Don't Trust Tesla's New $405 a Month Financing Stunt

Tesla's posh all-electric cars are cool, but they're expensive. So when the company announced a financing scheme on Tuesday that could bring ownership cost below $500 a month, we listened.

Tesla's posh all-electric cars are cool, but they're expensive. So when the company announced a financing scheme on Tuesday that could bring ownership cost below $500 a month, we listened. Buy a $72,400 luxury car for less than $500 a month with the option of selling it back at a predetermined price, if you don't like it? Sounds awesome, right? But it's not that simple. That $500 figure — give or take a few dozen bucks — is not what you'll be paying a Tesla dealer. Rather, the new financing program takes into account the money it says you'll save by owning an electric car. To calculate those figures, Tesla got, well, they got creative.

The plan looks simple on Tesla's website. Under the banner "True Cost of Ownership," a new page on the company's website explains how it's struck a deal "with some of the largest and most respected banks in the country" that enables new owners to buy the new Model S electric car but also enjoy the perks of a lease agreement. The crux of that proposition is the option to sell the car back to Tesl, no questions asked, for a preset amount after 36 months. "Not only is Tesla guaranteeing that resale value," the promo reads, "but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing."

Part of that peace of mind, the company says, involves taking into account the array of cost-saving benefits that come with owning an electric car. This is how the company gets the $543 dollars per month it advertises at the top of the page. As The Verge's Adi Robertson argues, it takes some "extremely creative math" to arrive at the buzzy number. Based on the 66-month financing plan that Tesla's worked out with Wells Fargo based on a 10 percent down-payment, the car would normally cost $1,199 a month. That's expensive, but then the savings kick in. The downpayment is wiped out by a $7,500 federal tax credit, though the credit climbs as high as $15,000 if you live in West Virginia. That's actually basically free money. It'll take a little faith to trust the numbers from here on out.

So let's break it down. Electric cars save on gas. Tesla assumes "premium gas" will average $5.00 per gallon for the three years, and you'll drive 15,000 miles in a "premium sedan" that gets 15 miles per gallon. That adds up to saving $284 per month in fuel cost, taking the cost of electricity into account. Totally fair. Gas is expensive; not buying gas is less expensive. Then things get a little dicey. You'll also be able to save time on your commute, which is sort of true because you can drive in the express lane with your shiny new electric car. Tesla assumes your time is worth $100 an hour — a rate that would put your annual salary at about $200,000 a year — and figures you'll save five minutes a day, adding up to $167 in savings per month. Finally, you'll save time by not having to go to the gas station, enough to recover another $100 a month in opportunity costs. In West Virginia that adds up to $405 a month.

Tesla does a good job burying reality beneath these speculative numbers. No matter where you live, you'll be paying $1,199 a month for your new Model S. And if you're worth $100 an hour like Tesla thinks you are, you can probably afford it. But if you're on a tight budget and looking for a lease in the neighborhood of $400 a month, don't even think of buying a Tesla. As we've learned before, Elon Musk doesn't always deliver on his data-driven promises.