Leasing Could Give Tesla Model 3 Big Boost

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One small-understood secret of the luxury-car business is the fact that a high percentage of luxury vehicles are leased, not purchased. Scotts Hall, Executive Vice President of Swapalease.com suggests that Tesla has been the most successful luxury brand launch of this millennium ̵[ads1]1; Tesla Motors – has gone very slowly on leasing. A lot to gain from rolling out competitive lease offers on its Model 3. In fact, leasing may be of critical importance to the electric carmaker as its ability to offer tax credits to blacks.

Up to now, Tesla has offered direct leasing of its pricey Model S then and Model X crossover SUV, but it currently does not offer a lease for its volume Model 3. According to a recent report from the automaker, "Our Q3 Model 3 deliveries were limited to higher-priced variants, cash / loan transactions, and North American customers onl y. There are significant opportunities to grow the addressable market for Model 3 by introducing leasing, standard battery and other lower-priced variants of the car, and by starting international deliveries. "

According to the company's earnings statement, only 6% of its car sales in the second quarter were leased directly by Tesla. To Hall, the opportunity to expand leasing offers the brand significant upside.

 

"Luxury vehicles have always led the charge on the leasing front," said Hall in an interview with Forbes.com. "To give you one example, BMW leased more vehicles than it was sold in 2017."

BMW is far from alone in its reliance on vehicle leasing to gain sales volume. The overall lease penetration rate for top luxury brands is well over 50%. In recent data reported in Automotive News Infiniti, Lexus, Audi and Mercedes-Benz joined BMW with lease rates of 50% or greater. Jaguar, Lincoln and Land Rover lease rates were reportedly 48% of total sales.

Some might argue the Model 3 is not a luxury vehicle, but with its brand image and current average transaction price, Hall said "there is no doubt in I think that they are in the luxury category. "

Since Tesla Motors leases a minor proportion of Model 3s now, should it add leasing to its sales / marketing arsenal, it could be a boon to overall sales.

" There are a number of advantages of leasing in the luxury category, "Hall said. "The number one is they make the payments more affordable and that opens up the market for more people."

The financial numbers are compelling. According to Hall, if one were to lease a Model 3 with a capitalized cost of $ 45,000, the monthly payment on a three-year lease would be $ 752. (Det antas en 50% restverdi på slutningen av tre år.) I motsetning til at en forbruker skulle kjøpe en Model 3 på en tilsvarende pris og finansiere den over tre år, ville den månedlige betaling være $ 1,344. To arrive at a monthly payment similar to the $ 752 lease payment, the buyer would have to take out a 72-month (6-year) loan.

Leasing can also take the potential worry out of buying a pure electric vehicle for the first time. Prospective buyers may be concerned about an EV's suitability for their lifestyles and about the new technology of the car's expensive battery pack, which will decrease in effect over time.

"The question about battery life is an advantage in leasing these vehicles," Hall said. "Consumers do not want to be responsible for taking care of that battery if there are issues."

The current high demand for Model 3s helps support a leasing strategy, as does the fact that EVs like the Model 3 are typically driven fewer miles per year than the average vehicle.

"I absolutely suggest that they ramp up their leasing," Hall told us. "Og det er for et par grunner: Jeg tror at leasing er en stor markedsføringsstrategi for enhver produsent, og jeg tror det er enda mer så for en luksusproducent på grund av prissætning og teknologi. That's something they need to do in order to be competitive. "

Hall does not feel it is advisable that Tesla targets the kind of lease penetration the luxury brands typically see. Instead, he says a lower lease rate is a logical first step.

"I'm not so sure than Tesla needs to emulate BMW or Mercedes or one of the other luxury manufacturers and their lease penetrations, but I would strongly recommend to Houd de voertuigen beschikbaar voor iedereen en bereik een kritische massa van mensen die ze zouden moeten schieten voor een initiële doel van ongeveer 30% lease penetratie. Og det kan være et godt mål for Tesla å skyte for å få så mange biler som mulig ute på veien. "

Of course, all leases are not equal from the manufacturer point of view. Some are highly profitable; Anderen, hvor producenten betaler midler til at sænke betalingen, er meget mindre rentable. Men det virker lite tvil om at Tesla Motors kan dra nytte av bilen leasing i fremtiden.

