Investors Underwhelmed by Tesla Announcement

Tesla Motors (TSLA) certainly is excited about the leasing program it introduced this week, which the company claims will help consumers pay just $471 a month for the electric Model S sedan, which has a starting retail price of $62,000.

Investors are somewhat less enthused—Tesla’s stock dropped 8 percent to $40.79 immediately after the financing plan was announced yesterday, closing at $41.05 as of 4PM on Wednesday. Some have called Tesla’s claim of super-low monthly payments bizarre, egregious and disingenuous.

Whether the actual numbers are true or false, most analysts believe the new program will do little to foster wider adoption of electric cars, which account for just 0.1 percent of all new car sales.

“At the end of the day, you’re still having to write a pretty sizeable check,” Alec Gutierrez, a senior analyst at KBB, told the Detroit News. “It’s certainly still out of reach for the everyday consumer.”

Beating the price of a Model S down to $500 per month requires some tricky leaps in math. It involves US Bank and Wells Fargo chipping in 10 percent of the down payment, taking full use of state and federal tax credits, pocketing the savings on gasoline and maintenance, and the guaranteed right to resell the car back to Tesla after 36 months.

After the unalloyed good news that Tesla is now selling 500 cars a month, news of the leasing program came as a letdown to investors, especially since many doubt the company’s financial logic.

“Our early analysis suggests that while the program is likely incrementally positive, it may perhaps not prove a game-changer in terms of demand,” Ryan Brinkman, a JPMorgan analyst, wrote in an investor note.

“We expect any increase in reservations based on this announcement to be minimal as $1,200 per month over 5.5 years still limits Tesla to an exclusive group of buyers,” said Ben Schuman, an analyst with Pacific Crest Securities.

The negative reviews are unlikely to change the forecasts of executives at General Motors, Toyota and Ford, all of whom  told the Financial Times recently that all-electric vehicles are likely to remain a small niche in the American market until battery technology becomes lighter and cheaper.

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