This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Tesla Announces 'More Affordable' Model S (Update 1)

Stocks in this article: TSLA WFC

Updated from 5:29 p.m. EST to provide executive comments from the conference call.

NEW YORK ( TheStreet) -- Tesla Motors (TSLA - Get Report) changed the car market with its popular electric cars. Now it's changing the market again, making the Model S available through a special financing program.

Partnering with Wells Fargo (WFC - Get Report) and U.S. Bank (USB), Tesla says it has created a new kind of financing product "that combines the surety and comfort of ownership with all the advantages of a traditional lease." Wells Fargo and US Bank have agreed to put down 10% financing of the purchase price of the Model S with the 10% payment covered by state and federal tax credits. Customers will still have to put down the down payment, but the financing is cheap, with an interest rate of less than 3% CEO Elon Musk said on the conference call.

Tesla has been running a trial program with a majority of customers being accepted for financing. "This announcement is about improving affordability and giving people peace of mind," Musk said. "I do expect that demand will respond accordingly." Musk went on to say he expects at least half of Tesla's customers will choose this option, maybe more.

The company noted that when considering savings from electricity, depreciation and other factors, the cost of owning a mid-range Model S is less than $500 per month. After 36 months, owners have the option to sell the Model S back to Tesla, or keep it. If they keep it, Musk noted, it would take about five years for a customer to pay off the cost of the car. The resale value percentage is the same as the Mercedes S Class, currently 43% after 3 years, and is guaranteed by Tesla, and Musk himself.

On its website, Telsa provided the actual cost to own the car, which varies depending on how much a customer can actually claim in credits. Tesla assumes a $227 per month savings if you use the Model S for business, and assumes that your time is worth $100 per hour, not something usually seen in the value of a car payment.

When asked about Tesla doing its own leasing like traditional car manufacturers, Musk noted this was something that was not in Tesla's short-term future, but could be an option down the road.

Shares of the electric car maker gained 0.93% on Tuesday to close at $44.34. The stock is moving lower in extended-hours trading following the announcement, off 1.38% to $43.78.

-- Written by Chris Ciaccia in New York

>Contact by Email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs