Tesla model 3 P lease or buy?

[Durzel]

squirdan said:

i leased mine because despite the strong residuals predicted, I think the trade in or sale at 2 years old could be tricky. Remember Tesla arent interested in 2nd hand cars

Mainly though, I am not sure about the build quality and hence the longer term ownership proposition. Not so much battery technology, more the basics of the car.

None of this changes the fact I love the car but...

low quality interior plastics liable to get badly scuffed
various bits of unpainted metal around eg boot closure
scrappy looking welds (especially the doors where you can see how the metal has been folded over
as someone else pointed out, the rear windows rattle when you close the door...frameless design ...not sure how robust it is

SO my judgement was, I'll leave the residual and build quality risk with someone else.

Finally the pace of technological change is quick in this segment. So lets say you buy an M3 on a 3 year view, there is a chance its been completely outclassed in 2.5 years time by some yet unkown unlaunched model, which knackers the residuals. Bit like how every magazine raved about the I-Pace, yet hardly anyone buys them...poor range and old school charging capability

I'm looking at leasing for these exact reasons.

I think it pays to look at the car like an Apple MacBook Pro, or an iPhone, or something. Owners and fans will proclaim the residuals are amazing and that the device will do this and that in the future, and that might genuinely be true in the here and now, but none of those people can predict the future. The reality is that there will be a new MacBook Pro and new iPhone in the future as sure as the sun rises each morning, with new features, and when that event happens the value of the older device will take a hit overnight. Same with Teslas.

I bought a top spec MacBook Pro when they were refreshed in late 2016 (the new TouchBar model) for circa £3600 (excluding student discount). 3 years later after all the issues have been identified and addressed there's been several iterations, the keyboard is fixed and isn't retrofittable. I managed to sell mine for £1400 and I consider myself lucky to do so.

I know it's not a great analogy, but I also think EVs and particularly Teslas will see changes rapidly. There is talk of a 100kWh/Ludicrous Model 3. There will be upgrades to the cameras and processing hardware, that may or may not be retrofittable. Who knows what the MY22 Model 3 is going to look like.

With ICE cars you're pretty much just going to see a change in bodywork and the in car entertainment stuff. The car itself is mostly the same and depreciation is almost set in stone. They're a known quantity in every respect.

0% BIK - if it happens - will swamp the used market in 2-3 years time. I'd think you'd be lucky to get £30k for a M3P (original price £52k) in 2 years time with average mileage, especially when you consider the private market for £30k cars isn't exactly huge.

Edited by Durzel on Wednesday 8th January 00:18

[jamoor]

Durzel said:

I'm looking at leasing for these exact reasons.

I think it pays to look at the car like an Apple MacBook Pro, or an iPhone, or something. Owners and fans will proclaim the residuals are amazing and that the device will do this and that in the future, and that might genuinely be true in the here and now, but none of those people can predict the future. The reality is that there will be a new MacBook Pro and new iPhone in the future as sure as the sun rises each morning, with new features, and when that event happens the value of the older device will take a hit overnight. Same with Teslas.

I bought a top spec MacBook Pro when they were refreshed in late 2016 (the new TouchBar model) for circa £3600 (excluding student discount). 3 years later after all the issues have been identified and addressed there's been several iterations, the keyboard is fixed and isn't retrofittable. I managed to sell mine for £1400 and I consider myself lucky to do so.

I know it's not a great analogy, but I also think EVs and particularly Teslas will see changes rapidly. There is talk of a 100kWh/Ludicrous Model 3. There will be upgrades to the cameras and processing hardware, that may or may not be retrofittable. Who knows what the MY22 Model 3 is going to look like.

With ICE cars you're pretty much just going to see a change in bodywork and the in car entertainment stuff. The car itself is mostly the same and depreciation is almost set in stone. They're a known quantity in every respect.

0% BIK - if it happens - will swamp the used market in 2-3 years time. I'd think you'd be lucky to get £30k for a M3P (original price £52k) in 2 years time with average mileage, especially when you consider the private market for £30k cars isn't exactly huge.

Edited by Durzel on Wednesday 8th January 00:18

Echoes my thoughts and that’s why I did a pcp over 4 years.

