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Canadian Oil Patch Grapples With Cannabis Legalization

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Canada has officially legalized recreational…

Tesla Won’t Offer Leasing Options For Model 3 Yet

Elon Musk

Tesla won’t start offering leasing options for the Model 3 for another six to nine months, CEO Elon Musk said on Twitter in response to a question from a fellow user. Musk said that “Leasing negatively effects Tesla cash flow, so we prob won’t offer Model 3 leases for 6 to 9 months,” adding that loan financing was a better option because of banks’ conservative approach to new car models’ residual value, of which the Model 3 has plenty.

At the moment, the only way to buy a Tesla Model 3 is to reserve it and then pay the vehicle in full. However, as Tesla has decided to produce the more expensive versions of what it promoted as the first affordable high-performance electric car, leasing could eventually find a place as a purchase option, Electrek’s Fred Lambert says in a recent report.

The problem with the Model 3—except for the fact that production has not yet ramped up to the planned 5,000 weekly—is that, as Lambert puts it, the car “is not yet available at nowhere near its advertised starting price of $35,000 nor can it be leased, which significantly increases the cost of having access to a Model 3.”

Related: Kuwait Halts Tax Plan As Oil Prices Rise

Yet for Tesla it makes more sense right now to double down on the more expensive versions, as they come with the highest margin, and Tesla urgently needs cash. At the moment, the company is producing only the long-range battery version and planning to soon launch an even more expensive version with a dual motor all-wheel drive.

At the same time, ramping up is going well, it seems. Last month, Tesla announced it would cut the waiting times for Model 3 deliveries by half—that is, by between 6 to 9 months from the day an order is placed. To date, there are about 450,000 Model 3 reservations.

By Irina Slav for Oilprice.com

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