Does Tesla Negotiate on the Lease?

[sukhi]

Is the 2013 Model S obsolete??

I would say yes with lower capacity battery, no auto pilot hardware etc.
Of course it's fully functional just like an older generation old iPhone. I tend to upgrade my iPhone every year.
If courses it's a matter of personal taste. For me obsolete implies I can no longer get access to significant new features available in newer models.

 

[loganintx]

I would say yes with lower capacity battery, no auto pilot hardware etc.
Of course it's fully functional just like an older generation old iPhone. I tend to upgrade my iPhone every year.
If courses it's a matter of personal taste. For me obsolete implies I can no longer get access to significant new features available in newer models.

But the X has AutoPilot hardware. I think if you due the true cost to own between the two options and even get a low resell value the Buy option is better especially with such low interest rates to be had and really low if you do a 3 year deal. Why don't you work up the two numbers with your estimates and show us how the Lease makes more sense for you.

 

[sukhi]

But the X has AutoPilot hardware. I think if you due the true cost to own between the two options and even get a low resell value the Buy option is better especially with such low interest rates to be had and really low if you do a 3 year deal. Why don't you work up the two numbers with your estimates and show us how the Lease makes more sense for you.

@loganintx, Autopilot hardware might need an upgrade to go fully autonomous, drive system might get improved, batteries might get more efficient etc.
I did the math and it did make sense for me and with all due respect I do not feel like I need to justify a very personal decision (lease versus buy) in a public forum.

 

[loganintx]

It sounds more like an emotional decision than a mathematical one which is fine. Your examples of the future cars having more fully autonomous control systems making the older cars obsolete is a bit off. It doesn't mean that the older cars would then be worth a LOT less money and the lease already costs you MORE money than a loan. If you don't want to do the math that's okay. I just prefer not to make emotional decisions when dealing with 6 figure money.

 

[loganintx]

Of course autopilot hardware will be better in the future, as will the batteries, as will the front seat ventilation and there may even be a sunshade for the front window. You can never buy a future proof car but choosing to pay more money to lease one because you think the residual value of the car will be far less than the residual offer on the lease probably isn't accurate.
My current car is a lease but the money factor on the deal was really good and I knew i didn't want it after 3 years and I currently drive very few miles in it.
The Tesla will be our shared family car and will end up with about 18k miles annually so the lease given the higher mileage and high money factor was a definite no go for us.

 

[sukhi]

Of course autopilot hardware will be better in the future, as will the batteries, as will the front seat ventilation and there may even be a sunshade for the front window. You can never buy a future proof car but choosing to pay more money to lease one because you think the residual value of the car will be far less than the residual offer on the lease probably isn't accurate.
My current car is a lease but the money factor on the deal was really good and I knew i didn't want it after 3 years and I currently drive very few miles in it.
The Tesla will be our shared family car and will end up with about 18k miles annually so the lease given the higher mileage and high money factor was a definite no go for us.

As you just highlighted there, there are multiple factors that inform such decisions. I drive barely 8k miles a year, I change my cars every three years (sometimes even sooner) and so on. Trust me, even the mathematical answer on these things is driven by the assumptions and those are subjective or circumstantial. There are no right or wrong answers, it all depends.

 

[loganintx]

For my X the numbers between Lease and Buy came out like this
MSRP: $112,900
Lease 15K: 36x $1,513 + $7,208 down + $7,056 tax = $68,732
Buy 72mo 1.99%: 36x $1,591 + $5k down - $7,500 tax rebate + $7,056 tax = $61,832

After 36 months I would owe $55,461 on Loan which is 49.1% of MSRP.
Buy is $6,900 cheaper over first 3 years than Lease which is 6.1% of MSRP so even if I could only sell at 43% residual which is WAY too low even if AutoPilot AMAZEBALLS version came out with 180kWh battery I still come out better by doing a purchase.

Things to know: In Texas you pay tax on full MSRP even for a lease. I don't have my own business to write off lease cost against for tax savings.
I have no problem with people leasing and for lots of people it will make sense. I was just asking that you share why it made sense for you and in doing so you will probably help others to make the same decision. it's about sharing in this forum not about worrying about exposing your personal emotions on how you spend your money.

