Rental contract for the 3 Tesla model in the United Kingdom, the Netherlands, Norway, Switzerland and China

May 5, 2019 by Vijay Govindan

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For this article, I will use Tesla's website information to determine if cash, loan, or leasing is the best option if you want to purchase a Tesla Model 3 Standard Range Plus (SR). +). The twist here is that I did these calculations for Switzerland, Norway, the Netherlands, China and the United Kingdom. These were the most popular markets for Tesla in the first quarter of 2019. I added to the UK, which has been suffering for 3 years and deserves special attention.

Note that some markets offer leasing options, but others do not. The comparisons are based on the options available on the Tesla website.

Switzerland (Switzerland)

Remarks:

• Swiss options are limited to purchase or lease
• Assume the 3.4% interest rate used on the Tesla website
• The lease is preferable if you want to keep the model 3 for less than 6 years.
• The purchase is best if you hold the model 3 for 9 years or more
• If you assume that amortization is high for 9 years, the 15,000-kilometer lease is similar in terms of purchase costs, with a 40% write-off.
  • The added benefit is that you receive a new car every 3 years.

Norge (Norway)

Remarks:

• Norwegian options are limited to Full Cash or Loan
• Assume the 2.9% interest rate used on the Tesla website
• Purchase> Loan
  • For all periods, the purchase has a NPV lower than that of the loan payments
• After 9 years, not only have you recovered your initial purchase price, but you continue to save on payments as long as you hold the car
  • Which means that the NPV will become more positive if you hold the car over 9 years

Nederland (Netherlands)

Remarks:

• Nederland's options are limited to the purchase or lease
• I used a 4.25% interest rate
• Lease> Buy!
  • We never see that happen with any other country
  • In fact, you have lower payments if you rent for 60 months than for 36 months!
• 60-month lease> 36-month lease> Purchase
  • At age 9, the cost of the lease is slightly higher than that of the purchase with a depreciation of 40%.
  • But you would have a much newer and safer car to drive than if you bought

China

Remarks:

• Complete Cash> Loan> Lease for Net Present Value at All Periods
• Interest rate of 8% to buy, 7.91% interest rate for rent on Tesla's website
• As with all cash purchases, your NPV becomes positive if you keep it for 9 years or more.
• It's amazing to see how expensive the lease is compared to a full
• Given the high cost of renting, any other option makes sense.

United Kingdom

Remarks:

• The United Kingdom is very interesting. There is a £ 9,000 incentive for congestion if you arrive in London.
• If you live in London and buy a SR +, the incentive is so convincing that your NPV dissipates even after 6 years.
• After 6 years, all scenarios have a positive NPV with full cash payment.

Remarks:

• The other option for the UK is a lease.
• A rate of 5.4% interest for hire-purchase is used.
• This option is also eligible for the congestion incentive in London, about 250 pounds per month for 36 months.
• We find that the 40% depreciation scenario always gives a lower result than the 30% depreciation, for all periods.
  • You lose it in advance every month and the car is worth less when you sell it after 9 years.
• The difference between the use of SR + in London and elsewhere in the UK is considerable.
• The hire-purchase option is worse than the full payment option in all scenarios.

Last thoughts

• The shorter your time horizon, the faster your VAN increases.
• Full cash is preferable to a loan, and with sufficient time, a loan is preferable to leasing (in most countries).
• Your NPV is much higher if depreciation is lower than your property. This is due to the initial reduction in amortization and a higher selling price when you sell the car after 9 years. Teslas is more resilient than many other competing vehicles, but we do not yet know the amortization of Model 3 over time.
• Things can be lost in the translation, and if some things can change the results for each country, I will always be happy to receive your comments.
• Country preferences play an important role in which the option is preferable. They are not the same for all countries, as this article shows.

You can consult my worksheet here, and feel free to copy and modify the hypotheses as you please.

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Disclaimer: I currently own Tesla shares. A recent discussion with $ TSLAQQ members confirmed that they were more worried about Tesla's finances and profits than to move the world toward sustainable energy. In my opinion, this article is not meant to be an investment, financial or car buying tip. Please consult a duly licensed financial advisor to discuss investments. Follow me on Twitter @ vijaygovindan17.

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