Here’s one way to help unprofitable electric vehicle startup Tesla move into the black: take its electric sports cars the Roadster and the Roadster Sport, which both cost over $100,000, and offer a leasing option. The company, which last month filed to raise up to $100 million in an IPO, now says it will offer the Roadster and the Roadster Sport with “a three year, 30,000 mile contract and with monthly payments as low as $1,658.”
However, that’s just part of the fees interested parties can expect to pay. Tesla says that in light of a retail price of $111,005 each for the cars, the leasing customer needs to provide $12,453 due at signing, which includes a $9,900 down payment and $895 acquisition fee but not taxes, title, license, registration and “locally applied” fees. After the three-year lease period the Roadster customer can then buy the vehicle or decide to give it up, which would involve paying a $350 disposition fee, as well as fees for any wear and tear and 25 cents per mile for those driven beyond a 30,000-mile limit over the life of the lease.
The concept of leasing electric vehicles isn’t new, though very few electric cars have been leased just because the EV market is so new. GM famously leased the EV1s (of “Who Killed the Electric Car?” movie fame) in the late 90s and then recalled them, much to the anger of many of their leasing customers. And more recently large car makers have tried out leasing options of very small numbers of alternative cars.
But as more EVs start to be leased to customers, (and more EVs come to market; both the Nissan LEAF and GM’s Volt are set to go on sale later this year and next, respectively) it will be interesting to watch how the leasing business model works for electric cars in comparison to how it works for traditional cars. For example, after seven years the battery pack for the Roadster is only able to hold 60-65 percent of its original charging ability (decreasing the vehicle’s initial range). How will that affect, say, the “wear and tear” fees on a leased and returned Roadster after three years?
More leased EVs will also help provide data as to how much used EVs are worth after their leased period is up (called residual value). I’m curious to know what a 3-year-old leased Roadster would cost a customer to buy, for example. As Josie recently pointed out, CAP Motor Research, one of the UK’s biggest providers of vehicle valuation data for leasing companies, insurance firms, vehicle retail groups and financial institutions, found that it was basically impossible at this point to determine the residual value of electric vehicles because of so much uncertainty surrounding charging systems, overall running costs and especially the battery, generally the most expensive part.
Also good to know that Tesla won’t be selling the current model of the Roadster after 2011, as it works on its next-generation EV, the Model S, and doesn’t have plans to make a next-gen Roadster until at least one year after the Model S is available (by 2013). So if you’ve been dying for a Roadster but just can’t afford the flat-out purchase fee — better lease it while you still can.
This article also appeared on BusinessWeek.com