As a Tesla enthusiast, one tough decision you’ll have to make is whether to buy or lease a car. Your budget and lifestyle will certainly influence your decision. Tesla EVs are increasingly popular due to their advanced technology, futuristic design, and zero emissions. Leasing is now a popular option, but is leasing a Tesla worth it? Is owning a Tesla the better option? Leasing and owning a Tesla are two paths to getting behind the wheel of this luxurious electric vehicle. While both have advantages, you need to consider their differences before making a decision. Let’s look at the pros and cons of leasing and owning a Tesla, associated costs, tax incentives, long-term commitments, and more.
Leasing a Tesla vs. Buying a Tesla: Side by Side Comparision
| Buying a Tesla | Leasing a Tesla | |
|---|---|---|
| What it means | Buyer has full rights to the EV for life | Lessee has limited rights to the EV, and for a specified period |
| Ownership | The buyer owns the vehicle after the completion of payments | The lessor retains ownership rights |
| Cost of acquisition | Higher monthly installment | Lower monthly installment |
| Security deposit | A high initial amount of deposit required | No security deposit required |
| Mileage limits/restrictions | No mileage limits | Has annual mileage limits |
| Additional fees | Taxes and registration fees | None |
| Trade-in | It’s not as easy to trade in your Tesla for newer models | Higher flexibility to trade in and exchange the vehicle for newer models |
| Customization | Yes, you can easily customize | Allowed but requires owner’s authorization |
| Tax incentives | A federal tax credit of up to $7,500 for buying a new Tesla | $1,500 for the lease of a new Tesla |
Leasing a Tesla vs. Buying a Tesla: What’s the Difference?
Owning a Tesla grants you exclusive ownership of the car and all its features. On the other hand, leasing provides you with temporary access to the vehicle for a predetermined period, with limited access to certain features.
Ownership Cost
When buying a Tesla, the most significant expense is the car’s initial purchase price. Tesla models typically cost more than other vehicles, which can be a significant hurdle for many people. However, several financing options from dealerships or banks are available to help offset the upfront cost.
You also need to keep in mind the costs associated with owning a Tesla. This includes taxes, registration fees, and maintenance. While fees vary from state to state, they can add up over time, making owning a Tesla really expensive.
Will you be charging your Tesla at home? Tesla recommends installing a wall connector to charge your car, which can cost anywhere from $400 – $1,000, depending on the type of connection you need. Additionally, monthly electricity bills may go up if you drive your Tesla regularly. If you’re leasing and decide to pay for your lease upfront, you will avoid extra fees such as sales tax or dealer markups. In some cases, you could save thousands throughout the lease period. Some companies even offer discounts for signing multiple leases with them simultaneously.
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Terms for Buying and Leasing
Leasing a Tesla is an affordable and convenient way to drive this luxury EV, although this option has yet to be available in all states. If you’re interested in leasing a Tesla, your application must be approved for a loan by Tesla.
Tesla auto loans typically have no minimum credit score requirements. However, customers with the highest credit scores (720+) qualify for financing with a lower APR. The cost and specifications of your Tesla depend on the features and options available when placing an order. Your car’s configuration also determines its purchase price. Taxes and official charges, which can add up to 10% or more of the vehicle’s purchase price, are excluded from a Tesla’s price.
Maintenance Costs
Leasing a Tesla offers an advantage over ownership in terms of maintenance costs. For starters, you’re only responsible for the routine maintenance costs during the lease term. These costs include oil changes, tire rotations, brake pad replacements, and other essential services.
Tesla repairs and maintenance can be costly due to expensive replacement parts and skilled technicians. You can spread out repair costs over a longer period (up to 8 years or 150,000 miles) by purchasing an extended warranty. When you lease a vehicle, on the other hand, you won’t have to worry about paying for repairs.
