Tesla is experiencing an impressive surge in vehicle production, reaching record rates. However, this has led to an unexpected situation of surplus inventory, a rarity for Tesla in recent years, particularly for its popular Model 3 and Model Y models.
To address the surplus inventory and keep sales momentum, Tesla has implemented various enticing incentives and discounts to attract customers. For the higher-priced Model S and Model X vehicles, the company is offering up to $7,500 off the Manufacturer’s Suggested Retail Price (MSRP), depending on the chosen configuration. In certain locations, customers can find Model S sedans and Model X crossovers at discounted prices of $82,000 and $92,000, respectively.
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NEWS: @Tesla has launched 84 month financing in the US. pic.twitter.com/p32HJdUcIZ
— Sawyer Merritt (@SawyerMerritt) July 21, 2023
Even the Model 3 is not exempt from the attractive deals. At select delivery centers, customers can purchase inventory models for as low as $37,490. However, Tesla’s initiatives go beyond price reductions. Recently, the automaker introduced a new financing option with an extended term to appeal to a broader audience.
The latest financing term spans 84 months, allowing customers to opt for a seven-year loan to purchase a Tesla vehicle. Alongside this extended duration, buyers can avail themselves of Annual Percentage Rates (APRs) around 6.39%. It’s worth noting that the 6.39% APR is primarily reserved for well-qualified customers, and rates may vary for others, potentially exceeding the mentioned figure.
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While the new financing option may make Tesla vehicles more accessible on a monthly basis, it’s essential to consider the financial implications of such a long-term loan. Let’s take the popular $50,490 Model Y Dual Motor AWD as an example for calculation.
Assuming the buyer places Tesla’s preselected $4,500 initial payment, the remaining financed amount would be $47,380. At the 6.39% interest rate, the monthly loan payment comes to $703 (without factoring in any possible incentives). Over the 84-month period, the total payments made by the owner would amount to $59,052, in addition to the $4,500 initial payment.
Ultimately, the total cost of the vehicle reaches a significant $63,552. While extended-term loans can reduce the monthly burden for customers, it’s crucial to be aware of the potential drawbacks, such as significant interest expenses and the risk of being “upside-down” on the loan.
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Despite these challenges, Tesla’s strategic use of incentives and long-term financing may help maintain sales and appeal to a broader customer base. As always, potential buyers are encouraged to weigh the pros and cons before making a financial decision.
