If someone were to ask you, “Hey, wanna buy a $60,000 electric car?” you’d probably be like, “Yeah, one sec, let me just dip into that offshore bank account.” But what if it came with a guaranteed buyback deal that would allow you to resell it after 36 months? That’s the gambit Tesla Motors is trying in a new venture it’s worked out with several banks to convince drivers to buy its Tesla Model S electric car.
People who perhaps can’t afford to plunk down a large wad of cash but want the cachet of driving a luxury auto often sign leases to obtain their heart’s desire. But as the Los Angeles Times points out, the Tesla deal works a lot like a lease but is actually a resale agreement.
Tesla hopes the resale agreement will drum up demand for its Model S (which, you may remember, has been in the news a lot recently) and convince people to try the car without the risk that comes with buying a new product from a start-up company.
“It combines the best of ownership and leasing,” Tesla Chief Executive Elon Musk said. “It makes (the car) more affordable to a much broader audience.”
Customers wouldn’t have to worry as much about buying electric, he notes, giving them peace of mind.
Tesla is working with U.S. Bank and Wells Fargo to offer a financing deal with a 10% down payment for the Model S. In most cases, that cost would be covered by the $7,500 federal tax credit for electric vehicles and could also possibly qualify for other incentvies, depending on your state of residence.
When 36 months is up, the buyer can sell the car back to Tesla for the same resale value as its rival, a Mercedes S Class sedan. Those vehicles lose about 53% of their value after 36 months.
Why would Tesla want to do this? Perhaps to get more buzz around its brand and expands its potential reach to consumers. It takes some of the scariness out of buying a luxury car and of course, gets people talking about Tesla. The more talking, the more buying is likely to happen, perhaps.
And Musk adds that it’s his goal to get the company’s cars on a less expensive “mass market” price point.
“I wish we could have done a mass market affordable car as our first car,” he said. “It simply wasn’t possible because it’s going to take us at least three major iterations of the technology to get there.”
Tesla Motors, banks arrange buyback deal for Model S electric car [Los Angeles Times]