I get the chance to buy it if the residuals hold up.

[gangzoom]

Durzel said:

I'd think you'd be lucky to get £30k for a M3P (original price £52k) in 2 years time with average mileage, especially when you consider the private market for £30k cars isn't exactly huge.

100% correct, you can just about to get a 5 year old Model S for £30k today. A 2 year M3P will be an absolute steal at £30k come 2021/22.

On the MacBook Pro front, I got mine for around £2k in 2013, its still my main work computer and will remain so for a while yet, the previous MacBook Pro lasted me 12 years and is still been used by my inlaws. I have had the battery replace for £135 from Apple 12 months ago, and gone through a new power adaptor at £80.

Yes there is always newer tech, but if the existing product is good enough no one is forcing you to change. A current Model 3 in 2021/22 will actually be an easier car to own compared to now, assuming more CCS rapid chargers are deployed.

Our original X would have been coming up to 3 years old and 45k soon, on going running costs of 3p per mile in fuel, 3 per mile in tyres, £50 cabin filter, and £80 third party HEPA filter. Battery degredation is sub 5%, DC rapid charging rates now peak at just over 120KW - some 20% more than when the car was new, so whats incentive/need to go buy new one??

I've never owned any other car with such cheap longterm ownership costs (Leaf aside). Infact the cost of owning the X last year was only £300 more than the Leaf, and most of that has been down to doing 14k per year versus 7k. Frankly its crazy how cheap EVs are to own/keep once you have paid the initial purchase cost. I was going to ask Tesla to 'service' it this year, but I don't think I'll bother, unless the MOT finds something.

If you WANT the latest and best, than leasing is fine, as swapping to a brand new car is never cheap however you pay for it. But if you want cheaper total ownership costs, these EVs are hard to beat as longterm keepers. The Model 3 even more so with lack of powered doors/air suspension as maintenance worries.

Most people in the UK buy used cars not new, from purely a cost point of view now buying our my old Leaf PCP contract was a mistake. Yes that car had rubbish range, but in a 2 car family 50-70 miles would be fine as a daily commuter, 2p per mile fuel costs, on budget tyres sub 2 per mile on tyre costs, zero other maintenance - brakefluid check/change at some point, I can see why they are holding their value.

Yes a new £30K+ Kona or even £20k MG EV has more range, but if you never need to use the extra range, and treat the car as purely a tool for commuting, a sub £10k used Leaf is just as good but saves you £20k versus a brand new Kona.

EVs are going to change the used car market quite dramatically.

Edited by gangzoom on Wednesday 8th January 06:44

[Durzel]

gangzoom said:

100% correct, you can just about to get a 5 year old Model S for £30k today. A 2 year M3P will be an absolute steal at £30k come 2021/22.

On the MacBook Pro front, I got mine for around £2k in 2013, its still my main work computer and will remain so for a while yet, the previous MacBook Pro lasted me 12 years and is still been used by my inlaws. I have had the battery replace for £135 from Apple 12 months ago, and gone through a new power adaptor at £80.

Yes there is always newer tech, but if the existing product is good enough no one is forcing you to change. A current Model 3 in 2021/22 will actually be an easier car to own compared to now, assuming more CCS rapid chargers are deployed.

Our original X would have been coming up to 3 years old and 45k soon, on going running costs of 3p per mile in fuel, 3 per mile in tyres, £50 cabin filter, and £80 third party HEPA filter. Battery degredation is sub 5%, DC rapid charging rates now peak at just over 120KW - some 20% more than when the car was new, so whats incentive/need to go buy new one??

I've never owned any other car with such cheap longterm ownership costs (Leaf aside). Infact the cost of owning the X last year was only £300 more than the Leaf, and most of that has been down to doing 14k per year versus 7k. Frankly its crazy how cheap EVs are to own/keep once you have paid the initial purchase cost. I was going to ask Tesla to 'service' it this year, but I don't think I'll bother, unless the MOT finds something.

If you WANT the latest and best, than leasing is fine, as swapping to a brand new car is never cheap however you pay for it. But if you want cheaper total ownership costs, these EVs are hard to beat as longterm keepers. The Model 3 even more so with lack of powered doors/air suspension as maintenance worries.

