New lease-style plan expected to generate more revenues at Tesla

Article by Anita Panait, on September 16, 2013

Tesla Motors is planning to buy back Model S electric cars from customers using its lease-style option, a move that could generate more revenues when the carmaker sells used cars, according to Bloomberg Industries. The move provides Tesla with more control over used vehicle resale prices than traditional carmakers, according to Bloomberg Industries analyst Kevin Tynan.

He said that used Model S sales may generate up to $368 million in annual revenue in 2016, or an additional $40 million in annual gross profit.

Tynan told Bloomberg News in an interview that “buying back three-year-old cars” at a set price means Tesla can control the secondary market for Model S and other cars it offers. He remarked that Tesla will be the main buyer and has the chance to earn a “second gross profit on the same car.” Tynan estimates that Tesla is offering 46 percent of the Model S’s original price.

The finance plan is in line with Tesla chief executive Elon Musk’s avoidance of traditional industry practices. Tesla announced the finance plan in April and was initially criticized for overstating customer savings.

The plan -- backed by Wells Fargo’s and U.S. Bancorp -- guarantees a resale value for Model S “equal to 50 percent of the base purchase price” of the entry-level car, which is around $70,000, and “43 percent of the original purchase price for all options” after 36 months, according to a Tesla agreement obtained by Bloomberg Industries. In a May revision to the plan, Model S owners can choose to keep their cars, with loans running up to six years.

If you liked the article, share on:

Pin It

Comments

Recommended

The German automaker Volkswagen is now racing against time to come up with electric vehicles that will be able to pass Europe and China's stringent emission standard. The car company...
by - March 22, 2017
In the last few years, the advent of compact sedans and crossovers has become quite overwhelming. Even two of the major manufacturers that “started it all” have to admit that...
by - March 22, 2017
By 2020, Audi will be throwing out not just one but three fully-electric vehicles. One of which will be pitted against the BMW i8. This new information was revealed by...
by - March 22, 2017
Tesla confirms that they will be discontinuing the fairly new Model S 60 and 60D sedans as soon as next month. Why, you ask? The company wants to make enough...
by - March 22, 2017
Have you ever wondered how much luxury car companies profit from every vehicle they sell? And which companies profit more? Well, in 2016, Porsche sold over 238,000 vehicles. That is...
by - March 22, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries