Oh, Tesla: Your 'Lease' Is Smart, But That Calculator Wasn't

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'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

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Well, that didn't take long.

Yesterday, just before 5 pm Eastern time, Tesla Motors [NSDQ:TSLA] released details of its new "lease-like" financing product.

The general consensus in the media (we read a lot of Tesla coverage here, folks) has been that it's smart for Tesla to offer financing for its Model S electric luxury sport sedan. It will expand the pool of potential owners.

But the press release, and a subsequent media call with CEO Elon Musk, mentioned a cost calculator on the company's website that purports to let users calculate the true net out-of-pocket cost for a 2013 Tesla Model S under the new financing.

As details of the calculator became visible, however, its assumptions and calculations were widely savaged.

Motor Authority, for example, went through the online tool and critiqued each line, concluding that under even average assumptions, a 60-kWh Tesla Model S would likely cost an "effective" $764 per month--but require an out-of-pocket monthly payment of $1,051.

There have been other critiques: for instance, here, and here ("its own calculatorĀ demonstrates acrobatics rarely seen outside a Cirque de Soleil show to reach that number").

Discussion has even centered on the hourly value of time saved not spent in traffic. Yes, there's data: the average value is $32/hour, though Tesla might counter that its buyers are hardly average, justifying its $100/hour default value.

Our favorite conclusion, tweeted by Automotive News reporter Nick Bunkley: "According to Tesla website, if you live in Calif. and make $2 million/year, driving a Model S has an effective monthly cost of minus-$2,000."

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

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The whole affair leads us to wonder why Tesla continues to push the boundaries of its communications when actual facts so often cast their assertions in a different light.

We've noted before that CEO Musk sometimes says things that prove not to be exactly true, or haven't yet happened, or need major asterisks to explain the context.

He's hardly alone in that regard among CEOs. Some even argue that it's the job of a startup CEO to talk about the reality he intends to achieve, rather than the world as it actually exists.

We've long criticized the pathetic practice of "net pricing"--quoting a price that doesn't reflect the cash a buyer must spend out-of-pocket, but instead nets out a Federal income-tax credit that not all buyers qualify for and that can take up to 15 months to be realized.

At least in that case, Tesla is no more guilty than any other plug-in electric carmaker; they're all culpable.

But the financing announcement would have gone off smoothly and met with widespread acclaim if the bizarre financial gyrations of the "cost calculator" hadn't largely overshadowed them.

Tesla Model S with DISRUPT license plate, March 2013 [photo: Sam Villella]

Tesla Model S with DISRUPT license plate, March 2013 [photo: Sam Villella]

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And it didn't help that the press release said that the financing product "was created from the ground up to provide maximum benefit to consumers, rather than simply duplicating other financing programs that tend to favor companies at the expense of the individual."

Yet the associated Tesla calculator goes through contortions to support Musk's statement that you can drive a Model S for "$500 or $600 a month," favoring Tesla's assertion at the expense of interested buyers.

We note that Tesla Motors now has its fourth VP of Communications in a bit more than four years: Welcome, Sarah Meron.

As Tesla matures, sells more cars, and slowly persuades more of its critics and detractors that it's a legitimate carmaker, is it too much to hope that it will think twice before acting--and leave these kind of amateur stunts to more desperate carmakers?

Perhaps the company will even release specific, legitimate monthly sales figures.

Nah. Never gonna happen. They're far too special for that.


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Comments (24)
  1. It is great to see the journalist community hold Tesla's feet to the fire. On the other hand, the last line or this article may have gone too far.

  2. Not true - if you don't release your figures like every other manufacturer then you indeed must think you're special or (more likely) are dishonest at this point. I'm sure once things start going their way more consistently, they'll be trumping their numbers all over the place.

  3. Thank you for being a Voelcker parrot.
    I have worked for many manufacturing companies over the years that would never, ever release volume sales numbers. Not releasing volume sales data is common industry practice.

  4. @John: That may be the case in the industries you've worked in, but it is NOT the case in the auto industry. Every single carmaker that sells in the U.S. releases sales figures, broken down by model, within 1-3 days of the end of the month.

    Tesla is the only one not to do so--absolutely the only maker selling in any volume that does not release monthly sales.

    Except, that is, for Fisker, Coda, Wheego, and the now-defunct Think (which did actually release its sales for several months when it was operating). I've suggested before that this puts Tesla in rather odd company.

  5. Great article, John.

    But on the monthly sales figures, I'm with John. If they're not breaking the law, then why not let them report how they like?

    It seems odd to celebrate them for doing things differently (the sales, the dealerships, and oh yeah, the cars), and then turn on them for doing the same thing when the media wants more data.

    The rest of the article was 100% on-target though. Thanks, as always for your contributions!