Insurance
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Lessees must insure their Tesla with Tesla Lease Trust as the lienholder and extra insured party. Tesla owners are obligated to carry insurance that provides at least:
- $50,000 of coverage for damage
- $100,000 for physical injury to one person
- $300,000 for any accident
- bodily injury insurance for the entire worth of the car,=
- Maximum deductible charge of $2,500
Resale Value
Comparing the resale value when leasing or owning a Tesla is challenging. With leasing, the higher resale value belongs to the lessor. If you wish to upgrade your vehicle in a few years, you may be liable to pay a termination fee to end your lease early and may not receive any money back.
On the other hand, when buying a Tesla, the vehicle’s resale value can vary significantly depending on the model, condition, and mileage. The older the model, the lower the value. Similarly, a Tesla with a higher mileage or one with any mechanical issues will have a lower resale value. Tesla owners can customize their cars, but selling them at a loss can be perilous. Investigate its resale value to maximize your return on investment if you decide to sell your Tesla. Leasing a Tesla may offer immediate financial benefits, but you may not recover the whole cost of upgrading your vehicle.
Tax Incentives
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There are tax incentives for leasing and owning an electric vehicle such as a Tesla. If you purchase a new Tesla, you may be eligible for a federal tax credit of up to $7,500, although it’s not easy. This tax credit is available for the full purchase price of the vehicle, not just the monthly lease payment.
Additionally, some states offer incentives, such as state tax credits or rebates, for purchasing an electric vehicle. If you decide to lease a Tesla, you can also take advantage of certain tax benefits. Many states offer tax incentives for leasing an electric vehicle. Also, if you’re leasing a car for your business, you can deduct the standard mileage rate for the commercial miles driven or claim actual expenses, including monthly lease payments.
While leasing a Tesla has certain tax benefits, the IRS does not offer special tax incentives. Potential tax incentives for both leasing and owning a Tesla do exist. However, it’s advisable to research and consult a qualified tax professional to determine if any tax incentives apply to your situation.
Customization
You are free to customize or modify your Tesla in both cases. However, if you’ve leased your Tesla, you must first get permission from the vehicle owner to avoid invalidating its warranty. If you own a Tesla, you can do wheel upgrades, window tinting, interior upgrades, and install vinyl graphics, and smoked tail lights.
Leasing vs. Owning a Tesla: 5 Must-Know Facts
- The cost of owning a Tesla is a bit lower compared with other EV models.
- Teslas are more fuel-efficient and require less maintenance than gas-powered cars. Lessees won’t have the car for long, whereas owners avoid costly upkeep costs.
- The average cost of buying a new Tesla ranges from $42,990 (Model 3 Rear-Wheel Drive) to $109,990 (Model X Plaid), while leasing one costs anywhere from $334 per month for three years.
- Tesla offers both leasing and financing to buy in 41 states.
- Leasing a Tesla has an annual mileage limit of 10,000, 12,000, or 15,000 miles, depending on your budget.
Leasing vs. Owning a Tesla: Pros & Cons
Is Buying a Tesla Worth It?
| Pros | Cons |
|---|---|
| Tax benefits (Up to a $7,500 rebate for buying a Tesla) | Much more expensive (higher monthly payments and registration fees) |
| You have full rights to the vehicle | Higher long-term maintenance costs |
| Freedom to customize vehicle freely | It’s not easy to upgrade to newer models |
| Freedom to move anywhere |
Is Leasing a Tesla Worth It?
| Pros | Cons |
|---|---|
| Highly affordable (cheaper monthly payments) | Limited driving range per year (10,000, 12,000, and 15,000 Miles) |
| Comes with the option to upgrade to newer models | Limited customization options |
| No security deposit required | |
| Lower long-term maintenance costs | |
| 1,500 tax incentive for leasing a new Tesla | |
| No tax and registration fees |
Leasing vs. Owning a Tesla: Which is the Better Option?
The decision to lease or own a Tesla requires careful thought. While weighing between buying and renting, it’s essential to consider all of the associated costs. Go the leasing route if you’re on a budget but would love to sit on this comfy, low-maintenance EV. Besides, this option offers more flexibility in trading in your current model for newer ones. If you prefer owning your EV and want the freedom of customizing your ride or no restrictions on annual mileage, buying a Tesla is the better option.
