Archives for June 18th, 2013

Tesla To Issue More Stock, Pay Off Energy Dept With Proceeds

2013 Tesla Model S

2013 Tesla Model S

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Since Tesla issued its first-quarter financials last week, its stock has been on a tear.

Not only did the company have its first profitable quarter ever, but the many investors who had shorted the stock of Tesla Motors [NSDQ:TSLA] are now faced with the threat of expensive margin calls.

So Tesla is taking advantage of the price runup; it announced this afternoon that it would issue up to 2.7 million to 3.1 million more shares of its common stock.

At today’s closing price of $84.84 per share, that would net the company $229 million to $263 million. It will also offer $450 million in convertible debt.

CEO Elon Musk simultaneously said he would also buy $100 million of shares with his own funds–$45 million from the new offering–giving it total expected proceeds of about $830 million.

But that’s even not the big news.

The remarkable part of the company’s release this afternoon is that Tesla plans to use the proceeds of the offering to prepay the remainder of its $465 million low-interest loan from the U.S. Department of Energy, both principal and interest.

That loan was granted in July 2009 as part of the DoE’s advanced-technology vehicle manufacturing program, along with much larger loans to Ford ($5.9 billion) and Nissan ($1.6 billion, of which it drew down $1.4 billion).

Last fall, Tesla was deemed a “loser” company by name by unsuccessful Republican presidential candidate Mitt Romney, who criticized a slew of companies to which the DoE loaned or granted money–a few of which have failed, most notably Solyndra.

Paying off its DoE loan entirely removes one stick used by Tesla critics to beat the company: that it is subsidized by your tax dollars and would not otherwise be viable.

Consider articles like this one, for example: Sorry, Tesla’s Only Profitable Because Of Your Tax Dollars.

While Tesla Model S electric cars will still be eligible for the same Federal income-tax credit and other incentives as any plug-in car, paying off the loans means the Feds will no longer be in the business of providing operating funds for the company.

Startup Fisker Automotive was also granted $529 million in loans by the DoE, but the department cut off access after the company drew down $192 million.

While Fisker has not filed for bankruptcy, it has not built any of its Karma range-extended electric luxury sedans since last July, and laid off most of its employees last month.

Tesla’s Model S electric sport sedan, meanwhile, received a rave review from notably cautious Consumer Reports two weeks ago.


By John Voelcker

2012 Toyota RAV4 EV: First Drive Of Tesla-Powered Crossover

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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If the ideal electric car has a real-world range of 100 miles or more and the practical utility that American families buy crossovers for, the future may be arriving this year.

The 2012 Toyota RAV4 EV has every bit of space that the gasoline versions do. Its Tesla-engineered battery pack and electric motor give it better performance than the RAV4′s most powerful V-6 version, plus a real-world range of 100 or more miles (depending on how you use the climate control).

It’s too bad that the RAV4 EV will only be sold in California as a “compliance car,” in a limited run of just 2,600 over the next three model years.

In other words, even if you want one–and have the price of $49,800–you may not be able to buy one.

As electric-car advocates may remember, this is actually the second RAV4 EV. The first one was built a decade ago to comply with earlier California zero-emission vehicle mandates that were subsequently changed, so Toyota stopped building them.

There are still almost 500 of the 2002 Toyota RAV4 EVs running around California–we drove one a couple of years ago–and their owners have been waiting eagerly for the new 2012 model.

Developed in record time, with a deal between Toyota and Tesla announced in May 2010 by respective CEOs Akio Toyoda and Elon Musk, the 2012 RAV4 EV will go on sale later this year in select California markets.

Tesla battery and motor

Tesla Motors [NSDQ:TSLA] engineered the lithium-ion battery pack, which has 41.8 kilowatt-hours of usable capacity and sits below the floorpan.

Ground clearance is consequently reduced by a couple of inches, but the RAV4′s cargo space of 36.4 cubic feet is untouched–as is the rear-seat foot room.

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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Tesla also provided the AC induction motor that powers the front wheels, which is the same unit used in the 2012 Tesla Model S electric sport sedan, but with a lower peak output of 115 kilowatts (limited not by the motor itself but by the pack power).

The drive motor, power electronics, and onboard battery charger are located under the hood where the engine and transmission used to sit.

Despite the loss of those items, the RAV4 EV is roughly 470 pounds heavier than a front-wheel drive RAV4 Limited with the V-6 engine, rising to roughly 4,030 pounds.

