Currently reading: Tesla launches new Model S finance deal
Electric Model S saloon available on a five-year hire purchase plan for £820 per month, following a £7542 deposit, with residual value guarantee
Lewis Kingston
News
2 mins read
6 October 2014

Tesla has announced a new finance programme, for private buyers of its electric Model S luxury saloon, which guarantees the residual value of the car.

The company says that it will buy any Model S acquired on the scheme back from private customers, in the 37th month of the hire purchase term, for 50 per cent of the base price of the entry-level 60kWh Model S – plus 43 per cent of all options, including the 85kWh battery pack upgrade.

“We understand that many customers enjoy the simplicity of a hire purchase but also may seek some assurance of the future value of Model S,” said Georg Ell, Tesla’s UK boss.

There's no obligation to sell the car, however, as after 36 months customers can continue to keep driving the car and financing it with the same monthly payment.

Opt for the entry-level 60kWh Model S and, for a down payment of £7,542, you'll pay £701 a month on a six-year scheme. The same down payment also gets you onto a four or five-year plan, costing £998 or £820 a month respectively.

For comparison, we found a deal online offering a BMW 530d in Luxury specification for approximately £972 per month over four years, following a £1000 deposit – with no residual value guarantee.

Tesla also says that Model S drivers will benefit further from fuel, VED and congestion charge savings, further reducing the effective monthly cost. Customers who opt for the 85kWh version will also be granted free use of the Supercharger network in Europe.

The scheme has been organised through Alphera Financial Services, which provides vehicle finance in over 20 countries and is also part of BMW Group Financial Services.

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Gerhard 7 October 2014

Who pays for the replacement

Who pays for the replacement battery pack? After 10 years the battery pack will need replacing and we all know that this affects e-car residuals dramatically. Will Tesla end up making a loss with 1000's of Teslas whose resale values are well below the buyback rate?
The resale value of a 530d luxury is pretty-much cast in stone, but I doubt there is anyone in the CAP/Glass's/Parkers crowd willing to stake their job on an bullish RV for a Tesla. The battery pack alone probably costs £20,000 to replace...
disco.stu 7 October 2014

Gerhard wrote: Will Tesla end

Gerhard wrote:

Will Tesla end up making a loss with 1000's of Teslas whose resale values are well below the buyback rate?
The resale value of a 530d luxury is pretty-much cast in stone, but I doubt there is anyone in the CAP/Glass's/Parkers crowd willing to stake their job on an bullish RV for a Tesla.

This would presumably be why they have come up with this unusual arrangement. Normally the finance company that loans the money sets the guaranteed future value, based on industry predictions. Although most in-house finance companies are factory-owned, they still have to lend money in a sensible manner. Obviously BMW-owned Alphera is not interested in offering such optimistic residuals on a Tesla, so Tesla themselves are doing so. It's entirely Tesla's risk.

On one hand, it is a bold move to address one of the key concerns of potential EV buyers. On the other hand, it is piling added financial risk on top of the other considerable costs a small, independent car company has to deal with. It's quite a high-stakes move, and I really hope it pays off for them.

fadyady 6 October 2014

50% residual value?

That is exceptionally high residuals for an electric car whereas most other EVs are typically being forecast to hold just under or over 30% of their residual value.
The claimed residual value shows Tesla's swashbuckling confidence in their product and easily meets and beats most of its even conventionally fuelled competitors.
Aussierob 6 October 2014

I agree with him

I wouldn't bet on Fiat, or any of their offspring except Ferrari. How long can Jaguar receive huge financial support without turning a profit? GM has set in motion closure of Holden, how long for Vauxhall?
Nope, Tesla look great to me and if I were in the market for a car in that price bracket I'd consider one. That is if I had a power connection within 500 metres of where I park.

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