't know for sure, but it seems to me that Elon Musk is toward the latter end of the spectrum.
    - bravura 14y ago
      "Rather a broad generalization, don't you think?" In fact, it was gratuitously restrictive, as you noted in the subsequent sentence.
    - jcr 14y ago
      > "the thing they want to build can only be embodied as a business." I agree completely. It's easy to see how improving the state of electric vehicles requires significant capital, so without a business, there's no viable way to make the desired advancements. Some of the backlash against Elon Musk seems to be caused by some people having extremely high expectations for everything he does. Those expectations are occasionally unrealistic, and blaming him personally for every misgiving of the entire Tesla company is entirely unfair. Most car sales/lease terms are horribly and intentionally confusing and complicated, but someone in marketing at Tesla made a serious mistake. The mistake wasn't using industry norm of difficult to comprehend claims and terms, instead, the mistake was failing to live up to expectations of something better, namely, clear and direct terms with fair and easy comparisons. As a business, Tesla must compete with all of the entrenched businesses but by using the "best practices" of the industry in terms of marketing, they missed an opportunity and failed to meet expectations. There are few people on the planet who have set expectations so high as to get blamed personally for failing to innovate absolutely everywhere, but it seems Elon Musk is one of them. The world would be a better place if more people had his problems. ;-)
marcamillion 14y ago
Huge fan of Tesla....but this advertising is misleading and very disappointing. Come on Musk, you set the high bar for yourself. We expect better.
dancesdrunk 14y ago
The only thing that irks me here is how the cost of fuel is deducted from the cost of the lease:- If I'm paying $1200/mo for a lease, and any fuel / maintenance costs are on top of that amount. If I get an S-Class for $1200/mo, the fuel would be (for example) $200/mo on top, the total being $1400/mo. Increment accordingly for maintenance. Tesla S is $1200/mo. I don't need fuel, hence I don't pay anything on top. It doesn't magically become $1200 - $200 = $1000/mo. You're still paying $1200/mo. Plus the cost of maintenance and electricity. Talk about manipulating numbers.
- majormajor 14y ago
  A manipulation that I don't see the point of, at that. Tell a people who can only afford a $600/mo payment that the TCO is under that, and it might get them to come into the dealership, but the real monthly cost will come out before the car could be sold. If they pitched the calculator on the "true cost of ownership" page as a "here's a way to estimate the hidden costs of a gasoline car that make the Tesla more competitive than you'd think" they could make the same pitch but without the smell of a bait and switch. But even at that, it's not apples to apples (if you buy an S Class, nobody has to guarantee that there will be a market for reselling it in three years).
  - ErrantX 14y ago
    > Tell a people who can only afford a $600/mo payment that the TCO is under that, and it might get them to come into the dealership, but the real monthly cost will come out before the car could be sold. Once you have them through the door you have the chance to pitch them the concept, which in sales is a big thing. And the whole point of a salesman's job is to close the deal. (I don't disagree, just pointing out why they are doing a bait and switch)
    - Ntrails 14y ago
      The issue with getting them through the door is the reputational risk from everyone who walked into a showroom to be told the actual monthly cost was 1200 bucks, only to bring it up with all their friends as a misleading marketing gambit. For a company that needs every ounce of credibility to make its product mainstream, this seems like a silly ad to place.
ricardobeat 14y ago
While the $500/month and milage figures can be misleading, they failed to acknowledge the upside: - the savings from fuel/maintenance/etc are very real, not wishful thinking. The math is true for total cost of ownership - no downpayment due to the tax refunds - guaranteed buyback, not something you'll find anywhere else In the absolute worst case it's a standard lease + buyback guarantee, so how can it be "expensive"?
- vacri 14y ago
  No fuel costs? What about the eventual battery pack replacement? That's not cheap. Similarly the buyback is only for a very short window of ownership. It'll be interesting to see how they remind owners of this window - will it be months in advance, or will it be "Hello, as of today..."?
  - gregpilling 14y ago
    Some cost information about Prius battery packs (not a Tesla, but relevant) http://www.tirebusiness.com/article/20121120/NEWS/121129994/replacing-hybrids-battery-not-as-costly-as-you-think http://www.tirebusiness.com/article/20121120/NEWS/121129994/...
    - vacri 14y ago
