Tesla Motors has reshaped the finance offering on the Model S sedan announced last month to a mix of praise and criticism.
Tesla has increased the guaranteed resale value of the Model S from 43% of its original value to 50% after three years, extended finance terms from 63 to 72 months, and applied the changes retroactively to those who have already purchased a Model S on finance.
The estimated take-up rate of finance on the Model S is around 20% in the opening month, a figure Elon Musk, chief executive of Tesla, aims eventually to increase to 70%.
Musk, who is personally backing the guaranteed future value of the Model S, said the company "didn’t get it quite right a month ago. We received a lot of valid criticism, and we’ve tried to make it a lot better".
The defaults used by the finance calculator operated by Tesla to demonstrate the savings available to owners of an electric vehicle (EV) such as the Model S have also been changed, no longer assuming all owners could discount ownership of an EV as a business expense and toning down its predictions for gas prices. Musk noted Tesla cars were still too expensive for all but the "top 1% of households" in the US but hoped, "with the right finance", this could extend to the top 10%.
A positive reaction?
What online commentators had to say at the launch of Tesla’s finance package on the Model S
Michael Graham Richard, treehugger.com
"If this new financing method is successful, other carmakers will copy it."
Drew Olanoff, techcrunch.com
"It’s not as complicated as it sounds, but it is pretty genius math and marketing."
Max Rogowsky, forbes.com
"This isn’t a radical change in how accessible the car is, but it’s certainly nice that the company and the CEO are stepping up to guarantee its resale value."
Randy Carlson, seekingalpha.com
"It’s a fairly conventional bank-supplied financing deal for a luxury car, except for the residual guarantee.
"What the availability of bank financing does for Tesla of course is to open up its market beyond the very well-heeled.
"For the participating banks… [the guarantee] provides assurance that these Model S cars will retain value sufficient to collateralise the loans they will be making."
Joe Weisenthal, businessinsider.com
"If you live in one of a few states, and you can deduct your car for business, and you don’t have to spend any time charging your Tesla, you can get a mid-range vehicle for effectively under $500, according to their calculator.
"For most people, no dice… if you uncheck all of the boxes above, here’s the real cost of ownership: About $940."