Tesla Sweetens the Deal for Potential Customers

Tesla Motors (NASDAQ: TSLA  ) is giving drivers more reasons to buy its all-electric vehicles. On a conference call Friday, Tesla CEO Elon Musk said that the company is increasing the resale value guarantee to be the highest of any premium car brand. This means if you finance the car with Tesla, the company will buy back your Model S after three years for at least 50% of what you originally paid.

Tesla CEO Elon Musk referenced the logic behind this by saying, "If we really believe we're making the best car than it should have the best resale value". Moreover, the "best value guarantee" is personally backed by Musk himself. That's a bold move, even for Musk.

For Tesla owners, this announcement protects the long-term value of the product. For would-be owners, the amended financing plan makes the roughly $70,000 Model S price tag more palatable. Whether or not these changes lead to a meaningful increase in demand for Tesla remains to be seen. However, if nothing else, Tesla proved it could use criticism to its benefit.

Tesla first announced the financing program last month to wide criticism. Instead of sticking to his original plan, Musk revised the finance offering to include a 72-month-term loan up from just 63 months, and a significant increase in the resale value of the Model S. Musk even went as far as to say, "When we did our first financing announcement about a month ago, we didn't get it quite right. We received a lot of valid criticism, and we've tried to make it a lot better."

As an investor and Tesla shareholder, I value Musk's honesty and eagerness to fix the problem.

The road ahead for Tesla
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  • Report this Comment On May 06, 2013, at 1:30 PM, Decoy0527 wrote:

    Tesla is either "breaking the mold" or getting more and more weird. It's in the eye of the beholder. I hope Musk succeeds, but I think he is way out on a limb, especially with personal guarantees.

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