      The Tesla batteries are more expensive - at around $10k a pop, it's not so trivial http://green.autoblog.com/2012/11/30/tesla-adds-replacement-battery-pack-costs-to-price-increase-deta/ http://green.autoblog.com/2012/11/30/tesla-adds-replacement-...
  - darklajid 14y ago
    I consider the ad/program very fishy (especially the 15.000/12.000 mile part), but I don't get your point: Are you really saying that you'd replace the battery pack on that car? In three years, starting with a brand new one? Or are you talking about keeping that car afterwards, ignoring the buyback option (and why would you do that)?
- 14y ago
CountHackulus 14y ago
Went to a Tesla "dealership" today, this article is entirely true. I was horribly disappointed that I couldn't actually afford the car.
Lightbody 14y ago
I'm a huge fan of the Model S and will be putting in an order for one as soon as I can decide which version to get. But I too think their whole financing announcement was really lame. Seems very beneath them for having such an amazing product to offer.
- vl 14y ago
  >as soon as I can decide which version to get Is there a question though? Max battery + all options including wheels and leather, except "pain armor" and probably "rear facing child seats". Roof is tricky, don't know it it's a good idea or not.
ck2 14y ago
Not to dismiss this but have you EVER seen an honest financial product or advertisement for such? I mean to get that result you'd have to throw bankers and marketeers in jail for bad behavior and that's never going to happen, so what exactly is their downside?
- anigbrowl 14y ago
  TIn several European countries that I've lived in, you would not be allowed to make claims of this kind in your advertising - it's regarded as abusive of the consumer. The first amendment gives advertisers wide latitude with the kind of claims they make, and even fairly blatant exaggeration is OK as sales talk is expected to involve a degree of 'puffery'. I like the first amendment but as a consumer I sometimes find the almost universal use of bait-and-swtich tactics in American advertising extremely tedious. In this case I think Tesla went too far with their claims and the market (both on Main and Wall street) is punishing them accordingly. The buyback guarantee was a good idea, as is the lease scheme. Of course they want to make the price seem attractive, but I think they could have been frank about a $1000/month lease cost and got the same amount of business or even more. A surprising misstep.
  - arethuza 14y ago
    I presume you didn't live in the UK? We seem to have a particularly slippery financial services sector (with some notable exceptions) - the latest one being interest rate swaps being sold to relatively small and unsophisticated borrowers as "interest rate protection".
    - anigbrowl 14y ago
      Not any more, but then financial products have always been regulated rather loosely, given the FSA's vague guidelines. That does sound pretty strange, but I was thinking more of regular consumer goods. I do frequently miss the media landscape in the UK grabs lapels you don't know what the TV here is like!!
      - 14y ago
spullara 14y ago
I even own a Tesla S and think the advertising of this program is terrible. I can't side with Elon on this. They definitely need to add some kind of qualifier like "$500 / month with savings." or "TCO equivalent to a $500 / month lease on a normal car." 15k/year assumption in the fuel savings calculator vs the 12k/year buyback program rate is hopefully an oversite rather than on purpose...
- Yhippa 14y ago
  As an owner what do you think of the car? Do you regret being an early adopter and would you recommend waiting? I'm gambling that they're eventually going to release one within my price range in the next five years. This financing program would make getting into a Tesla doable but I am not a big fan of leasing.
  - spullara 14y ago
    I love it. Doesn't feel like a 1.0 to me. The guaranteed buyback of this lease is a good deal I think. That said, they will release less expensive models within your time frame.
olympus 14y ago
When someone who truly revolutionized online money with PayPal says they have a revolutionary new deal, they had better not come at me with smoke and mirrors like this. When Elon Musk sat in front of a camera and talked about a revolutionary new financing opportunity where I could get an $80k car for $500 a month I was stoked. I was a lot less stoked when I found out that the "$500 a month" payment was actually as large as my mortgage payment. I've always been enthusiastic about what Elon Musk has done, but this irks me. It's pretty shady when you subtract the value of the Model S at three years in your calculations, but you don't subtract the resale value of any other cars in the comparison. Just because other cars don't have "guaranteed" resale values doesn't mean they have zero resale value. including PayPal, although they seem to have lost their direction since he left.
spc476 14y ago
