Hacker News Reader

Comment by buro9 | Hacker News Reader

I wonder how they will manage the market differences.

For example, in the UK the majority of cars at the level Tesla is going for are business vehicles. In that category, the tax laws make it such that the best thing to do is to lease a car.

Which is why you get business leasing options from every manufacturer:

BMW: http://www.bmwbusinesspartnership.co.uk/

Mercedes: http://www2.mercedes-benz.co.uk/content/unitedkingdom/mpc/mp...

Lexus: http://www.lexus.co.uk/company-cars/company-car-driver/2013/...

Basically, company car perks are paid in cash in monthly installments. Everyone with a business vehicle leases the vehicle using the cash they are paid.

Tesla may sell a fair few cars in the UK, but if they want to put a lot of cars on the road they'll need to package the car in a way that will attract this market.

I'm sure similar market differences exist throughout Europe too, where local conditions mean that buying outright isn't usually the best deal.

View on HN

Tesla already has a leasing program in the US, and in fact I suspect they would prefer all their customers to lease the vehicles (certainly if you go to their website you won't see a sticker price on the front page for the Model S - you'll see a monthly lease price after rebates, etc).

Note that they don't technically offer leasing, but rather a loan with a guaranteed repurchase price after three years. I don't know how much that matters, but there it is.

I get the impression that they like to talk up monthly costs not because they prefer leasing, but because it tends to show the car in a better light. They have a calculator which lets you calculate the "effective" cost of the car, which basically starts with the actual monthly cost and then subtracts off various savings, ranging from reasonable things like paying less for gasoline, all the way down to fairly dumb things like the value of the time you no longer spend filling up at the gas station.

Here in Germany the difference is mostly tax related:

- if you buy a car on a loan, you have to deduce it from tax in one batch (as you now own a car). edit: it's also part of your assets with has a set of ramifications

- if you lease it, you can deduce the montly payments (as you don't own the car). note that in the case of leasing the offering company can request the car back after the leasing ended or if they so whish sell it to you for a small price

It matters because the $7,500 federal credit (for buying a "green" car) doesn't apply to real leases.

That's an interesting decision, I wonder why? In such a fast-moving industry where they're constantly making their own old models redundant, wouldn't the models they get back after the lease period be basically useless to them?

One thing that to consider is that in UK company cars provided to employees as benefits are taxed heavily based on emissions, which is what drives a large number of customer to small engine diesels (hence the popularity of the BMW 520d amongst company car owners).

In that market assuming that tesla would be in the best emissions category, I'd expect them to do really well.

"In 2013, Tesla delivered 22,477 vehicles to customers worldwide. By the end of 2014, Tesla expects combined sales in Europe and Asia to be almost twice as high as sales in North America. Part of that projected growth will come from the UK, where right hand drive versions of the Model S will soon be introduced. Highly competitive leasing and financing options, similar to a program the company recently launched in Germany with rental company Sixt, are also expected to drive growth on the continent."[0]

[0] http://www.teslamotors.com/en_EU/about/press/releases/tesla-...

People keep saying that "Europeans don't drive much" but there are quite a few models from European manufacturers with very high ranges - over a 1000 miles. And they seem pretty popular with the people I know who have (and need) company cars.

You mean that diesel extends the range, is that the variable you are missing? At 20 mpg you need 50 gallons of fuel. At 50 mpg you need 20g. Cars with 20g fuel usually get 20mpg for a 400 mile range. On the flip side, many more models with diesel have higher ranges because the fuel capacity is set for petrol (20g) and swapping in diesel increases the energy payload per unit volume (40-50mpg).

Possibly - I wouldn't say my driving patterns are that unusual and I live in a small European country and I wouldn't buy a car that didn't have at least a 450 mile range and I know people (particularly in Germany) who make much longer trips very regularly and who have specifically purchased cars with very high ranges.

Is that to avoid refilling in places where the fuel is more expensive or just to avoid the hassle? Do people like to drive 500 miles without stopping?

One issue might be the price differences for petrol across the countries. As an example, many Italians near the border like to fill their tanks in Switzerland. The bigger the tank, the longer you can run with it.

Well, a weekend for me might involve driving 150-200 miles to the middle of nowhere (literally) walking or skiing and then driving back - with very few filling stations for most of that distance and then most of them being small rural businesses that close early (especially on a Sunday).

[NB I walk to work, my wife walks to work and my son walks to school - we even do a lot of our shopping by walking - I wouldn't pretend our car usage patterns are typical].

Reply on news.ycombinator.com