The typical progression for a new product launch is for motivated buyers to buy a new car at full MSRP and also to buy loaded cars with very profitable options. As time progresses the market gets saturated and the car companies have to add incentives. Tesla is now offering a generous "lease" deal in the form of a guaranteed buy back program.
Why would they offer such a program if the demand for the car is strong ? IMO this suggests that demand is relatively weak. The intial sales filled pre-orders and then demand went somewhat slack.
You have to think outside the box. Tesla car is THE best car currently on market. Let people try out THE best car through leasing companies is a whole lot cheaper and more effective way than letting salespersons accompany customers for every test drive. Many high net worth people do not want to go to a car dealer and hassle with the salesperson. Leasing provides a very comfortable way for them to try out THE best car in the world anonymously and for as long as they want to, not just a few minutes with a car dealer salesperson. It is another brilliant move by Tesla.
Sentiment: Strong Buy
(((( Let people try out THE best car through leasing companies is a whole lot cheaper and more effective way than letting salespersons accompany customers for every test drive. )))
How does leasing a car eliminate the need for a test drive?
(( Leasing provides a very comfortable way for them to try out THE best car in the world anonymously..))))
If I walk into a delaership and lease a car don't I have to show some sort of ID ?
Oh well I guess if you believe all that stuff then Tesla is your stcok. Good luck.
The value of the car will be less than 50 percent in 3 years when Tesla has to repurchase. Who wants to buy a 3 year old electric car where the battery is probably 80 percent as good as it used to be and declining each year?
(( The value of the car will be less than 50 percent in 3 years when Tesla has to repurchase. ))
I would LOVE to agree but we really do not know. Tesla is a tiny company and the market for used Testa's is extremely small.
At this point 30% of buyers opted for the buyback deal. So these cars will be worth 50% of MSRP in three years (bcause that is what Tesla will pay for them). No doubt Tesla will try to resell them for a profit. The other cars are held by private owners who may not want to sell.
The real isue here is risk/reward IMO. Tesla has basically assumed ALL of the depreciation risk and they have nothing to gain from this risk. If tesla cars retain 51% of MSRP or more then no one will sell their car to tesla for 50% of MSRP.
probably because - if I remember right - the battery is under warranty for "8 years" ...and
the "electric motors" are still running in Hoover Dam... like in "elec engines" having few parts and dependencies compared to "internal combustion engines"...
I have "elec motor powered stuff" that still RUNS LIKE THE DAY I BOUGHT IT... AND SOME IS 50 YEARS OLD...and been used a lot...(have an electric tiller...for digging postholes etc. WORKS LIKE NEW YET!!!) and been used a lot and "heavy stress on elec motor" when gets tangled in tree-roots...just stop ...cut root windings off... and resume tilling/digging....Oh...it's ALSO VERY QUIET TOO... no fumes either...
Teslas will probably be "clocking MILLIONS" of miles on that motor... and new cheaper batts in future...so 7/8 years from now... so what... (pay for that with the THOUSANDS you save in expensive gasoline each year...and STILL GO ON A LUXURY VACATION...with what's left over...after put new "warrantied fresh batteries in...
about like that... short
the reason the demand is weak is because the cars are expensive to produce...
this is a new paradigm of thinking... imagine if all car rental places (most rentals don't travel beyond the 250 mile charge limit) had teslas for people to rent.
People talk about the difference between going to the gas pump in 10 minutes, and charging for an hour... imagine if shopping malls, or Home Depot had chargers... people could refuel while they go about their business..
You have to think in a new way... outside of the current concepts.
((( the reason the demand is weak is because the cars are expensive to produce ))
Very good point. I think it is obvious that Tesla cars are pricey. The "lease" deal addresses that issue but does so at a cost to Tesla.
PS: The rest of your message is not based on factual information IMO. No offense but you say things like " imagine if all car rental places ..... had teslas for people to rent."
That is a valid suggestion or idea but, IMO, but very farfetched. The daily car rental business (Hetz, Avis, Dollar) has a business model whereby they "buy" brand new cars, keep them for a few months, and then sell them. The reason I place quotes around the word "buy" is that these purchases are masive and not very profitable for the car companies.
You argue that the range of the car makes it desirable to people who rent cars as follows: "(most rentals don't travel beyond the 250 mile charge limit) ".
That is very true. But does the incremental cost of renting a Tesla make sense? For example renting a $50,000 Suburban costs bout $1,000 per week (I checked with Avis) so renting a $100,0000 Tesla might cost $2,000.
Your claim that people renting cars drive about 250 miles cuts both ways. It makes the tesla car very convenient to the person renting it. However it limits the benefit they can obatin from the car. Even a die hard greenie (this is just an example) who is dedicated to saving the planet would be quite foolish to spend an extra $1,000 renting an electric car for a week to drive it just 250 miles. At the most he would save 25 gallons of gasoline. That same $1,000 could be spent on an efficient LED television.
Thanks for your reply. Even though be partially disagree I appreciate your ideas.
Now Bernie I agree with your thinking that the development of simplified charging mechanisms (locations,time spent ,COST) would improve the viability of EV cars in general, but TSLA at 100k is not properly considered. It is limited by definition at the price point. If they developed mid priced 35k vehicles, GM% would drop to under 15%. Total sales and volume could rise if that were introduced,but no meaningful increase in profits. At 20 billion mcap, this company needs 2.5 billion in net profits after tax,not gross profits, and possibly with only a limited subsidy in the future as adoption occurs. NONE of the BRILLIANT analysis written by hacks on SA or Motley Moron advocating purchase of the stock account for these factors properly.NONE.They live in the same fantasy as the 25 year old kids here who dream and live in the second most aberrational spec market in modern history. (discussed another time)
there needs to be a shift in paradigm for Tesla to work... instead of going to the gas station and spending ten minutes... you "refuel" when you shop, say at Walmart, or grocery stores... you put charging stations at places where people usually spend 45 minutes or more... new paradigm.