But it’s the power that really impresses when you drive the RAV4 EV, which more or less uses the powertrain and battery capacity of the lowest-spec Tesla Model S with a 40-kWh battery pack.

Toyota quotes less than 7 seconds from 0 to 60 mph in Sport mode and, more importantly–where it really counts in real-world usage–just 2.5 seconds to go from 30 to 50 mph. That’s notably faster than the best V-6 version.

Top speed is limited to 85 mph in Normal mode, and 100 mph in Sport mode.

User control: lots

As in Tesla vehicles, there are a number of user-controllable settings. There are normal and Sport drive modes, for instance, the latter boosting your acceleration even if you keep your foot steady when you push the Sport button while underway.

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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Then there are three climate settings: Eco-High, Eco-Low, and Normal. The Normal setting essentially replicates the maximum-blast behavior of a gasoline car’s cooling and heating system–and it chews through range at a major rate.

Eco-Low moderates that, and Eco-High is the least powerful climate setting, providing the most range.

Toyota claimed that Eco-Low is enough to keep front-seat passengers comfortable, if not either chilly or toasty, on cold and hot days respectively.

We were skeptical, but in fact in California coastal weather up to the low 80s, that proved entirely true with the fan on a lower setting.

We didn’t have any chance to test the car in chilly Northeastern winter weather–but then, it won’t be sold there, so it’s somewhat academic.

From 93 to 112 miles of range

Perhaps the most significant aspect of the 2012 RAV4 EV, though, is its real-world range–courtesy of the relatively huge usable 42 kWh of the battery pack.

(By comparison, the 2012 Nissan Leaf has a maximum usable pack capacity of 20.4 kilowatt-hours, or half that number.)

In an afternoon of driving two different electric RAV4s, we concluded two things.

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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First, it’s easy to get 100 to 115 miles of range no matter how you drive the car, in local stop-and-go or at legal freeway speeds and then some (given the general traffic flow in Southern California).

Second, the Tesla/Toyota range estimator on the RAV4 EV is remarkably accurate, with the change to projected range usually no more than 1 mile different than the actual mileage covered.

We didn’t run any of our test cars down near 0 range, but Toyota assured us that there’s a small margin even after the battery is shown as totally depleted.

Range of 158 miles, RLY?

Toyota estimates that in Normal charging mode–which doesn’t charge the battery pack to 100 percent–the RAV4 EV has a range of 93 miles.

If the owner needs more range and sets the electric RAV4 to “Extended Range” charging mode, that rises almost 20 percent, to 112 miles.

Despite lengthy conversations with the EPA, though, Toyota was not able to convince the agency to let it list two separate ranges–so it expects the EPA-rated range to come in around 98 miles.

Just for reference, with a fully charged pack and the ventilation turned completely off in one of our test vehicles, the range estimator said we had 158 miles. That’s worth opening some windows for.

The number fell to 92 when we touched the switch for Normal ventilation, rose to 111 on Eco-Low, and then 118 on Eco-High–which was where we left it.

10-kW charging

Unlike lesser battery electric cars whose onboard chargers are limited to 3.3 kilowatts (Nissan Leaf) or 6.6 kilowatts (Ford Focus Electric, Coda Sedan), the Tesla-designed charger in the RAV4 EV can charge at up to 10 kilowatts.

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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That means owners will have a sufficiently beefy 240-Volt Level 2 charging station if they want to charge a fully discharged pack overnight.

Toyota has arranged with Leviton to offer a custom charging station that delivers 9.6 kW at 40 amps, which will give you a recharge time of just 6 hours for the full pack. The price starts at $1,590 including basic installation.

On the other end of the scale, charging at 110 Volts with the cord that comes standard under the rear deck is tortuous, with a full pack charge requiring far more than 24 hours.

The motto: Big packs require special charging stations–which may require you to rewire your garage first. You have been warned.

Good handling, not great

With the 840-pound battery pack as the lowest part of the vehicle, the handling of the Toyota RAV4 EV is good. Oddly, the lower center of gravity (as good as a sedan’s, Toyota says) makes the tall crossover seating position feel higher than in the conventional vehicle.

Toyota has re-weighted its electric power steering to give less assist on the highway and more assist at low speeds, where the extra weight demands it. The steering feel is less noticeably numb than on many other Toyota products, though there’s still not a lot of road feel available.

