Tesla Motors CEO Elon Musk Announces Changes To Model S Deal Following Criticism
Tesla Motors CEO Elon Musk recently announced that the company will be making changes to the financing strategy for the Model S vehicle. The changes were made in response to criticisms that the initial plan overestimated potential cost savings. Going forward, the Model S will have the highest resale value guarantee than any other premium sedan on the market “made in volume.”
“We looked at it and decided we were wrong, other people were right, and we needed to fix it,” said Musk. Musk announced the initial plan on April 2nd, which was created through a partnership with U.S. Bank and Wells Fargo. Now buyers will be able repay loans across 72 months rather than 63, thus reducing the monthly prices by over one-fourth. The initial program also included the option to sell back the Model S vehicle after 36 months for the same residual percentage as vehicles like the Mercedes S Class. The Mercedes S550 retains a Kelley Blue Book residual value of around 47% based on the $95,505 sticker price.
Critics of the initial plan said that Tesla was being too aggressive by saying that payments could be as low as $500 when including savings on fuel prices and time. The payment with the initial plan was actually $1,051 per month for the Model S with a 60-kilowatt-hour battery pack. Yesterday Musk said that the new terms offer a guarantee that the “resale value will be higher than that of BMW, Audi, Mercedes, Lexus, or Jaguar.”
Tesla will be reporting their first quarter results on May 8th.
[Tesla Model S Image credit: TeslaMotors.com]