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Just how “revolutionary” you think the just-announced lease option is for the Tesla Model S will depend on a lot of factors, like how much gas costs where you live and whether or not your current car drinks premium or not.



The promised “exciting” news from Tesla Motors is what the company calls a “revolutionary new finance product.” It’s not really a lease, but it is claimed to combine the “best aspects of car leasing and ownership.” As with everything else, Tesla is going its own way here.


There are specific lease payment costs – $1,199 a month for the 85-kWh Model S, $1,421 for the 85-kWh Performance model and $1,051 for the 60-kWh version – but Tesla is putting up invisible asterisks all over the place.

There are specific lease payment costs – $1,199 a month for the 85-kWh Model S, $1,421 for the 85-kWh Performance model and $1,051 for the 60-kWh version – but Tesla is putting up invisible asterisks all over the place. Instead of highlighting those numbers, Tesla’s online calculator talks about the “true cost of ownership.” Tesla factors in the value of your time, cost of gas and EV incentives. We appreciate that there is much more to buying any car than the initial cost, but there is a lot of sunlight between Tesla’s headline-grabbing $500/month cost and what you’ll really pay. “Your net cost of ownership is five-to-six hundred dollars a month,” said Tesla CEO Elon Musk in a conference call announcing the new pricing structure, adding, “As much as possible, I’d like to broaden the affordability of the car.” Musk said he expects around half of the Model S “sales” in the US to be this new lease-like option.



I calculated my own numbers for the 85-kWh model and came out with an effective monthly cost of $1,133. Other Autoblog writers calculated theirs, and came up with results between $834 and $688. This makes us think that to hit that $500-a-month level you need to be in the center of a very strange Venn diagram.



In any case, Tesla has done some interesting things here. It worked with Wells Fargo and US Bank to reduce the cost of driving a Model S while also giving drivers the opportunity to own their cars. The banks, if you have good enough credit, will “provide 10% down financing for purchase” and that payment “is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000.” Now, the loan is a 66-month term loan but, 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).”



So, that Tweet about how Musk was putting his money where his mouth is? As Tesla puts it: “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.”

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By Sebastian Blanco