Overall, while the handling isn’t as well balanced as our all-time favorite crossover, the 2013 Mazda CX-5, it’s better than average for a compact crossover.

Affluent-family #WIN

The 2012 Toyota RAV4 EV has the potential to be the best and most practical battery electric vehicle sold in the U.S. south of Tesla’s luxury-priced Model S sedan range.

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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While the 2012 Nissan Leaf offers 73 miles of EPA-rated range and sacrifices some portion of that at freeway speeds, the RAV4 EV apparently hits the magic 100-mile mark, if not quite the 120 miles that many plug-in advocates feel is the real sweet spot.

So now affluent, early adopter families can add an electric crossover to the list of plug-in cars to test-drive along with the Leaf, the Chevy Volt, and the Tesla Model S.

The electric RAV4 may also simply whet the market’s appetite for the upcoming 2014 Tesla Model X crossover, complete with “falcon doors” and its 60- or 85-kWh battery pack options.

Which is why it’s such a shame that so few of these will be built through the 2014 model year.

We understand why; such a development partnership was a shockingly new and challenging way of doing business for both companies.

Both Toyota and Tesla are proud companies with set ways of designing, validating, and engineering cars for production.

If you read between the lines when speaking to slightly tired-looking engineers, meshing those procedures in a single product team to get a car out the door in two and a half years was brutally hard.

Losing money on each one

More importantly, industry scuttlebutt suggests that Toyota is still likely losing $10,000 or more on each RAV4 EV it sells. After all, if your CEO tells you to co-develop a car with Tesla, what incentive does Tesla have to cut prices on its battery pack and other components?

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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But Toyota is justifiably proud of the RAV4 EV, if still slightly shell-shocked at the birth process.

And 2,600 wealthy buyers who plunk down their $49,400 (before a Federal tax credit of $7,500 and California purchase rebate of $2,500) will be the beneficiaries.

Toyota hasn’t said whether it will offer a lease for the car, which it expects to go largely to retail buyers.

But given that the car may retain only 50 percent of its pack capacity over 5 to 8 years–largely depending on how it’s driven and charged–there’s an argument that a three-year lease might be about right.

Toyota warranties the battery pack for 8 years or 100,000 miles, but that simply ensures that if the pack fails, it is covered. The warranty specifically does not cover any loss of battery capacity.

Third generation to come?

Will there be a new 2016 model of the electric RAV4, given that the gasoline versions will be redesigned for 2014? (The electric version will continue with the older design after that happens, on the same lines.)

Toyota won’t say. The company does hint that it’ll be watching market reception of the RAV4 EV closely.

So if you want an electric crossover with 100 miles of real-world range and surprising acceleration that has all the cargo space of the regular RAV4, now’s your chance.

That’s your hint, folks.

Toyota provided airfare, lodging, and meals to enable High Gear Media to bring you this first-person test drive.

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

Enlarge Photo2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

Enlarge Photo2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

Enlarge Photo2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

Enlarge Photo2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

Enlarge Photo2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

Enlarge Photo2012 Toyota RAV4 EV, Newport Beach, California, July 2012

2012 Toyota RAV4 EV, Newport Beach, California, July 2012

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By John Voelcker

Rumors Video Roundup: Hot Lapping the Fiesta ST, Cutting Up a Model S, Best of Walter Rohrl – Rumor Central

Rumors Video Roundup: Hot Lapping the Fiesta ST, Cutting Up a Model S, Best of Walter Rohrl

In this week’s edition of the Rumors Video Roundup, we’ve got the Focus ST’s little brother, the Ford Fiesta ST, getting put through its paces in Belgium, a factory-fresh Tesla Model S getting chomped to pieces by the Jaws of Life in the interest of safety, and the owner of a Koenigsegg CCR get his keys out the same way us workin’ stiffs with Civics and F-150s do.

In addition, we take a look at some of the epic driving done by Porsche test driver Walter Röhrl, and ask if it’s possible that a front-drive hot hatch have too much power, in this case in the form of the Mazdaspeed 3. Check out our weekly video roundup below.

Feature Flick: Watch a 2014 Ford Fiesta ST on a Hot Lap

We’ve always though that the U.S. could use more pint-sized pocket rockets, and Ford seems to agree. The Blue Oval’s 2014 Fiesta ST will be joining the Fiat 500 Abarth here in the U.S. later this year. Ahead of its debut, Ford has just released a quick video of the new Ford Fiesta ST on a hot lap at its Belgian test facility.

