Electric car company Tesla just unveiled a new financing plan today that allows people interested in getting one of its Model S vehicles to essentially turn the car back over to the dealership after three years of payments.
“We want to combine the best parts of ownership and leasing,” Tesla founder (and real-life Tony Stark) Elon Musk said in a press conference. “We want to make the car more broadly affordable for people.”
Tesla outlines all the federal and state tax credits offered to someone who buys an electric vehicle (between $7,500 to $15,000), which accounts for the 10 percent down payment on a Model S. Musk said monthly payments, after factoring in fuel savings costs and other maintenance, will be about $500 or less. The financing plan basically offers you the chance to sign up for a 5- to 7-year loan, with the option to get out of the deal after the first three years.
How can this be? Well, Tesla will buy back the car, which Musk asserts will increase or retain its value. Musk even went as far as telling people he’d sink his own money into this plan to ensure customers could walk away with no additional costs after three years.
“It’s a great peace of mind play and if the claims match the reality than this is completely different from any other financing model in the industry,” said JD Rucker of KPA Automotive. “In essence, you’re buying half the car much in the way a lease works but still gaining the benefits of ownership. They’re banking on low mileage and I’m sure there’s fine print but it sounds like a ‘best of both worlds’ financing concept.”
But the average eligible driver still has a few hoops to overcome before it can truly make this beneficial to your wallet.
First of all the monthly payments factor in fuel, so the true monthly cost could be another $200 to $300 per month depending on your driving habits. Musk also noted emissions tests and such as other costs you would get to avoid paying with a Model S (emissions testing, oil changes, etc.). Also, this is still a loan that banks must approve you for, so people with bad credit will still have a hard time. And there’s the matter of running out of fuel before you can get back to a charging station to think of, which could net you a handful of towing bills.
Still, if you’re interested in buying an electric car, this could sweeten the deal, Rucker told me.
“Only Tesla could pull this off,” Rucker said. added, noting that the niche market for people looking for electric cars combined with Musk’s panache make this possible. “It will definitely get prudent people in the right situation looking at Tesla.”