Most people in the UK buy used cars not new, from purely a cost point of view now buying our my old Leaf PCP contract was a mistake. Yes that car had rubbish range, but in a 2 car family 50-70 miles would be fine as a daily commuter, 2p per mile fuel costs, on budget tyres sub 2 per mile on tyre costs, zero other maintenance - brakefluid check/change at some point, I can see why they are holding their value.

Yes a new £30K+ Kona or even £20k MG EV has more range, but if you never need to use the extra range, and treat the car as purely a tool for commuting, a sub £10k used Leaf is just as good but saves you £20k versus a brand new Kona.

EVs are going to change the used car market quite dramatically.

Edited by gangzoom on Wednesday 8th January 06:44

Good points well made.

I think perhaps I was being pessimistic on the projected GFV of ~£32k in 2 years, although Tesla themselves quote an even worse number (~£28k last I checked). I ran the numbers on this website, assuming a £54,990 start price (optioned M3P minus FSD) and got this:



And this is the best lease quote I've got out of 8 companies I've spoken to (options = Blue, White interior):

	Options	Opt+FSD
Term	24	24
Monthly	£634.43	£805.13
Initial	12	12
Mileage	15000	15000
Initial deposit	£7,613.16	£9,661.56
Processing fee	£0.00	£0.00
Effective monthly	£951.65	£1,207.70
Total payable	£22,205.05	£28,179.55
Difference (total)		£5,974.50
Difference (monthly)		£248.94
% of cash price (effective depreciation)	40.38%	46.36%
Estimated GFV	£32,784.95	£32,610.45
Difference from 08/15		£4,324.05

I guess ultimately it comes down to whether I think a M3P is going to depreciate by £951.65 / £1207.70 (FSD) a month. Obviously it's not quite that simple as RFL would come into play on a cash purchase from year 2 onwards.

There is also the concern I have, despite what you say, that the value of an M3 could drop precipitously if there is a significant evolution of the car within the next 2-3 years. A 100kWh/Ludicrous version, for example, would surely have a pretty major impact on the current "top" performance spec. I woudn't relish trying to sell the "not quite as fast as the fastest one, but it's still a Performance model honest" car in 2 years time. Leasing transfers exposure of this risk to the leasing company.

I also don't have great confidence in trying to sell a ~£40k car privately, but I'll concede I don't have a huge amount of experience.

I don't imagine keeping the car longer than 3 years - I don't particularly care what is "typical". I really can't see the pace of EV change being such that a 3 year old Model 3 is still contemporary, but I can see we disagree on that front. That being said I think an SR+ will still be as good in 3 years time as it is now, for the most part. I just happen to think the top spec model carries more risk, because it won't be the top spec model for very long.

Plus there's also the fact that I would have £60k tied up in the car, when that £60k could potentially be used elsewhere (e.g. towards property).

Edited by Durzel on Wednesday 8th January 10:12

[SWoll]

I still think that even at £999 a month Evezy offers the best option unless you absolutely have to have FSD (which to me looks a lot of money for limited functionality with no residual value guaranteed)

Let's guess at

£50-75 a month saved on insurance.
£40 a month saved on replacement tyres (£250 a corner and will need a set in 30k miles)
+ a few other costs

So real cost of £850 or less a month, or £20k over the 2 years without a 2 year finance commitment.

[anonymous-user]

I plonked in the HMRC typical 18% a year for depreciation in my spreadsheet. So many variables, I'd just be guessing otherwise. I agree with all the downward forces mentioned, but also cautiously optimistic that residuals will hold up. Mainly pinning hopes on pent up demand for used P3Ds outstripping supply.

I bought outright mainly due to fairly unique circumstances where my Ltd will 'probably' not have to pay tax on any disposal, so the sums worked.

I know a few people would want a P3D but would never have or would buy a car under 3 years old.Yes better models will be out in 3 years, but these same people won't buy them. But they might pay 35k (18% pa) for 69 P3D.

Totally guessing of course.