 

[loganintx]

Here's the spreadsheet I made to help people with financing but only for buying and not for leasing. I should probably add leasing numbers into this though to help with that decision.
Tesla Model X Finance

 

[Diavel]

For my X the numbers between Lease and Buy came out like this
MSRP: $112,900
Lease 15K: 36x $1,513 + $7,208 down + $7,056 tax = $68,732
Buy 72mo 1.99%: 36x $1,591 + $5k down - $7,500 tax rebate + $7,056 tax = $61,832

After 36 months I would owe $55,461 on Loan which is 49.1% of MSRP.
Buy is $6,900 cheaper over first 3 years than Lease which is 6.1% of MSRP so even if I could only sell at 43% residual which is WAY too low even if AutoPilot AMAZEBALLS version came out with 180kWh battery I still come out better by doing a purchase.

Things to know: In Texas you pay tax on full MSRP even for a lease. I don't have my own business to write off lease cost against for tax savings.
I have no problem with people leasing and for lots of people it will make sense. I was just asking that you share why it made sense for you and in doing so you will probably help others to make the same decision. it's about sharing in this forum not about worrying about exposing your personal emotions on how you spend your money.

Curious if you included the $7500 tax credit on the lease calculation you posted. I don't see it so wouldn't it be safe to say that if $6900 is whats cheaper to buy and assuming $7500 is not included in your calculation, then a lease would be cheaper by $600 over that same period of time?

I had just incorporated a new business so I don't think I can take advantage of the full $7500 and even more so section 179. Moreover, here in California Section 179 is limited to only $25,000 but I can still take deductions on leases and would take full advantage of the $7500. Plus safeguard me from chronic issues that cannot be fixed unless tesla changes a manufacturing process on a specific part (things that may require welding etc)

One thing I don't like about leasing is that they can nitpick and charge you extra when you return.

 

[sukhi]

Here's the spreadsheet I made to help people with financing but only for buying and not for leasing. I should probably add leasing numbers into this though to help with that decision.
Tesla Model X Finance

Thanks. I used a couple of similar sheets for calculating 3 year TCO for the lease versus buy options. Two big differences for me compared to yours. First here in CA, the tax is proportional to the capitalized cost and not the total purchase price. Second, I only need 10k option.

 

[Diavel]

Thanks. I used a couple of similar TCO sheets for lease versus buy option. Two big differences for me compared to yours. First here in CA, the tax is proportional to the capitalized cost and not the total purchase price. Second, I only need 10k option.

Can you elaborate more on taxes being proportional to the capitalized cost? When I bought my X, I paid taxes on the full amount of what I purchased.

 

[loganintx]

Curious if you included the $7500 tax credit on the lease calculation you posted.

The Lease numbers are straight off of the Configuration Page on TeslaMotors. You do not get the $7500 tax credit if you lease. Some lease options have that amount rolled in to the residual value and lowers your lease payment. Since you can ONLY lease from Tesla and those are the numbers on the page that is what I used.
Feel free to redo the math with more accurate numbers if I'm wrong on the $7,500 or anything else.

 

[loganintx]

First here in CA, the tax is proportional to the capitalized cost

Texas sticks me with the WHOLE tax bill

 

[loganintx]

One thing I don't like about leasing is that they can nitpick and charge you extra when you return.

Also, any money you invest in tinting, paint protection, modifications is 100% sunk cost and you cannot recover any of it at resale time.

 

[sukhi]

Can you elaborate more on taxes being proportional to the capitalized cost? When I bought my X, I paid taxes on the full amount of what I purchased.

@Diavel, just to clarify, did you purchase (finance/cash) your car or lease it? The tax bit applicable to the lease only.
- At lease signing you pay the taxes on the down payment
- Then every month you taxes on the lease payment.
So the taxes are not paid on the total purchase value. (Technically there is no purchase)

 

[Diavel]

oh and here's the official word from my Tesla credit specialist who I just asked about this:

The Lease numbers are straight off of the Configuration Page on TeslaMotors. You do not get the $7500 tax credit if you lease. Some lease options have that amount rolled in to the residual value and lowers your lease payment. Since you can ONLY lease from Tesla and those are the numbers on the page that is what I used.
Feel free to redo the math with more accurate numbers if I'm wrong on the $7,500 or anything else.

according to L-P-G the Tesla credit specialist claimed that the tax credit will now be passed to the customers. I leased a bmw i3 and bmw did pass it on as long as the lease is for a minimum of 30 months. So in this scenario I guess lease comes ahead based on the calculations... I wonder if I should switch to a lease and get a fresh one when it ends.


