Tesla long dominated the electric vehicle (EV) market in the U.S. largely by becoming the first automaker to build and market EVs in large volumes. That market dominance allowed it to try out sales practices almost unheard of in the automotive industry, like changing prices frequently or offering few leases at unattractive terms.
That’s changing as more automakers enter the EV market. Tesla’s market share has fallen dramatically – now below 50% – as it faces new competitors.
Registrations Down 7.3%
Sales are slipping. CEO Elon Musk promised investors in October that the company would beat last year’s delivery numbers (the total number of vehicles that end up in consumer hands). Yet, industry publication Automotive News notes, “Through the first three quarters this year, global sales fell 2.3%, Tesla said. In the U.S., registration data showed Tesla down 7.3 % in the same period.”
So, how will Tesla deliver more cars? By finally embracing leasing, it seems.
More Leases, Buyouts Allowed
The company has made several major changes to its leasing practices in recent weeks. In November, it launched a leasing program for the Cybertruck. Payments started as high as $1,148 per month but dropped by 10% just weeks later.
The company now advertises lease terms for every one of its vehicles on its website. Offers show payments as low as $216 monthly for the Model 3 for a 36-month lease with a $2,999 down payment.
Tesla also allowed customers to buy cars at the end of the lease period. That’s normal practice in most of the industry. However, Tesla had stopped lease buyouts in 2022, saying it would keep off-lease cars as a fleet of robotaxis.
A lease-end options page on the company’s website now reads, “Starting November 27, 2024, all leased vehicles are eligible for purchase.”
It’s unclear what Tesla plans to do with the stockpile of vehicles it currently holds from lease-end returns. Tesla showed off a purpose-built Robotaxi in October, which may mean it doesn’t plan to turn used Teslas into a robotaxi fleet.
Leasing, Automotive News says, could help Telsa meet Musk’s delivery claim this year.
Many Competitors Sell Far More Through Leases
In January of 2023, just 8% of Teslas on the road were leased. By April of 2024, that figure had climbed to 31% (though it fell back to 15% in September), according to analysts from S&P Global Mobility.
Some rivals see as many as 90% of their customers lease EVs. All leased EVs are eligible for a federal tax rebate of up to $7,500, while the government applies a stricter set of criteria to determine whether purchased cars qualify.
That has fueled a dramatic increase in EV leasing – one mid-year report found that almost half of electric cars are now leased.
