The Tesla Model 3 will be coming later this year. Thousands of people will be taking delivery of their new car (maybe you are one, I'll assume so). Before you do, you'll need to figure out how you are going to finance it.
The ancient wisdom of car buying was buy used, pay cash, and drive the car until the wheels fall off. If you could not pay cash, the next best option was a short term (2 or 3 years) car loan. The last bit of the ancient wisdom was "Never, ever lease a car!"
This advice applied to gas cars, things are different now, does the ancient wisdom still apply? Let's look at the pros and cons.
Why Not To Lease?
Leasing locks you into a payment. You don't own the vehicle. There can be mileage limitations or dents and dings that come back to haunt you when the vehicle is turned in. When the lease is up, you can turn the car in, but then you don't have a car and you have the same question for your next ride; should you lease or buy. This can lock you into a perpetual cycle of car payments. That said, I am still considering a lease for my Model 3 when I get the email to start financing.Why To Lease
Automobile technology is advancing faster than is has since steam engines were on the roads of New York City. This means that the Model 3 that is sold later this year could be leapfrogged by better technologies in just a few years. Elon Musk has made it clear that this generation of Model 3 will not have a heads up display (HUD). But in 2019, Tesla could roll out an advanced 3D augmented reality windshield that takes driving to a whole new level. This is an absurd unrealistic example just to make a point, Tesla will continue to innovate.If you are locked into 5 years of car payments, you won't be able to easily upgrade. With a two or three year lease, on the other hand, you'll be turning in your 2017 car in 2019 or 2020 and then you will know if the Model 3 is the car for you and if you should buy the next one.
Battery technology currently has more research dollars being poured into it than ever before. Advances will happen. How much will a ~250 mile range EV be worth when 400 mile EVs are on the showroom floor? If you have a lease, you can just turn it in at the end of the lease term. You are not stuck with yesterday's battery technology. The cutting edge car can cut both ways.
Being on the cutting edge of new technology can be just what you wanted, or leave you wanting more. A lease gives you easy options to upgrade to the next big thing or keep the car you love.
Here's an example of the pace of change. I recently took my Model X to the service center for a minor issue. They gave me a loaner 2013 Tesla Model S to drive while they worked on my car. This loaner is the car model that won Car & Driver Car of the Year. It was a great car when it came out, but compared to a 2017 Tesla, it was primitive. It had 3G instead of 4G LTE, it didn't have autopilot, just to name a couple. First world problems, I know, but the rate of change seems to be increasing, so it is likely that the 2020 Model 3 will be radically better than the initial cars off the line in 2017.
By 2020 what improvements do you think Tesla will make to the Model 3? Here are a few that I think we're likely to see (eventually):
- HUD
- Solar roof
- Autopilot Hardware 3.0 (faster processor)
- 5G
- 90 kWh battery pack option
- 360-degree bird's eye parking view
- Factory installed dash cam that can be viewed remotely in real-time from Tesla's app
If any of these are must-have features for you, then a lease is likely a better option.
Electricity follows the path of least resistance. In this case, my electric car purchase might follow the path of lease resistance.
A lease will likely cost more than just buying the car, but the additional money is an insurance payment for future-proofing for new features and battery tech. The Model 3 is a new car, maybe I won't like it (unlikely but possible). If that's the case, then I turn in the car when the lease is up and maybe I put in a reservation for the Tesla Pickup Truck.
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