Choices choices choices.

 

[Diavel]

@Diavel, just to clarify, did you purchase (finance/cash) your car or lease it? The tax bit applicable to the lease only.
- At lease signing you pay the taxes on the down payment
- Then every month you taxes on the lease payment.
So the taxes are not paid on the total purchase value. (Technically there is no purchase)

My mistake, I meant to say when I purchased my "S". My X is due in July. Nevertheless, the S is financed at 1.8% through my credit union.

I see so taxes only paid towards what you use. Leasing is becoming more and more attractive. With the potential of buying down the money factor, I wonder if leases would be a much better alternative for me on the X.

 

[Diavel]

Please tell me more about Sec 179 credits if I am a small business owner. Are these deductions above and beyond vehicle maintenance and mileage calculations?

This is my opinion and understanding based on my perusing online. This is not advice nor do I claim to be right. In fact, I may be wrong on some specifics.

That said, Sec. 179 allows businesses to deduct the full amount of the purchase price of equipment (up to certain limits) when the vehicle is put into service (which had to be in that same fiscal year).

Depending on which state you are in, you may not be able to apply for full benefits. In California for example, we get no bonus depreciation and maximum tax deduction is $25,000. Other states that do participate get an average yearly depreciation rate that diminishes per annum (If I remember correctly), BONUS depreciation, permanent $500,000 tax deduction up to 2.5 million of a company's expenditure can be deducted. After that it phases out dollar for dollar. These are for other items like compurers and software as well.

By deducting the cost, you lower the amount you pay for the equipment at year's end and will not have to do a typical yearly deduction where you get to recoup initial expense gradually over time with exception of standard depreciation in conjunction with bonus depreciation.

I hope I wasn't confusing as I can tend to further confuse people. Hah...

Google section 179 and THEN talk to your accountant. They will be able to specify it to your particular situation. This is in addition to the federal tax rebate of $7500.

For example, I just incorporated a business as my current one does not qualify. I will get a $7500 tax credit to be shaved off of my total tax owed/return. If there is any more balance due, I can take another $25,000 in tax DEDUCTIONS here in California but In States that participate, they get up to $500,000 AND normal yearly depreciation as well as 50% depreciation of said asset. In my case and if I were in a state with no tight regulations pertaining to 179, I expect about 60-80k net from business (based on calculations) I will end up probably leaving some money on the table as I do not owe enough in taxes to take advantage of the total deduction allowance and depreciation. I believe you choose either to deduct or count mileage as they cannot be done in conjunction. Also, 179 works for both leases and sales.
Hope this helps... Now I have to compute and see which makes the most economic sense for me.

 

[loganintx]

So in this scenario I guess lease comes ahead

$7,500 is already baked in to lease pricing. You cannot claim a $7,500 fee tax rebate on a car you lease. Only on a car you purchase. Buying is cheaper but has less guarantees.
Also, I live in a state with no state income tax so we get no state tax credit. You also miss out potentially on state tax rebates when leasing vs buying. Not sure if those would be baked in to lease price as well.

 

[Diavel]

$7,500 is already baked in to lease pricing. You cannot claim a $7,500 fee tax rebate on a car you lease. Only on a car you purchase. Buying is cheaper but has less guarantees.
Also, I live in a state with no state income tax so we get no state tax credit. You also miss out potentially on state tax rebates when leasing vs buying. Not sure if those would be baked in to lease price as well.

Whether or not its baked in isn't the majority of my concern but my overall investment.

With the i3, I get the full state rebate here in California and bmw subsidized the lease with the 7500. So I got full credit for both On 30 months. However if I purchased, I actually wouldn't have been able to use the full 7500.

In your calculations, the $7500 is not baked in yet. Do including that in lists payments even more. So my question is wouldn't the costs be roughly the same? I know the money factor is ridiculous though.

Not trying to be argumentative. Hope I don't come across as such. Just getting more clarification as I'm not on the fence between the both.