[jamoor]

SWoll said:

I still think that even at £999 a month Evezy offers the best option unless you absolutely have to have FSD (which to me looks a lot of money for limited functionality with no residual value guaranteed)

Let's guess at

£50-75 a month saved on insurance.
£40 a month saved on replacement tyres (£250 a corner and will need a set in 30k miles)
+ a few other costs

So real cost of £850 or less a month, or £20k over the 2 years without a 2 year finance commitment.

Just be aware of the mileage limitation.

[Durzel]

12,000 p/a isn't bad and is more than a typical lease. As I understand it you can actually do 15,000 with a nominal surcharge.

[gangzoom]

Durzel said:

I don't imagine keeping the car longer than 3 years.........

.........Plus there's also the fact that I would have £60k tied up in the car, when that £60k could potentially be used elsewhere (e.g. towards property).

I think those are the only two real points to decide between lease or purchase. If you know 100% sure you want to change, than its a case of the cheapest way to fund depreciation.

The concept of 'potentiality' using the money else where though I think for most people is man maths. £60k locked away for 2-3 years in a 'safe' investment produce isn't going to for pay borrowing £60k either through PCP or Hire Purchase.

£60k into a house is a different matter, but if you are really going to dump £60k into property over 2-3 years do you than want to have an additional £500-600/month going out in a car payment??

One big reason for us cancelling the 3 was because we want to put money into the house, and when you take a step back it quickly becomes obvious spending £60k on a house is far better 'investment' than wasting it on a car regardless if you're going to pay for the car with cash or finance it over 2-3 years.

Leasing works fine if you can afford the luxury of changing to a brand new car every 2-3 years, but financially you need to very well sorted to afford that, especially at the price point of the top spec Model 3.

[jamoor]

Durzel said:

12,000 p/a isn't bad and is more than a typical lease. As I understand it you can actually do 15,000 with a nominal surcharge.

It's not that simple.

You get 1,000 miles per month included with subscription. This is a monthly charge and you will be notified a week before the payment will be debited from your account. Any overage up to 1,250 miles will be charged at 8p per mile, and anything above 1,250 will be charged at 30p per mile. All drivers are asked not to exceed 1,250 miles per month as this could lead to your subscription being suspended.

[gangzoom]

SWoll said:

I still think that even at £999 a month Evezy offers the best option

Your living on a different planet to the rest of us if your household finances are good enough to justify essentially throwing away £999/month on a pure luxury good, and with no actual ownership prospect. It literally is throwing money down the drain in return for renting an experience!!

That's bordering on the same costs as full time child care, which most families struggle to balance the books on.

[jamoor]

gangzoom said:

Durzel said:

I don't imagine keeping the car longer than 3 years.........

.........Plus there's also the fact that I would have £60k tied up in the car, when that £60k could potentially be used elsewhere (e.g. towards property).

I think those are the only two real points to decide between lease or purchase. If you know 100% sure you want to change, than its a case of the cheapest way to fund depreciation.

The concept of 'potentiality' using the money else where though I think for most people is man maths. £60k locked away for 2-3 years in a 'safe' investment produce isn't going to for pay borrowing £60k either through PCP or Hire Purchase.

£60k into a house is a different matter, but if you are really going to dump £60k into property over 2-3 years do you than want to have an additional £500-600/month going out in a car payment??

One big reason for us cancelling the 3 was because we want to put money into the house, and when you take a step back it quickly becomes obvious spending £60k on a house is far better 'investment' than wasting it on a car regardless if you're going to pay for the car with cash or finance it over 2-3 years.

Leasing works fine if you can afford the luxury of changing to a brand new car every 2-3 years, but financially you need to very well sorted to afford that, especially at the price point of the top spec Model 3.

Indeed, I'd never spend this sort of money on a car, it's ridiculous


The only way it worked for me was the 0% BIK and the fuel saving which made the 4 year repayments only slightly more than owning a large petrol car.

[Durzel]

Well, yeah, property always wins in "what else could I do" calculations. Not particularly exciting though, and there's always a bigger house, or extension, or whatever, which would for most people mean you'd never have any luxury like a £60k car.

[SWoll]

gangzoom said:

SWoll said:

I still think that even at £999 a month Evezy offers the best option

Your living on a different planet to the rest of us if your household finances are good enough to justify essentially throwing away £999/month on a pure luxury good, and with no actual ownership prospect. It literally is throwing money down the drain in return for renting an experience!!

