The Washington Post

Tesla Model S Residual Value Increased, Is It Enough?

With its new financing scheme, Tesla Motors received a great deal of criticism for its unrealistic price estimates as well as the residual value built into the finance/lease plan.

But today, Elon Musk acknowledged another error in the plan, and fixes it by guaranteeing the Model S's retail value will be the best in the industry.

"We appreciate the feedback from a number of journalists and customers that the first version of our financing product wasn’t quite right," said Tesla [NSDQ:TSLA] CEO and co-founder Elon Musk. "They were right, so we are fixing it and, moreover, upping the ante by providing the best resale value guarantee in the automotive industry."

In the original plan, the residual value was tied to that of the Mercedes-Benz S550's 12-month average resale value--not a particularly hard target to match. Alternatively, Musk said fair market value would also be honored if it were higher than the 43-percent benchmark of the S550.

Now, Tesla promises only that the Model S' guaranteed resale value will be the highest of any premium sedan brand "made in volume." That last qualifier isn't particularly tricky; it should only eliminate boutique and custom-built cars.

Other updates to the Model S financing process include new longer-term loans to reduce monthly payment size.

(c) 2013, High Gear Media.


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