Here's something I can't figure out. I saw a list price of the Model S 60Kw as $62,400. The article says you pay $1,097 for 63 months for that model, and you can sell it back at 43% of the original price. Okay, at 36 months, you've paid $39,492 in payments. Assuming Tesla buys back at 43% of the $62,400 price, or $26,832 and you get that money, then all you are out at the end of 36 months is $12,660 or an effective $351/month (but only realized after three years). Am I missing something here? Is my math off?
- olympus 14y ago
  No, your math is right. The $500 per month figure is for the 85 kWh car, which is more expensive. Tesla's "calculator" gives roughly the same figure as you for the 60kWh car. That doesn't mean it's comparable to a car payment of $351/month though. If you did equivalent discounting to a car that only had a $351/month payment (maybe some sort of Kia?) then that would come out to be in the ball park of $150/month, but you don't see Kia advertising their cars like that.
  - spc476 14y ago
    I did my math on the 85 kWh version and it came out to $417/month (effective after three years and selling it back). But you are right, you don't see other cars being advertised like that.
- majormajor 14y ago
  After making $39,492 in payments, you still owe $22,908 on the car (well, not exactly, because I'm not accounting for the down payment or for interest on the loan, here—but you don't own the car free and clear). So that $26,832 doesn't all go straight into your pocket if you sell the car back. That's why, in order to get to the $346 figure I'm seeing on loading up the page with the default options for the 60kWh model, most of the "savings" comes from stuff other than the buyback (primarily the business tax benefit and fuel costs). The guaranteed resale value portion is only credited a $40/month benefit.
  - spc476 14y ago
nwzpaperman 14y ago
Fisker is toast, what's the over-under on HN's favorite electric car boondoggle getting pinched? What greenism acolytes don't appreciate is that deflation lowers the price of goods and services--including car and fuel prices! Value is conserved and deflation will burn the green industry in a bright white light like ice cold water on lithium. Green energy's only hope is that Bernanke's replacement starts handing out trillion dollar tokens on street corners. All these bright minds and no one takes the time to model assumptions of perpetual compounding growth of the economy! It's not linear, duh!
- stcredzero 14y ago
  > All these bright minds and no one takes the time to model assumptions of perpetual compounding growth of the economy! It's not linear, duh! Planetary Resources. Colonization of Mars.
  - nwzpaperman 14y ago
    Pass the pipe, yo! Who would want to live on Mars? Why not build a colony in the middle of a desert with no one but moneyed acquaintances and imported indentured slaves? Oh wait, we already did over in Dubai! Bwahaha Mars colonization is just a novelty to obscure reality and distract people from the bankruptcy of the debt-asset based financial-political system. Aka asset-based lending The Tesla financing gimmick is nothing more than a retail level tax credit securitization scheme of the TIF pedigree that municipalities use.
    - stcredzero 14y ago
      > Who would want to live on Mars? The number one historical driver of wealth and geopolitical power: proximity to resources. On Mars, you're several times closer than Earth to the majority of the resources in the Solar System, on a planet that has terrestrial mineral resources and the ability to support agriculture. Also, not being at the bottom of such a deep gravity well, you're also at a strategic advantage.
      - 14y ago
OGinparadise 14y ago
The also valued an hour of stuck in traffic at $100. Imagine if we didn't sleep that much, or we ate while working, several hundred $ more a day. Because that's just how it works :) The biggest opportunity to screw you is this http://blog.caranddriver.com/wp-content/uploads/2013/04/TeslaMileageTerms-626x381.jpg http://blog.caranddriver.com/wp-content/uploads/2013/04/Tesl... "Excessive wear and use" gives them a license to renege on their promise to buy your car for 43% of the value after 3 years. Considering the truth stretching Tesla did with this advertisement, I'd trust them to take advantage of any miniscule opp to screw you.
dpe82 14y ago
> The sad part of this price comparison quagmire is that Tesla doesn’t need to do it. Its Model S is, flatly stated, very cool. Totally agreed. I'm really disappointing that this BS is coming from what (up to this point) many of us have perceived as a trustworthy company. We all know Teslas are expensive but that they'll get more affordable with future models. There's no reason to pull this kind of stunt. Elon, you're better than this.
- m4x 14y ago
  Elon, you're better than this. This is such a common sentiment, but why? Elon Musk has helped create a number of awesome things, but that does not make him a virtuous person. His handling of the NYTimes debacle strongly suggested the opposite, in fact I suspect it's largely because he's the figurehead for the new-age EVs which are making many people giddy with excitement in much the same way that iPods did a few years ago.
