Should You Buy vs. Lease a Tesla?

Many people choose to lease a Tesla to experiment with how it integrates into their daily lives. Even a short-term car lease can help lessees determine if driving an electric vehicle is viable for their lifestyle. Leases are a great way to rent a car for an extended period to see if you like driving it.

The cost of the leased vehicle and the expected value once your lease comes to term determine your monthly payment. Tesla leases typically include gap insurance. Since Teslas don’t require the type of maintenance that gas vehicles do, you can typically return to the dealer for any issues. 

Depending on the leasing agent you choose, your lease terms will vary. Tesla does not publish its minimum credit score requirements. However, Tesla offers lease terms of 24 and 36 months, depending on your chosen model. Most Model 3 and Model Y variants come with 36-month terms, while you can lease Model S and X variants for 24 or 36 months. 

If you’re wondering if you should lease and then buy a Tesla, your decision-making process may be short-lived. Tesla mandates that any vehicles delivered after April 15, 2022, are not eligible for purchase. Teslas continue to hold value, meaning dealerships can take returned leases and turn around and sell them for a profit. 

Given the accelerated rate of electric vehicle technological developments, many wonder if now is a good time to buy an electric vehicle. Indeed, learning about the differences between hybrid versus electric vehicles and how to choose between them can be difficult for most people. 

Teslas are known for having superior range and performance. You can also choose between affordable variants like the Model 3 and more expensive ones such as the Model Y. Tesla may not have as many models available as other brands, but the brand continues to develop its inventory. 

You can purchase a new Tesla from a local dealership (if you can find one nearby) or through Tesla’s website. Use Tesla Design Studio to build your perfect car, but budget around 12 weeks for delivery and an extra $2,000 for the optional Autopilot feature. 

Tesla offers financing with no prepayment penalties. You can also obtain third-party financing for your new Tesla. However, Tesla requires you to take delivery in approved states only. Depending on what terms you qualify for, you can finance for anywhere from 36 to 72 months. 

Each Tesla comes with a federally mandated 8-year or 100,000-mile warranty for the electric battery. Tesla also throws in a 4-year, 50,000-mile warranty. 

Purchasing a Tesla requires locating a nearby charging station (such as a Supercharger) or installing one in your home. Most people set aside around $1,000 to install a charging station due to the associated electrician costs. Owning a Tesla requires that you plan your trips to ensure you have enough range or access to a charging station along the way.  

If you’re considering leasing a Tesla, it’s important to weigh the pros and cons. Here are a few major advantages and disadvantages of leasing a Tesla. 

Pros 

You’re not locked into purchasing the Tesla 

Most lease terms last up to 3 years. If you don’t like your Tesla or want to explore other (EV) options, you can return the car at the end of the lease without any further obligations. 

You can avoid a potential sharp loss in value 

The EV market continues to thrive. Teslas may continue to hold value as technology progresses or drop sharply in price as technology reaches the next tier and current EVs become obsolete. 

You aren’t responsible for potential battery and maintenance issues down the road 

Electric vehicle technology can be complex and expensive if something goes wrong. With a lease, you’re not left holding the bag. 

You have the freedom and flexibility to switch cars after the lease is up 

Whether it’s the model itself or a small detail like color, if you don’t like something about your Tesla, you can turn it in at the end of your lease. You then have the chance to lease or purchase any other car you want. 

Cons

Tesla lease terms can be restrictive 

You cannot use a leased Tesla for rideshare programs like Uber or Lyft. Tesla also doesn’t offer leases in every state. Since inventory can run low, Tesla may not offer many leasing deals depending on the economic and industry climate. 

Mileage is limited to between 10K and 15K miles 

One of the biggest leasing questions to ask before leasing a car is how many miles you’re allowed. With most basic lease deals, Tesla offers 10,000 miles annually, but you can increase that to 12,000 or 15,000 miles with an additional upcharge. 

Transferring or terminating the lease can get complicated

Teslas approves lease transfers if you have more than 13 payments left. However, transfer fees can be high, given Tesla actually grants the transfer. If you terminate the lease, your credit score and wallet can suffer.  

Tesla may not pass the tax incentive savings on to its leasing customers

EV owners are eligible for the Federal Electric Car Tax Credit, which is a $7,500 potential value. Lessees may be eligible for $1,500 of this rebate, given the dealer passes those savings on. 

Leases favor those with high credit scores 

Many dealerships offer favorable lease terms to those with high credit scores. Loyalty discounts may also apply.

It can be exciting to consider purchasing a Tesla. But with the advanced technology within these vehicles, it’s wise to research the pros and cons of owning a Tesla before you sign on the dotted line.

Pros 

Teslas have a lower depreciation rate than gas-powered vehicles

With a relatively limited inventory and high popularity, Teslas continue to hold their value compared to gas-powered variants. Expensive batteries and electrical components aside, Teslas are relatively affordable to own. 

You own the car outright after you pay off the loan 

Once you own the vehicle, you can customize and use it however you want. You can also trade it in or sell it. 

You receive the full value of the Federal Electric Car Tax Credit 

Federal tax rebates up to $7,500 from the Federal Electric Car Tax Credit can knock quite a bit of the final price off purchasing your new Tesla. In addition, state incentives can increase your savings depending on where you live. 

You exchange fossil fuel costs for a higher electric bill 

Gas prices are several dollars per gallon, whereas charging a Tesla typically costs less than $1 per kilowatt hour.  

You can put as many miles on your Tesla as you want 

Financed deals and outright ownership do not restrict mileage like leases do. 

Cons

Used Teslas can be hard to find

Major turnaround in the Tesla market continues, but there are only so many on the road. 

The future value of Teslas is uncertain 

The company continues to develop its lineup. However, the fickle technology of tomorrow could dissolve Tesla’s values with the next latest-and-greatest model. 

Tesla batteries and range degrade over time 

Batteries don’t last forever, and neither will your Tesla. Scrapping or recycling a Tesla can be more trouble than it’s worth. 

Post-warranty issues are your financial responsibility 

Maintenance costs for a Tesla are few, at least initially. Anything that goes wrong outside of the warranty could have you paying a large portion of your Tesla’s final price in repairs. 

Finding a qualified and knowledgeable mechanic can be difficult 

Very few mechanics are certified or knowledgeable in troubleshooting and diagnosing issues with a Tesla, let alone most EVs. 

The discussion of leasing or buying a Tesla boils down to a few key factors: your personal preferences, car ownership goals, and confidence in the electric vehicle market. 

Many people purchase a Tesla because it offers fuel savings for the vehicle's life. They can customize and do whatever they want with the Tesla without worrying about extra mileage penalties. Plus, the automotive landscape seemingly supports the longevity of the EV market. 

However, those who lease a Tesla may need further convincing of this vehicle’s viability. They may need contextual support to determine if EVs are here to stay and, more importantly, worth the investment. They may also “test drive” the Tesla for a few years to lease or purchase another EV from a separate brand (such as Chevrolet, Volvo, or Volkswagen).