Tesla sets up finance unit for Model S corporate buyers

Article by Christian Andrei, on April 9, 2014

Tesla Motors Inc. is establishing a financing unit aimed at corporate buyers for its Model S premium electric sedan. This will allow small and medium-sized businesses to estimate the cost of leasing while configuring the Model S on Tesla’s Web site, the EV maker said in a statement.

The new Tesla Finance unit will be offering loans from partner banks as well as providing a resale-value guarantee available under the current lease-style program launched a year ago.

Tesla said that the financing options -- when combined with the fuel savings of Model S -- provide an “attractive value proposition.” The move comes as Tesla aims to hike its production of the Model S by 56 percent this year.

The Model S carries a starting price of $71,000. Tesla is preparing to export Model S to China and has set a goal of expanding its operations in Europe through this year.

According to Tesla, a captive finance company represents a natural extension of its strategy to offer great customers experience, including financing products to one of its most important customers. Tesla Finance will offer the financing production that was requested by customers and has not been available from company’s bank financing partners.

Craig Irwin, an analyst with Wedbush Securities, said that a large portion of the luxury vehicles in the United States are leased and we should not be surprised to see Tesla start a captive finance company. Tesla will use some of the cash generated by the Model S sales in order to find its finance unit.

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