- davidiach 14y ago
  But it should also be noted that they don't advertise it as the price of a Tesla but the cost, or "the true cost of owning a Tesla". Cost and price are 2 different things. My problem though is that I don't think that they got the math right. It's like saying: you spend 3000$ every month. A trip to Las Vegas would cost you an additional 1000$. But if you don't go to Las Vegas you are saving 1000$ and now your "true" spending is only 2000$ this month. What they should have said is: non EV - car X has a monthly price of 1200$ and Tesla Model S also has a monthly price 1200$. For car X you have some additional monthly costs of 1000$ but for the Tesla, the additional costs are only 300$. So the total cost for you would be 2200$ for having car X and only 1500$ for Tesla. Or something like that.
  - SilasX 14y ago
    >But it should also be noted that they don't advertise it as the price of a Tesla but the cost, or "the true cost of owning a Tesla". Cost and price are 2 different things. My problem though is that I don't think that they got the math right. Then why was it worded in a way that gave the impression they were telling you the price? Even several people here, presumably somewhat intelligent, came away with that idea. The fact that TCO and price are different is no reason use language that muddies the difference.
smackfu 14y ago
The other missing factor here is who is paying the sales tax on this $80,000 car. That's $6000 at a 7.5% rate, due on "purchase".
- matwood 14y ago
  Depends on the state. Some states cap the sales tax on an auto purchase. IIRC, in SC it's capped at $350. Then of course you get the property tax bill about a month later assuming you didn't transfer tags.
  - smackfu 14y ago
    True. I think people just need to be wary that no matter how Tesla works the numbers, you are still buying an $80k vehicle at the end of the day.
jusben1369 14y ago
When this first came out a few days back I said this had the chance to be a much bigger problem than the NY Times piece: https://news.ycombinator.com/item?id=5482963 https://news.ycombinator.com/item?id=5482963 Ok, now I got "how smart am I" out of the way. Tesla can have stumbles as a product and we can forgive them because they're blazing a trail and early adopters understand that comes with the territory. I for one did not care too much about the NY Times article. It was such an extreme use case (traveling all that distance in freezing cold) that would solve itself within 18 - 36 months. It would not have impacted my buying decision. The response from Elon gave me more pause. "Wow, there's such a defensive attack response from this company. What happens to me if I buy one and it's a lemon? It can happen. Do I feel like they'd be supportive or blame me for everything that went wrong?" More troubling than it needed to be. This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car" What really matters is if I were in the market for a new car in the next 12 months up until pre NYTimes Tesla would have been my top choice. Post NYTimes I would have asked a lot more questions if I was going through the buying process. Now I would not buy a Tesla for at least 12 months as I want more proof points around what exactly is the culture of this company. Elon will publicly apologize for this within 30 days is my best guess.
- rz2k 14y ago
  It sounds like the problem is "the cause". If Tesla is successful, it will be because they focused on making a good car rather than relying on the cause to attract buyers. Yet there is this large cheering section that want the car to succeed, but probably aren't considering buying the car. Take a look at some of the Reddit threads about the expected profits, and you highly see upvoted comments talking about the NY Times debacle as though it is something that Tesla "won". I can't know whether Elon Musk is actually caught up in the cause of electric cars, but it increasingly passes for a explanation of strange decisions.
- cube13 14y ago
  >This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car" I think this shows that Tesla just doesn't get the market they're aiming for. With their prices(around $60,000 MSRP for the Model S, and $90,000 for the Roadster), they're looking at car enthusiasts and rich people. They're looking at an informed audience that will see through(or are capable of paying people to see through) the marketing to the direct impact on their bottom line. They're informed customers, and don't need this kind of marketing. The key points here was that they've gotten a bank to issue loans on the cars. That's all they needed to announce, not the terms or the nebulous "Total cost of ownership" calculation.
tocomment 14y ago
I wonder if anyone at Tesla considered the idea of guaranteeing the gas savings? At it's simplest the buyer just gets some money back if the cost of gas goes way down. Tesla could use futures to fund the guarantee at possibly a low cost?