That's bordering on the same costs as full time child care, which most families struggle to balance the books on.

Christ, give it a rest will you. I'm discussing the cost of a car with someone who's interested in buying/leasing one on a thred specifically started to discuss that subject, quite what that has to do with childcare is beyond me so would suggest getting down off your high horse.

And if renting ends up cheaper than buying over the same term you'd be an idiot to buy anyway.

jamoor said:

Indeed, I'd never spend this sort of money on a car, it's ridiculous


The only way it worked for me was the 0% BIK and the fuel saving which made the 4 year repayments only slightly more than owning a large petrol car.

Ridiculous for you perhaps.

You do appreciate that everyone's circumstances are different though so sweeping statements are utterly pointless?

jamoor said:

Durzel said:

12,000 p/a isn't bad and is more than a typical lease. As I understand it you can actually do 15,000 with a nominal surcharge.

It's not that simple.

You get 1,000 miles per month included with subscription. This is a monthly charge and you will be notified a week before the payment will be debited from your account. Any overage up to 1,250 miles will be charged at 8p per mile, and anything above 1,250 will be charged at 30p per mile. All drivers are asked not to exceed 1,250 miles per month as this could lead to your subscription being suspended.

His lease quote was for 15k miles per year, which would cost £20 a month extra on Evezy. As long as you stay within 15k miles across the year you don't have to do 1250 every month and Evezy will soon be offering mileage packages so further miles can be paid for upfront at a reduced cost.

Edited by SWoll on Wednesday 8th January 11:21

[SWoll]

Sambucket said:

Leasing vs buying is basically the same once you factor in risk and opportunity cost. So value for money is entirely off topic. Can I suggest paying no more than 10% of income on a car?

Arbitrary % don't really help though TBH. Car's have different levels of importance to some people than others and dependent on you income and disposable higher or lower % would be affordable. Someone on £2500 a month may struggle to find £250 but for someone on £10k finding £1500 a month could be very straightforward especially if they are an enthusiast.

As above, everyone's circumstances differ so suggesting there should be any kind of rules for this stuff is laughable IMHO.

[jamoor]

Sambucket said:

Leasing vs buying is basically the same once you factor in risk and opportunity cost. So the morality of luxury expenses is entirely off topic. Can I suggest paying no more than 10% of income on a car?

Future of BIK is a big factor in residuals.

My spreadsheet reckons a company car P- should cost between 400 and 500 a month all in, including consumables and insurance. Depending on how you tax disposal. But if BIK rises in 3 years that will completely change the market as people sell.

I'd say leasing is different for this specific as the leasing company will be charging you for the depreciation of the car which they have guessed out of thin air (I assume they've based it off an ICE car, a product like this hasn't existed before) and if it becomes very popular and values hold (Musk would also lead you to believe that the car will become an income generating asset in the future) then you've paid the depreciation rate for 3 years on a car based on an ICE car and have nothing to show for it.

It sounds ridiculous but there are markets out in the world where the cost of labour is extremely low and therefore cars barely depreciate as its possible to keep maintaining them as the cost to maintain is negligible compared to the cost of the vehicle. Not only that but the markets are also supply constrained.

Edited by jamoor on Wednesday 8th January 13:14

[Durzel]

I'm not really dwelling on the affordability aspect of it, buying it outright or paying the monthlies are both viable options for me.

What I'm aiming to do really is - as much as is possible - predict the future on a car, a company and a technology that is by its very nature on a fairly rapid evolution course, to try and avoid losing money hand over fist.

Obviously leasing is completely risk free as the car goes back at the end of the term, but at the same time you pay for the privilege of having that lease.

I also take on board the point about the utility of £60k in non high risk investments over 2-3 years, as said it doesn't really return much at all.

I don't think there is any safe bet with this car. Leasing is in some respects more reassuring simply because the costs are known up front, you can't lose more than you already know you're going to have to pay. Buying means rolling the dice on a number of questions that seem sure to come up in the short to medium future - whether 0% BIK gets implemented (i.e. the knock on effect of businesses buying lots of them that will end up on the market in 2-3 years), whether the Government reduces or drops the £3500 grant entirely in March, whether Tesla release a major upgrade to the car that makes the current Performance model "obsolete", etc.

