Last November, Tesla ended an unusual policy that prohibited US leasing customers from buying the cars they used at the end of their contracts.
Policy began in 2019, when it announced it that customers could do leasing involving Model 3, but customers would have to return cars to the automaker at the end of the contracts, as the company planned to use them in a future brain taxi fleet.
“You don’t have the option to buy,” Tesla’s executive said at a meeting with investors in California in April 2019. “We want them back.”
“Next year, for sure,” he added, “we’ll have over 1 million robot taxis” in operation.
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None of this proved true. Despite the repeated promises, Tesla’s driverless taxis never arrived. Instead, the automaker has found an unusual way to make money by selling many of the leasing cars to new customers, according to four sources familiar with Tesla’s retail operations.
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Instead of storing used cars – a quick depreciation asset – Tesla has begun to add features to them through software updates. Then he sold these vehicles to new customers, who paid thousands of dollars more than the amounts the former tenants would have disbursed to buy them, the sources said. Practice was an easy way to “increase the price” of used vehicles, said one of the sources.
Tesla and Musk representatives did not comment on the matter.
Despite counteracting what Musk said publicly – and the descriptions Tesla made on her site about the terms of leasing – the tactic seems to have been cool. Still, the strategy denied the tenants the standard option of the sector in the US, which is allowing the purchase of vehicles at the end of contracts, and has fooled them for years on the reason for the impediment.
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The tactic also perpetuated the myth among investors that Tesla was close to a fully autonomous direction technology. This belief helped boost Tesla’s actions and the appreciation made the company the most valuable automaker in the world.
Throughout the sector, leasing contracts usually allow customers to pay monthly to drive a new car for a specific time, usually between two and four years. The lessee does not own the vehicle and must return it to the concessionaire when the leasing contract expires. In almost every case, customers can choose to buy the vehicle at the end of leasing or before.
Since 2019, according to Tesla’s financial statements, the company has rented more than 314,000 vehicles around the world, or 4.4% of its total deliveries. It is unclear whether the non -acquisition policy has been applied anywhere outside the US.
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The policy was well suitable for the years after the COVID-19 pandemic began, when vehicle stocks were tight and car prices climbed. More recently, with the fall in demand – partly due to the aversion of some consumers about Musk’s right -wing political activities – buyers are not so enthusiastic about the Teslas used.
By updating out of leasing vehicles, the sources told Reuters, the company often added the “Full Self-Driving” software, which was sold separately for up to $ 15,000 and is now sold for $ 8,000. The automaker also added the “acceleration increase”, an update that can cause the car to accelerate faster, which is sold separately for $ 2,000.
After starting the policy that did not allow the purchase of cars, Tesla expanded it for leasing contracts of all models. Until the recent reversal, the company’s website said Tesla vehicles delivered after April 15, 2022 “are not eligible for purchase” and that “Model 3 and Model Y locations are not eligible for purchase, regardless of delivery date.”
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Then, last November 27, Tesla’s account in North America published on social network X: “Buying of now available leasing” for new contracts. The company has also updated its leasing page on the internet to say that leased vehicles “can be eligible for purchase”.
For some former arrendators, the discovery was disappointing.
At the beginning and end of his three-year leasing contract from Model Y, Joe Mendenhall told Reuters that Tesla’s team told the car’s back to the company’s taxi fleet. But last year he knew that Tesla sold the car after he returned it.
“Lies about I can’t buy my contract,” wrote Indianapolis marketing entrepreneur at X. “The car is sold into an auction, and not transformed into a robotaxi, as I was told. Slow to @elonmusk.”
“I get your hands on the dough”
Tesla’s story about keeping driver -free taxis cars fits into a long standard of unfulfilled promises on technology.
Every year, since 2016, Musk promised that self -employed Teslas would come to late the following year. In 2019, when Tesla first offered Leasing to Model 3, Musk told the Lex Fridman podcast host that the ability to add autonomous steering software would make each Tesla used an “asset in appreciation”.
Some investors mentioned the alleged stock of rented vehicles as a promising strategy. Recently, in October-before an event in Hollywood where Tesla showed a “Cybercab” robot taxi concept-Ark Investment Management, which has long been optimistic about Tesla’s actions, said unnatural stock could help rapidly increase autonomous transportation service.
“To start the service, she could deploy an existing model 3 and model y fleet, including those coming out of rent,” Ark said in a report at the time. Sam Korus, Ark’s research director, said Tesla this week, even without out -of -rent cars, can still have other options, including new or third party vehicles.
Others have been in doubt for a long time. When Tesla in 2019 announced that she was banning leasing purchases because of the driver -free taxis, Evercore Isi analysts stated: “Uhmmm, what?” The announcement “is an indication that Tesla believes that its robot taxi network will be a viable business in three years,” analysts added. “Put us in the extremely skeptical field.”
As a general rule, car dealers avoid maintaining used stocks because cars usually depreciate quickly. Michael Minick, a former Tesla sales representative and one of the people familiar with the sale of previously rented cars, told Reuters that the company would not allow cars to “stop lots and lose value”.
“I knew this was not true,” added Minick, who was among the thousands of Tesla employees fired during a restructuring last year.
For most automotive companies in the US, leasing purchase offer is “obvious” because resellers do not need to find a new buyer when the leasing contract ends, said Joseph Yoon, consumer perceptions of the Edmunds automotive data supplier. Now that the prices of a used Tesla are “kind of sinking,” Yoon said, the company has probably ended the ban on the end of leasing to avoid being “dirty -handed.”
As Tesla models get older and face increasing competition from other electric vehicle automakers, cars now lose value faster than almost any other vehicle. An analysis of bullshit, a data service and used car sales, found that average used Teslas sales prices fell 7.6% over the past year compared to a 0.8% drop in an index composed of all brands. Cybertruck pickup prices plummeted 46% over the past year, while Model Y prices fell 14.1%.
During Tesla’s results conference conference in January, Vaibhav Taneja, the company’s chief financial officer, blamed “the smaller profit of the used car business” as a reason for the decline of margins in one of its units. Unlike almost all other US sales manufacturers, Tesla has and operates its own dealers.
In dealers before the change in leasing policy, one of the people familiar with Tesla’s retail operations said, customers sometimes asked why the prices of those used were so similar to those of some new models. Vendors cited software updates to those interested in buying.
For those looking for a leasing, they kept saying that the cars would be used for rolls at the end of the contract. The explanation never changed, the source added, because until November the company never deviated from it.
Marshall Distel, a Vermont transport planner who rented a 3 in 2023 model, said that by researching Tesla’s policies, he understood that he would have to return the car. At the time, he said, thought a purchase option would have been good.
Now he has no interest in buying anything from Musk, whose activities as US President Donald Trump’s advisor have alienated some consumers. “I love the car, I just don’t like what is happening at the top with the executive president,” said Distel. “I don’t want to be associated with that anymore.”