133 points by astaire 14y ago

the media seems intent on sinking Tesla. While I agree with the conclusion that they should stick to car instead of loan technology, the tagline under the 500$ seems enough to me to indicate it is a cost of ownership figure. These practices are certainly not more deceptive than what is seen elsewhere in the auto industry

niggler 14y ago
Many of the complaints are absolutely legitimate and have nothing to do with sinking tesla. For example: " the fuel savings calculator nestled among these references to the buyback program defaults to driving 15,000 miles per year. Nowhere on the page does Tesla mention that the buyback program explicitly limits mileage to 12,000 per year, and that any miles in excess are charged at $0.25 apiece ... they’d have to pay an additional $2250 in mileage penalties." This is the type of thing you expect from a scummy used car dealer.
twoodfin 14y ago
It's not a cost of ownership figure. By definition, if you're paying Tesla or Wells-Fargo $1,200 a month for your car, your cost of ownership is at least $1,200 a month.
- deleted 14y ago
  [deleted]
- guiambros 14y ago
  If you're saving $250 on gas, then your total cost of ownership is $950 per month. Also, if the resell value after 3 years is higher than your other option, then the TCO is reduced even further when analyzed over that time period.
  - jacquesm 14y ago
    > If you're saving $250 on gas, then your total cost of ownership is $950 per month. Of course it doesn't. It means the total cost of ownership of the other vehicle is $250 higher.
  - Someone 14y ago
    Rent one from me for $1500 a month. That will save you the $1200 you otherwise would pay to Tesla, so your total cost of ownership is only $300 per month. In other words: your logic does not make sense to me.
potatolicious 14y ago
This is silly and borders on conspiracy theory. It would be suspicious if Tesla is being attacked over technicalities or falsehoods, but all of the criticism in this article is true, representative, and on the money. It's not just Car & Driver, there have been recently discussions on HN also where it's been shown many times over that the $500 figure is straight out to lunch and grossly misleading. Why is it that some of us here feel the need to constantly worship at the feet of demigod Musk, He Who Does No Wrong, and anything negative said about him is dismissed as slanderous propaganda by Big Automobile? What is this, the USSR? I appreciate what Elon Musk is doing to advance electric cars and wean us off of oil, but he is a shrewd businessman subject to the fallibilities of all shrewd businessmen. He is neither a messiah nor a saint.
- pg 14y ago
  "he is a shrewd businessman subject to the fallibilities of all shrewd businessmen." Rather a broad generalization, don't you think? Like most fields, business turns out to have more variation than outsiders think. "Businessmen" range from pure money grubbers who will do whatever makes the most, to people who are in business simply because the thing they want to build can only be embodied as a business. I don't know for sure, but it seems to me that Elon Musk is toward the latter end of the spectrum.
  - bravura 14y ago
    "Rather a broad generalization, don't you think?" In fact, it was gratuitously restrictive, as you noted in the subsequent sentence.
  - jcr 14y ago
    > "the thing they want to build can only be embodied as a business." I agree completely. It's easy to see how improving the state of electric vehicles requires significant capital, so without a business, there's no viable way to make the desired advancements. Some of the backlash against Elon Musk seems to be caused by some people having extremely high expectations for everything he does. Those expectations are occasionally unrealistic, and blaming him personally for every misgiving of the entire Tesla company is entirely unfair. Most car sales/lease terms are horribly and intentionally confusing and complicated, but someone in marketing at Tesla made a serious mistake. The mistake wasn't using industry norm of difficult to comprehend claims and terms, instead, the mistake was failing to live up to expectations of something better, namely, clear and direct terms with fair and easy comparisons. As a business, Tesla must compete with all of the entrenched businesses but by using the "best practices" of the industry in terms of marketing, they missed an opportunity and failed to meet expectations. There are few people on the planet who have set expectations so high as to get blamed personally for failing to innovate absolutely everywhere, but it seems Elon Musk is one of them. The world would be a better place if more people had his problems. ;-)

marcamillion 14y ago

Huge fan of Tesla....but this advertising is misleading and very disappointing. Come on Musk, you set the high bar for yourself. We expect better.

dancesdrunk 14y ago

The only thing that irks me here is how the cost of fuel is deducted from the cost of the lease:- If I'm paying $1200/mo for a lease, and any fuel / maintenance costs are on top of that amount. If I get an S-Class for $1200/mo, the fuel would be (for example) $200/mo on top, the total being $1400/mo. Increment accordingly for maintenance. Tesla S is $1200/mo. I don't need fuel, hence I don't pay anything on top. It doesn't magically become $1200 - $200 = $1000/mo. You're still paying $1200/mo. Plus the cost of maintenance and electricity. Talk about manipulating numbers.

majormajor 14y ago
A manipulation that I don't see the point of, at that. Tell a people who can only afford a $600/mo payment that the TCO is under that, and it might get them to come into the dealership, but the real monthly cost will come out before the car could be sold. If they pitched the calculator on the "true cost of ownership" page as a "here's a way to estimate the hidden costs of a gasoline car that make the Tesla more competitive than you'd think" they could make the same pitch but without the smell of a bait and switch. But even at that, it's not apples to apples (if you buy an S Class, nobody has to guarantee that there will be a market for reselling it in three years).
- ErrantX 14y ago
  > Tell a people who can only afford a $600/mo payment that the TCO is under that, and it might get them to come into the dealership, but the real monthly cost will come out before the car could be sold. Once you have them through the door you have the chance to pitch them the concept, which in sales is a big thing. And the whole point of a salesman's job is to close the deal. (I don't disagree, just pointing out why they are doing a bait and switch)
  - Ntrails 14y ago
    The issue with getting them through the door is the reputational risk from everyone who walked into a showroom to be told the actual monthly cost was 1200 bucks, only to bring it up with all their friends as a misleading marketing gambit. For a company that needs every ounce of credibility to make its product mainstream, this seems like a silly ad to place.

