My partner and I are looking for a new car. We’d really like an EV. We sold our 2015 Audi A3 around two months ago and got around $9,000 for it. We’ve test driven a number of EVs and haven’t found one that we like enough to purchase and drive for 5+ years to get the most out of it. That, coupled with the EV tax credit complexities federally and in Massachusetts and our concerns about eventual advancements in EV technology, pushed us to consider leasing. We’d like to be able to revisit an EV purchase in around 3 years when there are, hopefully, more cars on the market.
We are currently scheduled to take delivery of a 2023 Tesla M3 RWD tomorrow at 11:00 AM. In total, with the Massachusetts $3,500 rebate, we’re looking at around $456 a month effective. Insurance is another $150-180. We’d like to keep the total cost of the vehicle, including insurance, under $750.
This seems like the best deal for an EV right now, but we are making compromises to have this car. Ideally, we’d like an SUV because it’s more spacious and we think it could more accommodating of our chronic pain, but we understand it’s more expensive to get an SUV, so we’re willing to drive a sedan. The Tesla is also missing many features that other cars at this price point have (e.g. USS, blind spot detection, functional auto windshield wipers).
We’ve never leased before, so we’re a little apprehensive about making a mistake. Before we pull the trigger, are there are any other cars we should consider that could fit the cost criteria? The Volvo XC40 Recharge or BMW i4 would be great, but they don’t qualify for the $3,500 Massachusetts rebate, unfortunately.
What are your top 5 must have features in your next car? You listed 3 below.
What is USS?
If I were in your shoes, I would delay taking delivery of the model 3, and do more research to see what other cars/SUVs you could lease that met your needs.
Are you married to an EV?
EDIT:
To those wondering, I found these requirements on the Mass Offers Rebates site (https://mor-ev.org/).
Purchase or lease a new battery electric and fuel cell electric vehicle on or after November 10, 2022 with a sales price of $55,000 or less
Vehicles must be retained and registered in Massachusetts for at least 36 months
There could be a huge difference between a low and cramped sport sedan and a higher/roomier crossover if you have chronic pain. Hopefully the overnight Tesla price drops make the decision easier.
Even over just 2 or 3 years, the TCO of a Tesla does not favor leasing and disqualifies you from the $7500 rebate. If you are payment shopping EV leases, I would suggest you look for one where federal rebate is passed through (eg: Hyundia Ioniq , VW ID.4 )
Supporting data… MMRs for 23,22 and 21 M3RWD.
2023 TESLA MODEL 3 2WD 4D SEDAN BASE MMR $39,900
2022 TESLA MODEL 3 2WD 4D SEDAN BASE MMR $36,600
2021 TESLA MODEL 3 2WD 4D SEDAN BASE MMR $34,600
Hm. That’s too bad. I don’t think I can change the payment I selected in the application (i.e. lease), and I’m skeptical I could take delivery of a different Tesla by April 18th.
I see you have already found the MOR-EV program, but, yes, it does qualify so long as the MSRP is under $55,000 (not including the delivery fee). The money factor is a lot worse on the Model Y, though. The Model 3 RWD’s interest was around 1.90%, while the Model Y’ Long Range’s interest was over 5.00%. I think the Model Y was over $300 more a month, and we just can’t swing that.
USS is ultrasonic sensors. Tesla removed them around a year ago, I believe, and now they’re replacing it with camera-based “Tesla vision”. I’ll live without them, but it’s just frustrating not to have that in a $40,000+ car.
We did do a good amount of research, but no car seems to have come close to the monthly payment of the Model 3. I’ve reached out to a number of brokers, but many of them don’t do business in Massachusetts or are not very responsive, and I don’t think I’d do a good enough job negotiating a lease by myself, so I’m not really sure what to do, you know?
If you want something larger, the Model Y is probably the lowest price that I’ve seen at just under $50k. All the Tesla models are probably the best bang for your money right now. If you qualify for the credits, definitely just buy instead of lease. The only downsides that I see are:
Elon might lower prices yet again in a few weeks
Elon might introduce new designs for the aging 3 and Y, which would cause the current designs to plummet in resale value. I think the Model 3 looks fine. The Y looks like someone spent 5 minutes to photoshop the 3 to make it look taller.
It really depends on your situation. I hate the Y, and I don’t qualify for any credits due to income, so I would personally just lease the 3. I still have 9 months left on my Kona EV. I’ll probably lease the 3 next unless a hackr deal comes along.
EDIT: Last time I test drove a Y, it had a birdseye view for parking, and animation of all the cars around you while driving, including blind spots. Sure you had to sort of take your eyes off the road and look at the center console, but I found it pretty useful. I personally liked the birds eye view for parking much more than the parking sensors - this goes for a lot of models that we test drove. My wife has parking sensors now, and it’s better than nothing, but you can’t see anything. It just beeps.
