- Tesla introduced a new financing product for customers of its Model S on Tuesday.
- U.S. Bank and Wells Fargo & Co. have agreed to provide 10 percent down financing for the purchase of a Model S, according to Tesla.
- The setup is designed to make the Model S more affordable, the company said.
PALO ALTO, California — Tesla Motors today announced an innovative new financing product for customers of its Model S electric car.
U.S. Bank and Wells Fargo & Co. have agreed to provide 10 percent down financing for the purchase of a Model S, according to Tesla.
The financing product, which is not a lease, per se, but financing over five years, is designed to make the Model S more affordable, the company said. In December, Tesla announced a new base price of $59,900 for the Model S. The price does not include destination and does not reflect a $7,500 federal tax credit.
After three years, participating customers can sell back their Model S to Tesla for the same residual-value percentage as the Mercedes-Benz S-Class, Tesla said in a statement. Also at year three, the consumer can opt to continue making payments and then own the car after five years.
"There's got to be some better way than the traditional approach," said Tesla CEO Elon Musk in a conference call with reporters.
Musk said the residual value of a Mercedes-Benz S550 is 43 percent after three years, according to the Automotive Leasing Guide.
Musk would not say what kind of credit score a consumer must have to take advantage of the program. He said the interest rate on the loans is 2.9 percent. A calculator on the automaker's Web site will help consumers figure out their monthly payment, which Tesla said should be around $500.
"When considering the savings from using electricity instead of gasoline, depreciation benefits and other factors, the true net out-of-pocket cost to own a midrange Model S drops to less than $500 per month," Tesla said in a statement.
Musk added: "That really makes it affordable to a much broader audience."
The new financing does not apply to prior purchasers of the car.
Tesla says not only is the company guaranteeing resale value of the Model S, but that Musk is "personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing."
"I will stand behind the residual value," Musk said. "I think the residual value will be excellent."
Edmunds says: Perhaps the most interesting part of Elon Musk's conference call with reporters was his promise that other major announcements are coming from Tesla Motors in the coming weeks.