ricardobeat 14y ago

While the $500/month and milage figures can be misleading, they failed to acknowledge the upside: - the savings from fuel/maintenance/etc are very real, not wishful thinking. The math is true for total cost of ownership - no downpayment due to the tax refunds - guaranteed buyback, not something you'll find anywhere else In the absolute worst case it's a standard lease + buyback guarantee, so how can it be "expensive"?

vacri 14y ago
No fuel costs? What about the eventual battery pack replacement? That's not cheap. Similarly the buyback is only for a very short window of ownership. It'll be interesting to see how they remind owners of this window - will it be months in advance, or will it be "Hello, as of today..."?
- gregpilling 14y ago
  Some cost information about Prius battery packs (not a Tesla, but relevant) http://www.tirebusiness.com/article/20121120/NEWS/121129994/replacing-hybrids-battery-not-as-costly-as-you-think http://www.tirebusiness.com/article/20121120/NEWS/121129994/...
  - vacri 14y ago
    The Tesla batteries are more expensive - at around $10k a pop, it's not so trivial http://green.autoblog.com/2012/11/30/tesla-adds-replacement-battery-pack-costs-to-price-increase-deta/ http://green.autoblog.com/2012/11/30/tesla-adds-replacement-...
- darklajid 14y ago
  I consider the ad/program very fishy (especially the 15.000/12.000 mile part), but I don't get your point: Are you really saying that you'd replace the battery pack on that car? In three years, starting with a brand new one? Or are you talking about keeping that car afterwards, ignoring the buyback option (and why would you do that)?
14y ago

CountHackulus 14y ago

Went to a Tesla "dealership" today, this article is entirely true. I was horribly disappointed that I couldn't actually afford the car.

Lightbody 14y ago

I'm a huge fan of the Model S and will be putting in an order for one as soon as I can decide which version to get. But I too think their whole financing announcement was really lame. Seems very beneath them for having such an amazing product to offer.

vl 14y ago
>as soon as I can decide which version to get Is there a question though? Max battery + all options including wheels and leather, except "pain armor" and probably "rear facing child seats". Roof is tricky, don't know it it's a good idea or not.

ck2 14y ago

Not to dismiss this but have you EVER seen an honest financial product or advertisement for such? I mean to get that result you'd have to throw bankers and marketeers in jail for bad behavior and that's never going to happen, so what exactly is their downside?

anigbrowl 14y ago
TIn several European countries that I've lived in, you would not be allowed to make claims of this kind in your advertising - it's regarded as abusive of the consumer. The first amendment gives advertisers wide latitude with the kind of claims they make, and even fairly blatant exaggeration is OK as sales talk is expected to involve a degree of 'puffery'. I like the first amendment but as a consumer I sometimes find the almost universal use of bait-and-swtich tactics in American advertising extremely tedious. In this case I think Tesla went too far with their claims and the market (both on Main and Wall street) is punishing them accordingly. The buyback guarantee was a good idea, as is the lease scheme. Of course they want to make the price seem attractive, but I think they could have been frank about a $1000/month lease cost and got the same amount of business or even more. A surprising misstep.
- arethuza 14y ago
  I presume you didn't live in the UK? We seem to have a particularly slippery financial services sector (with some notable exceptions) - the latest one being interest rate swaps being sold to relatively small and unsophisticated borrowers as "interest rate protection".
  - anigbrowl 14y ago
    Not any more, but then financial products have always been regulated rather loosely, given the FSA's vague guidelines. That does sound pretty strange, but I was thinking more of regular consumer goods. I do frequently miss the media landscape in the UK grabs lapels you don't know what the TV here is like!!
    - 14y ago

spullara 14y ago

I even own a Tesla S and think the advertising of this program is terrible. I can't side with Elon on this. They definitely need to add some kind of qualifier like "$500 / month with savings." or "TCO equivalent to a $500 / month lease on a normal car." 15k/year assumption in the fuel savings calculator vs the 12k/year buyback program rate is hopefully an oversite rather than on purpose...

