Oh, Tesla: Your ‘Lease’ Is Smart, But That Calculator Wasn’t
‘Revenge of the Electric Car’ premiere: Elon Musk arrives in a Tesla Roadster
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 calculator 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
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]
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.