Edited by Durzel on Wednesday 8th January 13:29

[SWoll]

All crystal ball gazing, even with ICE cars as so many factors to consider.

My decision was purely based on the type of car I wanted and then comparing all of the alternative vehicles and methods of finance over a 2-3 year period.

The Evezy M3P ended up easily winning the comparison in every area (performance, practicality, spec, TCO and length of commitment) so a complete no brainer for me and would still have won easily at the new £1000 a month price. As I've said before, a bargain for what it offers when compared to genuine rivals.

Durzel said:

Obviously leasing is completely risk free as the car goes back at the end of the term, but at the same time you pay for the privilege of having that lease.

Edited by Durzel on Wednesday 8th January 13:29

Not sure committing to a 2-3 year finance agreement can ever be considered 'risk free'?

That assumes that a change of circumstances 12 months in doesn't leave you in a position where the car is either not fit for purpose or affordable, at which point you've got a significant problem.

Edited by SWoll on Wednesday 8th January 15:27

[ant1973]

The EVEZY price increase has forced me to reconsider my plans. £800 per month for a £38k car with limited maintenance is just too rich for me. My approach has been driven by the BIK change but as I own my company, I pay on the other side of the equation as well. No point in doing something for a personal benefit while leaving the company saddled with the debt.

I am genuinely uncertain as to Tesla residuals. Some days I think they are so far ahead that residuals will remain elevated on a 3-5 year basis. Other days I think that early adopters almost always overpay and will end up being stung. My impression is that battery technology is not evolving that quickly and it seemed unlikely to me that a gamechanger was imminent. No doubt battery prices will fall over time but again I am not sure if they will do so quickly. I think it is unlikely that a half price Tesla competitor is imminent. Tesla is probably the biggest competitor to Tesla. I can maybe see a £20k Citycar at some point in the next few years but I guess it will be short range and not a competitor for the 3 (accepting that a 3 does form some competition for the 5).

Even if game changing tech does emerge, how long will it take to hit the market? 5-10 years is my guess. New entrants to the market will have no ability to substantially reduce their prices given the roll up of legacy ICE costs being written off more quickly combined with new cap ex associated with electric cars.

I am inching towards buying an SR+. I figure that the entry model will take the least depreciation hit and will still be plenty quick enough for me. I will keep it for 5 years and take my chances.

[jamoor]

ant1973 said:

The EVEZY price increase has forced me to reconsider my plans. £800 per month for a £38k car with limited maintenance is just too rich for me. My approach has been driven by the BIK change but as I own my company, I pay on the other side of the equation as well. No point in doing something for a personal benefit while leaving the company saddled with the debt.

I am genuinely uncertain as to Tesla residuals. Some days I think they are so far ahead that residuals will remain elevated on a 3-5 year basis. Other days I think that early adopters almost always overpay and will end up being stung. My impression is that battery technology is not evolving that quickly and it seemed unlikely to me that a gamechanger was imminent. No doubt battery prices will fall over time but again I am not sure if they will do so quickly. I think it is unlikely that a half price Tesla competitor is imminent. Tesla is probably the biggest competitor to Tesla. I can maybe see a £20k Citycar at some point in the next few years but I guess it will be short range and not a competitor for the 3 (accepting that a 3 does form some competition for the 5).

Even if game changing tech does emerge, how long will it take to hit the market? 5-10 years is my guess. New entrants to the market will have no ability to substantially reduce their prices given the roll up of legacy ICE costs being written off more quickly combined with new cap ex associated with electric cars.

I am inching towards buying an SR+. I figure that the entry model will take the least depreciation hit and will still be plenty quick enough for me. I will keep it for 5 years and take my chances.

I directors loaned my company the money and the company will repay the loan back so maybe thats an option?

I don't think its crystall ball gazing with ICE cars that much as they can look at the last 3 generations of a BMW/Mercedes/Audi and make an educated guess. Not only that but nobody knows how much the leasing companies purchased the cars for. We know how much they paid for the Model 3 as Tesla don't offer leasing co's discounts.