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.

Tesla Model S, the first completely electric vehicle, is a revolution in car engineering. Integrating performance, safety, and productivity, it has raised the world's standards for the vehicle of the 21st century with the highest conceivable safety ratings, the longest range of any electric car, and over-the-air software enhancements that keep on improving it.

Tesla Architecture

Created on the Tesla stage, the battery's location on the floor allows Tesla Model S to have a remarkably low center of gravity, significantly diminishing the danger of rollover while simultaneously improving handling and performance. Without an engine, Tesla Model S has a fold zone considerably bigger than other performance vehicles to assimilate the energy of a front end impact.

Safety

Tesla Model S is one of the safest vehicles on the road. A lot of its safety is due to the exclusive electric drivetrain that sits underneath the car. Model S has a low center of gravity, reducing rollover risk. Model S's safety record is demonstrated by its NHTSA and Euro NCAP 5-star safety rating along with setting a record of the most minimal probability of injury to its occupants when tested in the United States.

With standard active safety features including path departure warning, automatic crisis braking, blind spot detection, collision warning, and optional convenience elements like traffic-aware cruise control, autopark, autosteer, and summon, Tesla Model S is still the safest vehicle on the road.

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