Feature Flick: Tesla Model S Gets Ripped Up by the Jaws of Life

Electric cars like the Tesla Model S offer up a unique challenge to firefighters. Rather than engines, fuel tanks, and fuel lines, electric cars have motors, batteries, and high-voltage cables that can potentially electrocute someone trying to save an occupant after an accident. Because of the challenge, Tesla has just put out a video showing just how firefighters should dismantle a Model S in the event of an accident.

Feature Flick: Koenigsegg Keys Locked in Car

It turns out that this “oops” moment doesn’t just happen to college students – it also happens to owners of Koenigsegg CCR supercars. Automotive blog Carscoops came across this video of said Koenigsegg owner fishing his keys out of his apparently locked car through a crack in the window — and, yes, that does seem to be a wire hanger he’s using.

Feature Flick: Celebrating Walter Rohrl’s 66th Birthday

Today marks the 66th birthday of Walter Röhrl, rally driver extraordinaire and present-day Porsche test driver. Born on this day in 1947, Röhrl grew up as a ski instructor and chauffeur, but at age 21 he tried his first rally. The rest is history: Röhrl became one of history’s most storied and accomplished rally drivers, immortalized on YouTube for his fancy footwork and daring driving.


Feature Flick: Does the 2013 Mazdaspeed3 Have Too Much Power?

The 2013 Mazdaspeed3 channels 263 hp and 280 lb-ft of torque to its front wheels, making for an entertaining drive. On this Feature Flick, Carlos Lago asks if the hot hatch, which is rough around the edges, is fun because of or in spite of its powertrain.

By Edward A. Sanchez

Video Find: Watch a Tesla Model S Get Torn Apart by the Jaws of Life

Video Find: Watch a Tesla Model S Get Torn Apart by the Jaws of Life

Hybrid and electric vehicles pose a special problem for first responders. Unlike traditional gas or diesel-powered vehicles, hybrids and EVs use high voltage battery packs that can potentially electrocute firefighters when responding to an accident, if the first responders are unaware of the location of the cables that carry electricity through the car. Realizing the potential hazards, Tesla has released a video with a Model S being torn apart by the Jaws of Life to teach firefighters how to safely rescue someone from an EV.

If you want to skip the video’s drier bits, the Tesla Model S destruction starts at the 27:45 mark in the video below. Firefighters begin by ripping off the door and front quarter panel, before ripping into the A-pillar. The firefighters then dig into the dashboard and completely separate the dashboard section from the rest of the Model S, causing complete destruction of the electric car.

Watch the Tesla Model S get torn to shreds in the video below.

Source: Brock Archer via YouTube

By Christian Seabaugh

Forza 4 Bonus Pack Adds Agera, RUF Porsche, 1M

The new Launch Bonus Pack for the Forza Motorsport 4 game has been made available via the Xbox Live store for 560 Microsoft Points. The bad news is that it’s only available for those who pre-ordered the car, the good one is that it adds some really cool cars.

The top new contender is the 940 horsepower turbocharged monster that is the Koenigsegg Agera that’s just what the doctor ordered to take on a stock Bugatti Veyron on the track and be in with a chance of winning.

The ten-strong list on new cars also includes the Porsche-based RUF RGT-8, the smallest perforce BMW – the 1-Series M Coupe or 1M for short, the fastest incarnation of the Tesla Roadster, 2011 MINI John Cooper Works Clubman wagon, the 2011 Alfa Romeo Giulietta Quadrifoglio Verde, 2011 Honda CR-Z EX, Subaru WRX STI sedan and a 1997 Lexus SC300.

Check out the Forza 4 Launch Bonus Pack photo gallery

By Mihnea Radu

GM Trademark "Electra" Name

The “Electra” name not new, as it is associated with a range of large cars built by GM sub-brand Buick, between 1959 and 1980. However, GM have recently filed for a trademark on the name, for possible use in an unknown future model.

The name does subtly hint at electricity, so it’s only a fair guess that the Electra could be GM’s second ‘ultra-green’ offering, joining the range as a more upmarket Volt, sold as a more luxurious Buick. Speculation also suggests that the name may, in fact, be attributed to a new Tesla Model S-rivaling sedan made by the US giant, and that it may, in fact, use the platform of the 2013 Chevy Malibu as a base – which would sadly translate into a front-wheel drive vehicle, unfit to really challenge the Tesla.