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One small-understood secret of the luxury-car business is the fact that a high percentage of luxury vehicles are leased, not purchased. But the most successful luxury-brand launch of this millennium – Tesla Motors – has gone very slowly on leasing. Now, an expert on the subject, Scot Hall, executive vice president of Swapalease.com, suggests that Tesla has a lot to gain from rolling out competitive lease offers on its Model 3. In fact, leasing could be of critical importance to the electric carmaker

Up to now, Tesla has offered direct leasing of its pricey Model S sedan and Model X crossover SUV, but it currently does not offer a lease for its volume. Model 3. According to To a recent report from the automaker, "Our Q3 Model 3 deliveries were limited to higher-priced variants, cash / loan transactions, and North American customers only. There are significant opportunities to grow the addressable market for Model 3 by introducing leasing, standard battery and other lower-priced variants of the car, and by starting international deliveries. "

According to the company's earnings statement, only 6% of its Car sales in the second quarter were leased directly by Tesla. To Hall, the opportunity to expand leasing offers the brand significant upside.

"Luxury vehicles have always led the charge on the leasing front," said Hall in an interview with Forbes.com. "To give you one example, BMW leased more vehicles than it was sold in 2017."

BMW is far from alone in its reliance on vehicle leasing to gain sales volume. The overall lease penetration rate for top luxury brands is well over 50%. In recent data reported in Automotive News Infiniti, Lexus, Audi and Mercedes-Benz joined BMW with lease rates of 50% or greater. Jaguar, Lincoln and Land Rover lease rates were reportedly 48% of total sales.

Some might argue the Model 3 is not a luxury vehicle, but with its brand image and current average transaction price, Hall said "there is no doubt in I think that they are in the luxury category. "

Since Tesla Motors leases a minor proportion of Model 3s now, should it add leasing to its sales / marketing arsenal, it could be a boon to overall sales.

" There are a number of advantages of leasing in the luxury category, "Hall said. "The number one is they make the payments more affordable and that opens up the market for more people."

The financial numbers are compelling. According to Hall, if one were to lease a Model 3 with a capitalized cost of $ 45,000, the monthly payment on a three-year lease would be $ 752. (Det antas en 50% restverdi på slutningen av tre år.) I motsetning til at en forbruker skulle kjøpe en Model 3 på en tilsvarende pris og finansiere den over tre år, ville den månedlige betaling være $ 1,344. To arrive at a monthly payment similar to the $ 752 lease payment, the buyer would have to take out a 72-month (6-year) loan.

Leasing can also take the potential worry out of buying a pure electric vehicle for the first time. Prospective buyers may be concerned about an EV's suitability for their lifestyles and about the new technology of the car's expensive battery pack, which will decrease in effect over time.

"The question about battery life is an advantage in leasing these vehicles," Hall said. "Consumers do not want to be responsible for taking care of that battery if there are issues."

The current high demand for Model 3s helps support a leasing strategy, as does the fact that EVs like the Model 3 are typically driven fewer miles per year than the average vehicle.

"I absolutely suggest that they ramp up their leasing," Hall told us. "Og det er for et par grunner: Jeg tror at leasing er en stor markedsføringsstrategi for enhver produsent, og jeg tror det er enda mer så for en luksusproducent på grund av prissætning og teknologi. That's something they need to do in order to be competitive. "

Hall does not feel it is advisable that Tesla targets the kind of lease penetration the luxury brands typically see. Instead, he says a lower lease rate is a logical first step.

"I'm not so sure than Tesla needs to emulate BMW or Mercedes or one of the other luxury manufacturers and their lease penetrations, but I would strongly recommend to Houd de voertuigen beschikbaar voor iedereen en bereik een kritische massa van mensen die ze zouden moeten schieten voor een initiële doel van ongeveer 30% lease penetratie. Og det kan være et godt mål for Tesla å skyte for å få så mange biler som mulig ute på veien. "

Of course, all leases are not equal from the manufacturer point of view. Some are highly profitable; Anderen, hvor producenten betaler midler til at sænke betalingen, er meget mindre rentable. Men det virker lite tvivl om at Tesla Motors kan dra nytte av bilen leasing i fremtiden.