Mike Ramsey and Joseph B. White
Tesla Motors Inc. said it revamped a month-old sales program that guarantees the resale value of its about $70,000 plug-in electric car after the program was widely criticized.
A new offer guarantees that the Model S will be worth at least 50% of its original cost after three years, up from 43%. As part of its new financing program, Tesla would agree to buy cars back from owners at that price, regardless of third-party estimates of what the car might be worth.
The Palo Alto, Calif., company also is revising an online calculator to determine the monthly cost of a lease-to-purchase program. The revision would make the cost savings estimate more conservative by excluding such factors as time saved by not having to pump gas. Features of Tesla’s earlier online cost calculator had prompted criticism for lowering the monthly payment presented to shoppers by using noncash savings.
“When we did our first financing announcement a month ago, we didn’t get it quite right,” Chief Executive Elon Musk said in a conference call. “This is backed by me personally to give peace of mind about the long-term value of the product.”
The deal also set up a lease residual at that three-year level. Critics said the S-class wasn’t a good vehicle to peg the value, so Tesla then used the average of all its competitors in the same class of vehicle and raised the percentage to 50%.
Read more in The Wall Street Journal.
By WSJ Staff