This is a smart marketing move by GM, by maintaining this name of electric and historic resonance, it will definitely add to the appeal of the future car to bare the ‘Electra’ name. A question does begin to creep into our minds, though:Will they be using Carmen Electra in their future promotional material for the vehicle?

Story via

By Andrei Nedelea

2013 Tesla Model S Tested at the Track and on the Streets in New Ignition

2013 Tesla Model S Tested at the Track and on the Streets in New Ignition

We’ve tested the 2013 Tesla Model S’ range on three single-charge road trips, but how will the car perform on the track? In this episode of Ignition, associate road test editor Carlos Lago puts the Model S through our standard battery of tests to see just how fast and fun the electric car is to drive.

2013 Tesla Model S on Ignition image 6 300x187 imageAt the test track the Model S reached 60 mph in 4.0 seconds and finished the quarter-mile in 12.4 seconds at 112.5 mph while it stopped from 60 mph took 113 feet. Despite its hefty weight, the Model S handles well because the battery pack’s mass sits low in the chassis.

Lago then takes the Model S to the streets to see how the electric car behaves in the real world. Check out the video below to hear Lago’s conclusion about the Model S and whether he thinks it’s a viable alternative to traditional gas-powered cars. And if you haven’t seen it, watch the Tesla Model S vs. BMW M5 drag race here.

By Jason Udy

Tesla Unveils New Leasing Program For Model S

2013 Tesla Model S CAPTIONS ON | OFF

In an attempt to diversify purchasing options for potential customers, Tesla Motors yesterday unveiled a new 36-month leasing program for the popular Model S electric sedan that partners with banks and includes several key promises in the hopes of easing public fears about the cost of ownership.

So, how much? For the 60kWh Model S, only about $500 per month. Oh, excuse me. That’s if you factor in down payments, federal incentives, a guaranteed resale value, business write-offs, and gas savings. If that sounds like a lot of qualifiers, it is. The true out-of-pocket monthly payment is over $1,000 per month ($1,097 when I input figures that would relate to my hypothetical purchase — try it yourself here). Tesla shouldn’t be faulted for offering an alternative ownership method, but they do deserve scrutiny for skewing the numbers a bit. Then again, maybe this does turn out to be quite the deal. Does it make you more interested in buying a Model S?

After all, the Tesla Model S is not an affordable car. Nor should it be. The five seater is bloody gorgeous, blasts from 0-60 mph in about five seconds and has an all-electric range of more than 230 miles (up to 300 miles in some trims). It isn’t the car of the future, but it will probably lead to the car of the future, and that shouldn’t come cheap.

The problem is that Tesla wants to build the everyman electric car, but you can’t do that by making an expensive car appear affordable. They’ve already killed plans for the cheaper 40 kWh Model S, citing low interest, so why not just embrace that the Model S is an expensive car for people with the means?

Instead, Tesla is trying to put a price on things like gas savings and time savings and factor them into your monthly payment. Those benefits of owning a Tesla Model S are all well and good, but if I’m on the fence about buying one, they aren’t going to open my eyes and lead me down a new path. I already know about the benefits of a Model S or I wouldn’t be considering one in the first place. The Model S is a great choice for people who can afford one, but asking them to consider hypothetical pennies saved doesn’t seem like a great marketing strategy.

Which is a shame, because the lease offer is attractive. US Bank and Wells Fargo put up 10% for a down payment, which depending on your state is likely covered by tax credits anyway, and after the 36-month term your Model S will have the guaranteed resale value of a Mercedes-Benz S Class.

It’s not a bad deal. It’s just not the deal Tesla wants you to think it is.


Visit theautoMedia.comTesla Research Centerfor quick access to reviews, pricing, photos, mpg and more. Make sure to followautoMedia.comonTwitterandFacebook.


By Ryan ZumMallen

Tesla Model S Earns Top Overall Test Score from Consumer Reports

When it comes to US-built luxury cars, we think that Tesla’s Model S is a perfect top spot contender in this category. Sure, not everyone must agree, but Consumer Reports seems to share our opinion because the EV just earned the highest score in the American magazine’s ratings.

