The lease program has to give a large boost to Model S sales. Before this program your only option was to pay cash. Now you can pay cash or take out a Tesla lease. How can this hurt sales? Forget about the "out of pocket" $500/month arithmetic, having the option to lease has to increase sales. Here is how Bloomberg Businessweek describes the lease program.
" U.S. Bank (USB) and Wells Fargo (WFC) will provide financing for people—with good credit—who make a 10 percent down payment on a Model S sedan. Tesla points out that federal and state tax credits offset much of that down payment and says people could, theoretically, end up paying $500 per month to drive a Tesla."
"After 36 months, you have the right, but not the obligation to sell your Model S to Tesla for the same residual value percentage as the iconic Mercedes S Class, one of the finest premium sedans in the world, made by Daimler (also a Tesla partner and investor). Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing."
"In reality, though, aspiring Tesla drivers may expect to pay more than the $500-per-month figure Tesla championed. The company has put up a handy calculator to show expected monthly payments, and people can make their own subjective estimates about how much not having to spend time going to gas stations is worth to them. People in states with big electric vehicle incentives, or who drive their Tesla for work, or who value their time very highly, will pay less; others can expect to pay more."
Musk described the financing effort as yet another step to removing any doubts around the practicality of electric vehicles, including people who worry that the battery life of their car will diminish over time and saddle them with a devalued car. “There is a lot of uncertainty,” Musk said. “We wanted to eliminate that uncertainty.”
((( How can this hurt sales? Forget about the "out of pocket" $500/month arithmetic, )))
You just answered your own question. A person walks into the store expecting a fantastic lease and is told that $500 really means $1,100 and turns around and walks out the door.
BTW it's not a lease. The consumer has to buy the car.
"The lease program has to give a large boost to Model S sales. Before this program your only option was to pay cash. Now you can pay cash or take out a Tesla lease. How can this hurt sales? Forget about the "out of pocket" $500/month arithmetic, having the option to lease has to increase sales."
I agree. Now please explain why Tesla with a years backlog, who gets 3 new orders in the area when one is delivered, Needs more sales?
When are you Tesla bashers ever going to wake up and realize that this is a scam?
Think about how insane this is. Tesla LOST MONEY selling cars that were on pre-order and fully paid for with cash. Now they are supposedly leasing the car for $500 per month.
This is about grabbing a headline and pumping a stock.
That is a good question. I can think of two answers.
1) Mush and company are delusional, but they were able to convinced Wells Fargo and US Bank to sponsor a lease program for cars they can't produce.
2) They are confident that they can increase production.
Good chance it's due in part to slowing orders which is what you're thinking. We'll find out when earnings come out May 6th. If it turns out that orders were not substantially slowing or the lease program accelerated orders, we could have another big run. If not, low 30's are likely.
Sentiment: Strong Buy
It is not a years long backlog. Their getting close to a reasonable wait for a vehicle depending on the specs, which will get those 25k out the door with reservations rolling in continually. Closer to buying your S550 for example, which is not a long backlog but is not a high-volume production either.