  6. John,
    You may have noticed that Tesla does not play by the same rules as the rest of the industry. If they did we wouldn't have the Roadster and Model S.

  7. I've got to agree with John B. here, John V... I agree that Tesla made a minor mess with all this and I wish the company provided better, meaningful sales figures. But... getting in the by-now-obligatory shot at Tesla for the lack of sales clarity speaks more of childish revenge than true journalism, at least in my opinion.

    Yes, I agree that Tesla should provide better data. But no, it isn't necessary to demand it every time with what amounts to a cheap shot at the end. Have any of your other little insults been successful in the past at getting the data you want, John V.?

    If not, give up the obligatory shot at Tesla in each blog. It makes GCR look worse than Tesla, IMHO, anyway...

  8. I love this... it is so 'out of left field' that it works for me... Yes I am smart enough to know every month I will have to be out of pocket 1051 bucks, yes I know that I will not be paying for gas thus I can subtract that amount (theoretically)... but the fact still stands... I am one step closer to owning one of these fantastic cars... and that makes me, and I am sure many others, smiling all the way to the bank... Elon don't change we love you just the way you are!

  9. You make a very good point. Haters are gonna hate but even one new sale spurred by all the attention is all good. Just look at the number of views THIS article got!

  10. @ John Voelcker: just yesterday I accused you of having changed your tone regarding Tesla from cynical/sceptical to objective/balanced. I stand corrected.

    That said: I do understand how this somewhat overly creative cost calculator is bound to bring out the worst in the sceptics and haters.

  11. @Chris: If you read the article, my concern is not with the financing scheme--which is a sensible move--but with what came across to essentially independent analyst & journalist as a desperate set of machinations to provide a "Tesla costs $500 a month to drive" headline.

    That was what the company apparently wanted the story line to be. The journalistic community, as you note, did not comply.

    I think "cynical/sceptical" is exactly the right tone here. You obviously differ.

  12. I think you went a bit above and beyond your duty as a conscientious journalist to drive the point home that Tesla has strayed here and that some other news outlets feel the same thing like your sister site(!) Motorauthority, Business insider (LOL!) and Yahoo autos(?).

    The tone of sarcasm and resentment is one I don't consider to be particularly professional and frankly rather worrying coming from an editor of a green car site.

  13. @Chris: Interesting comment. Tell me how you would have the "editor of a green car site" behave?

  14. Behave professionally. It's clear there is not much love lost between you and the Tesla motor company (and it's rather larger than life CEO maybe...)for some reason, but it shouldn't show so much in your reporting.

    You will deny your resentment for Tesla of course but at times it really oozes from your reporting ("pathetic practice") and comments. Which is odd. Top Gear will tell you one can't be a petrol head without having owned an Alfa Romeo. By the same token I think one can't really be into green cars and not have sympathy for what Tesla is trying to achieve. Of course sometimes a job is just a job an not necessarily a hobby, but please don't take it out on Tesla. What it's trying to achieve really is important.

  15. John V, I say keep up the good, professional work. I find everything here to be balanced.

  16. No news here - after evaluating his company's claims about driving ranges and costs, I pay no attention to anything either he or his company says. I'll wait for a real automaker to offer a practical electric car, whenever a practical battery becomes available. Electric cars at this point are oxymorons for all but the wealthy crowd.

  17. @Kent: Ah, we've missed your dyspepsia, bile, and inability to see beyond the last century. Welcome back!

  18. It looks like this year, more than 50,000 plug-ins will be sold in the US. That'd be about 1 in 300. I think not bad given the lack of a "practical battery", and things are just getting started.

  19. @Norbert: Actually, there were about 53,000 plug-ins sold LAST year, and the total this year will be something around 100K plus or minus.


  20. I simply calculated "more than 50,000" by taking the Q1 results for Leaf, Volt, and Model S, and multiplying it by 4. There is also the Prius Plug-In, Fords plug-ins, and the compliance cars including RAV4 EV, and the iMiev (full EV) is making some numbers, as far as I can think of.

    If that adds up to 100,000, it would be 1 in 150 cars, almost 1%.

  21. @ John V - since Henry Ford's wife had an electric car, Beuchert may actually be onto something. I don't think his use of "oxymoron" is grammatically correct here, though. For example, "smarta$$" is an oxymoron.

  22. my take on Tesla not releasing sales figures is their childish attempt at being different and they are different but this "savings" calculator is beyond belief! Looks like the legalization of pot may have had some unintended results...

  23. Not yet in CA... the legalization part...

  24. Perhaps also that some journalists went overboard ridiculing attention-getters, when confronted with the idea that an electric car saves time (rather than taking more time), and didn't really know what to make of a financing package which combines features of loan and lease, aside from implying that electric cars can have a residual value equal to respected ICEs. (Anyone recall how many articles casted doubt about that?)

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