Yhippa 14y ago
As an owner what do you think of the car? Do you regret being an early adopter and would you recommend waiting? I'm gambling that they're eventually going to release one within my price range in the next five years. This financing program would make getting into a Tesla doable but I am not a big fan of leasing.
- spullara 14y ago
  I love it. Doesn't feel like a 1.0 to me. The guaranteed buyback of this lease is a good deal I think. That said, they will release less expensive models within your time frame.

olympus 14y ago

When someone who truly revolutionized online money with PayPal says they have a revolutionary new deal, they had better not come at me with smoke and mirrors like this. When Elon Musk sat in front of a camera and talked about a revolutionary new financing opportunity where I could get an $80k car for $500 a month I was stoked. I was a lot less stoked when I found out that the "$500 a month" payment was actually as large as my mortgage payment. I've always been enthusiastic about what Elon Musk has done, but this irks me. It's pretty shady when you subtract the value of the Model S at three years in your calculations, but you don't subtract the resale value of any other cars in the comparison. Just because other cars don't have "guaranteed" resale values doesn't mean they have zero resale value. including PayPal, although they seem to have lost their direction since he left.

spc476 14y ago

Here's something I can't figure out. I saw a list price of the Model S 60Kw as $62,400. The article says you pay $1,097 for 63 months for that model, and you can sell it back at 43% of the original price. Okay, at 36 months, you've paid $39,492 in payments. Assuming Tesla buys back at 43% of the $62,400 price, or $26,832 and you get that money, then all you are out at the end of 36 months is $12,660 or an effective $351/month (but only realized after three years). Am I missing something here? Is my math off?

olympus 14y ago
No, your math is right. The $500 per month figure is for the 85 kWh car, which is more expensive. Tesla's "calculator" gives roughly the same figure as you for the 60kWh car. That doesn't mean it's comparable to a car payment of $351/month though. If you did equivalent discounting to a car that only had a $351/month payment (maybe some sort of Kia?) then that would come out to be in the ball park of $150/month, but you don't see Kia advertising their cars like that.
- spc476 14y ago
  I did my math on the 85 kWh version and it came out to $417/month (effective after three years and selling it back). But you are right, you don't see other cars being advertised like that.
majormajor 14y ago
After making $39,492 in payments, you still owe $22,908 on the car (well, not exactly, because I'm not accounting for the down payment or for interest on the loan, here—but you don't own the car free and clear). So that $26,832 doesn't all go straight into your pocket if you sell the car back. That's why, in order to get to the $346 figure I'm seeing on loading up the page with the default options for the 60kWh model, most of the "savings" comes from stuff other than the buyback (primarily the business tax benefit and fuel costs). The guaranteed resale value portion is only credited a $40/month benefit.
- spc476 14y ago

nwzpaperman 14y ago

Fisker is toast, what's the over-under on HN's favorite electric car boondoggle getting pinched? What greenism acolytes don't appreciate is that deflation lowers the price of goods and services--including car and fuel prices! Value is conserved and deflation will burn the green industry in a bright white light like ice cold water on lithium. Green energy's only hope is that Bernanke's replacement starts handing out trillion dollar tokens on street corners. All these bright minds and no one takes the time to model assumptions of perpetual compounding growth of the economy! It's not linear, duh!

stcredzero 14y ago
> All these bright minds and no one takes the time to model assumptions of perpetual compounding growth of the economy! It's not linear, duh! Planetary Resources. Colonization of Mars.
- nwzpaperman 14y ago
  Pass the pipe, yo! Who would want to live on Mars? Why not build a colony in the middle of a desert with no one but moneyed acquaintances and imported indentured slaves? Oh wait, we already did over in Dubai! Bwahaha Mars colonization is just a novelty to obscure reality and distract people from the bankruptcy of the debt-asset based financial-political system. Aka asset-based lending The Tesla financing gimmick is nothing more than a retail level tax credit securitization scheme of the TIF pedigree that municipalities use.
  - stcredzero 14y ago
    > Who would want to live on Mars? The number one historical driver of wealth and geopolitical power: proximity to resources. On Mars, you're several times closer than Earth to the majority of the resources in the Solar System, on a planet that has terrestrial mineral resources and the ability to support agriculture. Also, not being at the bottom of such a deep gravity well, you're also at a strategic advantage.
    - 14y ago

OGinparadise 14y ago

The also valued an hour of stuck in traffic at $100. Imagine if we didn't sleep that much, or we ate while working, several hundred $ more a day. Because that's just how it works :) The biggest opportunity to screw you is this http://blog.caranddriver.com/wp-content/uploads/2013/04/TeslaMileageTerms-626x381.jpg http://blog.caranddriver.com/wp-content/uploads/2013/04/Tesl... "Excessive wear and use" gives them a license to renege on their promise to buy your car for 43% of the value after 3 years. Considering the truth stretching Tesla did with this advertisement, I'd trust them to take advantage of any miniscule opp to screw you.