Don’t just focus on the monthly lease payment. Have you run numbers if you were to finance the same car instead of leasing it? With finance, you will qualify for the $7500 federal EV rebate as long as you meet the income requirements. Just food for thought.
BMW is passing the $7500 federal tax credit on the i4 e35 on leases. With minimal upgrades, you can get around $600/month (with $0 down) all-in payment on the i4 lease (it’s not uncommon to see 3-6% off MSRP in addition to the $7500 credit). FWIW, I greatly preferred the interior of the i4 over the Model 3. If 250 miles of range is sufficient, I’m not sure I would even consider leasing a Tesla (and with the i4, you retain the buyout option at the end of the lease).
Also, the i4 appears to meet the qualifications of the MOR-EV rebate if spec’d below $55k, which would lower your payments another $100. However even if not, I would still personally lease the i4 (and I did, so maybe I am bias).
This is off topic (as I usually am) but I want to point out that Ariyas are starting to collect bonkers amount of inventory. I’m assuming that the 18 month high residual leases is gonna make these stellar for someone looking for a low cost EV with a hatch for the cargo area.
I did run the numbers as best I could. Assuming I don’t put a downpayment down on financing the car, I’d be looking at around $830 a month.
Right now, I qualify for the full $7,500 federal rebate and the $3,500 state rebate for a total of $11,000. I may change jobs this year and get a salary increase that bumps me over the threshold, so there is a small bit of risk there.
I do not plan to keep the car for more than 3 years, and that’s where I start to have trouble comparing a leased car to a financed car that I sell in 3 years. Don’t I have to make a lot of assumptions about what the car could sell for, the condition of the car in 3 years, etc. in order for financing to make sense?
I’m trying to understand what you’re saying, but I’m having a little trouble seeing the advantage of financing the car.
Is the idea that I could make some money back if I finance and then sell it in three years, and that would make it a better financial decision? I’m thinking of this EV as a sort of stop-gap before more vehicles come onto the market that I will want to keep longer. It’s definitely not a “keep for 10 years” car for me.
I do qualify for the rebates, so I’m certainly open to financing. Although… I may not really have any leeway at this point given the imminent changes and the fact that I locked in my lease terms already.
If you lease it for $456/mo for 36mo your TCO is $16,416.
If you buy the car for $42,000 - $3500 - $7500 your effective cost is $31,000
In three years you sell it, based on 2021 M3RWD pricing, the car will be worth $34,600
The TCO of owning this car for three years is -$3600.
(this does not include fees/taxes/interest which can be very situation specific)
To justify the lease, the car would need to sell for less then $14,584 in three years.
You seem to be more concerned with the monthly payment.
In that case your finance payment would be $42,000-$3500 = $38,500
Over 84 months at 5.49% your payment would be $553.06.
If you sold after 3 years, you would have paid $5195 in interest.
This shifts your TCO to $1595 or $44/mo effective.
I am sure your actual numbers will vary but you can see how big the TCO gap is…
Thanks for responding. Unfortunately, the BMW i4 isn’t on the list of eligible vehicles for the MOR-EV program. I did reach out to a BMW broker to see what I could get for the i4, so we’ll see. If it qualified for the MOR-EV program, I’d definitely go in that direction instead.
What are the variables you are using to get to that monthly payment? Loan terms? Interest rate?
Lots of folks beside me offering advice. At the end of the day, figure out what would work best for you. If you really want to lease a Tesla then go for it. If you are not sure, then no need to rush into a new lease.
Here is the calculator I used to calculate the loan payment. It’s a 60 month loan at 5.50%. I can get that rate from the credit union I’m a part of, or Tesla financing is close by at 5.59%.
I feel the need to rush because I was concerned manufacturers may stop passing through the $7,500 on leases after the new guidance becomes effective. I certainly want to be logical about this, so I will finance the car if the TCO is a lot lower, but I just don’t have a lot of time to make that happen, so I want to stay level-headed about it and understand what I’m doing before I switch my strategy to financing. I appreciate your feedback!
Thank you for breaking that out for me - really appreciate it. That’s very compelling!
One note is that the Massachusetts $3,500 rebate is not point-of-sale. It’s a check I would receive later, but I understand that makes a marginal difference in the interest paid in the grand scheme of things.
I’m very risk averse, so I just have a few questions. This makes a lot of assumptions about the resale value of the car in 3 years, right? I know you’re not a fortune teller, but what are the chances I’m underwater on the loan in 3 years if Tesla redesigns the Model 3, the changes to the rebates affects the resale value of the car, or the car suffers damage? For example, I was rear ended three times in my last car, so there’s definitely more ambiguity in this equation, right?
And if my plan is to sell in 3 years, there’s no real advantage in taking out a 60 month loan, right? If I choose to keep the car, I could refinance the payment to save on interest later.
