Tesla Motors Inc on Tuesday said it was partnering with Wells Fargo & Co and U.S. Bank on a financing product that it says will make its pricey electric sedan accessible to more people.
Tesla, producer of the first fully electric sports car, said earlier this week it had its first profitable quarter ever in the first quarter thanks to stronger-than-expected sales of its Model S sedan, its second car model which is substantially cheaper than the first.
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Tesla's partner banks have agreed to provide 10 percent down financing for purchases of the Model S, the company said in a statement. The vehicle's price starts at $62,400 after a $7,500 federal tax credit.
"This is going to fundamentally improve the affordability of the car," Tesla Chief Executive Elon Musk said on a conference call to discuss the announcement.
The offering combines ownership with the advantages of a traditional lease, Tesla said. Buyers will still be able to utilize federal and state tax credits available to electric vehicles. Those would not be available to a traditional lease.
After 36 months, the customer has the right to sell the vehicle to Tesla at a residual value percentage equal to that of the Mercedes S class of sedans. There is no obligation to sell, however.
If customers elect to keep the car, it would be paid off after 66 months, Musk said.
Musk, who is worth an estimated $2.7 billion, said he is personally guaranteeing the resale value of the car.
"I will stand by the residual value if Tesla cannot," he said on the call with reporters. "With all the value of the assets I have at my disposal."
Musk's guarantee is intended to give peace of mind to customers who may be skittish about the future of an electric car company, he said.
Musk had been teasing the announcement on Twitter for the last week.
"Am going to put my money where my mouth is in v major way," he tweeted on March 25.
(Reporting By Nichola Groom; Editing by Gary Hill and Andrew Hay)