dpe82 14y ago

> The sad part of this price comparison quagmire is that Tesla doesn’t need to do it. Its Model S is, flatly stated, very cool. Totally agreed. I'm really disappointing that this BS is coming from what (up to this point) many of us have perceived as a trustworthy company. We all know Teslas are expensive but that they'll get more affordable with future models. There's no reason to pull this kind of stunt. Elon, you're better than this.

m4x 14y ago
Elon, you're better than this. This is such a common sentiment, but why? Elon Musk has helped create a number of awesome things, but that does not make him a virtuous person. His handling of the NYTimes debacle strongly suggested the opposite, in fact I suspect it's largely because he's the figurehead for the new-age EVs which are making many people giddy with excitement in much the same way that iPods did a few years ago.
davidiach 14y ago
But it should also be noted that they don't advertise it as the price of a Tesla but the cost, or "the true cost of owning a Tesla". Cost and price are 2 different things. My problem though is that I don't think that they got the math right. It's like saying: you spend 3000$ every month. A trip to Las Vegas would cost you an additional 1000$. But if you don't go to Las Vegas you are saving 1000$ and now your "true" spending is only 2000$ this month. What they should have said is: non EV - car X has a monthly price of 1200$ and Tesla Model S also has a monthly price 1200$. For car X you have some additional monthly costs of 1000$ but for the Tesla, the additional costs are only 300$. So the total cost for you would be 2200$ for having car X and only 1500$ for Tesla. Or something like that.
- SilasX 14y ago
  >But it should also be noted that they don't advertise it as the price of a Tesla but the cost, or "the true cost of owning a Tesla". Cost and price are 2 different things. My problem though is that I don't think that they got the math right. Then why was it worded in a way that gave the impression they were telling you the price? Even several people here, presumably somewhat intelligent, came away with that idea. The fact that TCO and price are different is no reason use language that muddies the difference.

smackfu 14y ago

The other missing factor here is who is paying the sales tax on this $80,000 car. That's $6000 at a 7.5% rate, due on "purchase".

matwood 14y ago
Depends on the state. Some states cap the sales tax on an auto purchase. IIRC, in SC it's capped at $350. Then of course you get the property tax bill about a month later assuming you didn't transfer tags.
- smackfu 14y ago
  True. I think people just need to be wary that no matter how Tesla works the numbers, you are still buying an $80k vehicle at the end of the day.

jusben1369 14y ago

When this first came out a few days back I said this had the chance to be a much bigger problem than the NY Times piece: https://news.ycombinator.com/item?id=5482963 https://news.ycombinator.com/item?id=5482963 Ok, now I got "how smart am I" out of the way. Tesla can have stumbles as a product and we can forgive them because they're blazing a trail and early adopters understand that comes with the territory. I for one did not care too much about the NY Times article. It was such an extreme use case (traveling all that distance in freezing cold) that would solve itself within 18 - 36 months. It would not have impacted my buying decision. The response from Elon gave me more pause. "Wow, there's such a defensive attack response from this company. What happens to me if I buy one and it's a lemon? It can happen. Do I feel like they'd be supportive or blame me for everything that went wrong?" More troubling than it needed to be. This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car" What really matters is if I were in the market for a new car in the next 12 months up until pre NYTimes Tesla would have been my top choice. Post NYTimes I would have asked a lot more questions if I was going through the buying process. Now I would not buy a Tesla for at least 12 months as I want more proof points around what exactly is the culture of this company. Elon will publicly apologize for this within 30 days is my best guess.

rz2k 14y ago
It sounds like the problem is "the cause". If Tesla is successful, it will be because they focused on making a good car rather than relying on the cause to attract buyers. Yet there is this large cheering section that want the car to succeed, but probably aren't considering buying the car. Take a look at some of the Reddit threads about the expected profits, and you highly see upvoted comments talking about the NY Times debacle as though it is something that Tesla "won". I can't know whether Elon Musk is actually caught up in the cause of electric cars, but it increasingly passes for a explanation of strange decisions.
cube13 14y ago
>This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car" I think this shows that Tesla just doesn't get the market they're aiming for. With their prices(around $60,000 MSRP for the Model S, and $90,000 for the Roadster), they're looking at car enthusiasts and rich people. They're looking at an informed audience that will see through(or are capable of paying people to see through) the marketing to the direct impact on their bottom line. They're informed customers, and don't need this kind of marketing. The key points here was that they've gotten a bank to issue loans on the cars. That's all they needed to announce, not the terms or the nebulous "Total cost of ownership" calculation.

tocomment 14y ago

I wonder if anyone at Tesla considered the idea of guaranteeing the gas savings? At it's simplest the buyer just gets some money back if the cost of gas goes way down. Tesla could use futures to fund the guarantee at possibly a low cost?