With a score of 99 out of 100, the Tesla Model S performed better than any other vehicle ever tested, said Consumer Reports, adding that the EV delivered “the performance of a sports car, versatility of a wagon and better energy efficiency than the best hybrids”.

"The Tesla Model S is packed with technological innovation," said Jake Fisher, director of Automotive Testing for Consumer Reports. "It accelerates, handles and brakes like a sports car, it has the ride and quietness of a luxury car and is far more energy efficient than the best hybrid cars."

The last vehicle to achieve 99 points in Consumer Reports’ testing was the Lexus LS 460L and that happened back in 2007.

In other related news, the luxury Tesla Model S is the best-selling EV in the United States in first quarter 2013, the company announcing that 4,900 vehicles have been delivered in the first three months of the year.

By Ciprian Florea

Big Mystery Unveiled: You Can Now ‘Lease’ 2013 Tesla Model S

2013 Tesla Model S

2013 Tesla Model S

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And now we know: Tesla’s Big Mystery Story, teased via more than one tweet from CEO Elon Musk, is this: You will soon be able to “lease” a brand-new 2013 Tesla Model S.

That’s a good thing (though not nearly as much fun as some of the ideas proposed under the Twitter hashtag #TeslaPredictions). But we digress.

Tesla Motors [NSDQ:TSLA] has partnered with two banks, Wells Fargo and US Bank, to create a “new kind of financing product” that combines, the company claims, “the surety and comfort” of actually owning a car with the traditional advantages of a lease.

On a conference call held today shortly after the announcement, CEO Elon Musk said the new product would both make the Tesla Model S available to a much broader audience and address nervousness about the residual value of a battery-electric car with a battery pack whose capacity declines over time.

Here’s how it will work, according to the company’s press release:

  • Buyers can put 10 percent of the purchase price down, and get financing from one of the two banks after their credit is approved.
  • That 10-percent down payment is covered (or more) by U.S. Federal income-tax credits, state purchase rebates or credits of $2,500 to $7,500, and zero sales tax in two states and the District of Columbia.
  • After a 3-year lease term, lessees may sell their Model S back to Tesla–at the residual value percentage of a Mercedes-Benz S Class, the company says, which is 43 percent of purchase price–but do not have to.
  • Tesla CEO Elon Musk is personally standing behind that guaranteed resale value, thereby giving customers “absolute peace of mind” about the value of their car, “with all of the assets at my disposal”.

According to Musk, this is effectively a five-year loan (he later clarified this to “a 66-month term”) with the right to return the car after three years.

If Tesla buys the car back from the customer, Musk said, the company will pay at least the guaranteed value. If the market value is higher, Tesla will pay that amount.

The company suggests that with the guaranteed return value, the various Federal, state, and local incentives, and the lower cost-per-mile of driving on grid electricity, it will cost less than $500 per month to drive a new Tesla Model S.

Musk suggested that net cost of ownership would be “$500 or $600″ a month, combining the lease payment and cost of electricity–and pointed interested customers toward a cost calculator on the company’s website for the true net out-of-pocket cost for a Model S.

That calculator starts with a lease cost of $1,199 per month before the various incentives are applied. It includes cost savings both for the Business Tax Benefit (assuming that buyers drive their Tesla on business) and a value for time saved by not having to stop for gasoline.

Musk noted that current depositors will not be able to take advantage of the new lease product, essentially because it would mess up the company’s accounting.

If drivers who finance the car decide not to return it after three years, they continue to make payments for two more years to pay it off.

The press release contained one line that raised eyebrows among several journalists: “Like the Model S, this product was created from the ground up to provide maximum benefit to consumers, rather than simply duplicating other financing programs that tend to favor companies at the expense of the individual.”

2013 Tesla Model S

2013 Tesla Model S

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Tesla Motors has been on something of a roll lately, with an announcement that it had beaten its own mid-February projection and delivered “more than 4,750″ electric cars from January through March.

That total actually meant that Tesla had the highest quarterly sales of all three previously top-selling plug-in electric cars in the U.S.: the Chevrolet Volt, Nissan Leaf, and Toyota Prius Plug-In Hybrid.

Musk also said on the call the company would be releasing news “every week or so” from here on out.

But whether this new method of financing your ability to drive a new Tesla will be the earth-shaking advance that Musk suggests is another question.

We’ll leave that discussion to the financial analysts, industry professionals, and our readers.

Leave your thoughts in the Comments below.


By John Voelcker