Tesla finally offers lease-to-buy options for Model 3 and Y, but it’s not available everywhere

Tesla is beginning to supply the option to purchase its all-electric Model 3 and Model Y vehicles at the decision of a leasing interval in some markets in Europe and Asia.

For some time, Tesla has not permitted owners to obtain their cars at the end of a leasing period. The car is to be returned to the automaker with no prospect of a leaseholder purchasing out the automobile at the conclusion of the period. The car will be added to the company’s employed inventory, to third-party resalers, or reserved for the future use of the Robotaxi fleet.

Tesla’s Leasing Program

Tesla’s leasing policy is one of those few automotive applications that’s exposed to a necessary return policy at the decision of a leasing period. In its 2020 10-K filing with the SEC, Tesla details its process for receiving leased vehicles when the interval is terminated.

The company states:

“Our used vehicle business supports new vehicle sales by integrating the trade-in of a client ’s existing Tesla or non-Tesla vehicle with the sale of a new or used Tesla vehicle. The Tesla along with non-Tesla vehicles we acquire since trade-ins are then remarketed, either directly by us or through third parties. In addition, we remarket used Tesla vehicles acquired from other sources such as lease returns. ”

In some markets in the U.S., Canada, and Europe, Tesla did permit Model S and Model X leaseholders with the Choice to Buy the automobile at the end of the rent interval.

Tesla says:

“At the conclusion of the lease period, customers are expected to return the vehicles to us or for Model S and Model X rentals in some specific areas, may opt to purchase the vehicles for a pre-determined residual price. ”

This program did not apply to the Model 3 or Model Y, as anyone who leased of these cars will be asked to relinquish possession of the automobile with no prospect of purchasing it at the conclusion of the lease. However, Tesla introduced a new segment to the 10-K at 2020, detailing the chance of a lease-to-buy alternative in some markets in Europe and Asia, and it applies to the Model 3 and Model Y. The company writes,” “This isn’t available with the Model 3 and Model Y,” on its website.

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Lease-to-Buy Option for Model 3 and Model Y in Europe and Asia

Tesla introduced new language to the 2020 10-K filing that particulars its decision to permit lease-to-buy choices on its vehicles in Europe and Asia.

The company wrote:

“We have outstanding direct rentals and vehicles funded by us under loan arrangements accounted for sales-type rentals under ASC 842 in certain countries in Asia and Europe, which we introduced in bulk throughout the next quarter of 2020. Based on the specific program, customers might or might not have the right to return the vehicle to us at the conclusion of the lease duration. In the event the customer does not have the right to return, the customer will simply take title to the vehicle at the conclusion of the lease period after producing all contractual payments. Under the applications for which there’s a right to return, the purchase option is fairly certain to be exercised by the lessee and we thus anticipate the customer to take title to the vehicle at the conclusion of the lease period after producing all contractual payments. ”

In summation, Tesla is supplying the option to purchase a vehicle at the end of a lease in some markets. The customer has the option to return the vehicle as well in some instances, and Tesla is “reasonably sure ” the leaseholder will require possession of the automobile title when the lease ends.

Teslarati got a list of those nations where this lease-to-buy alternative can be found, according to the Online Design Studio. Some nations have explicit language that states the automobile leaseholder must return the automobile, while others indicate there’s an option to purchase the car at the end of a lease. Some don’t have any language that suggests exactly what the leaseholder have to do, which could demonstrate that the option to purchase the automobile is available at the conclusion of the leasing period.

The nations where a lease-to-buy alternative can be found are:

Belgium
Croatia
Denmark
France
Italy
the Netherlands
Poland
Taiwan

A few examples reveal that there’s explicit language that suggests a lease can be purchased directly in the conclusion of the period.

Other Design Studio examples reveal that the vehicle has to be returned to Tesla at the conclusion of the lease period.

Lastly, additional Design Studios show no language either manner, which seems to indicate the option to purchase the vehicle is available since the lease term expires.

Poland is one state where Tesla does not indicate if the car must be returned at the end of a lease period. However, the option to get the car at the conclusion of the lease is available, according to a Polish Model 3 leaseholder who spoke to Teslarati. Model 3 leaseholder Szymon Janus stated that Tesla does permit lease-to-buy choices in his state of Poland, and at the conclusion of the lease, can be obtained for “around 60% of their new automobile ’s value,” he explained. However, Tesla isn’t offering the lease-purchase option directly, it is operated via a bank, ” he says. This really is why Tesla has no explicit language depicting the mandatory return of the vehicle at the lease’s end date.

Tesla has not revealed any further details inside its 10-K filing that indicate whether the corporation will let rented vehicles to be purchased at the end of a lease period. However, it failed detail some specific fiscal figures.

Tesla stated:

“For the year ended December 31, 2020, we realized $120 million of sales-type leasing sales and $87 million of sales-type leasing cost of revenue. ”

What do you think? Be sure to leave a comment below, or you can contact me directly at [email protected] or @KlenderJoey on Twitter.

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