(New York, NY) Tesla Motors is trying to reinvent the auto incentive business by adding a guaranteed buyback program to its cars. “Yes, this has been done before, however there is a new and interesting twist to Tesla’s offer!” commented Steve Picarillo, Principal at SJP Financial Advisory. Tesla CEO Elon Musk announced that he would personally guarantee a buyback for his Tesla cars under an innovative payment arrangement, even if the company were to go out of business. In an effort to make Tesla cars more affordable, Mr. Musk will personally pay the percentage difference between a Tesla model S sedan depreciation at the end of the threeyear period and the depreciation over the same timeframe of a Mercedes-Benz S class sedan. The new financing arrangement is important because the cost of batteries and the technology in the electric cars, which have resulted in lofty price tags. Indeed, currently the cheapest model is pricey at $69,900, before rebates plus a $990 delivery charge. Tesla says it is working with two large banks on a “lease to own” type arrangement. Under the proposed financing deal, buyers of the electric car can opt not to make a down payment, which will be replaced by the owners’ $7,500 government electric car tax credit incentive plus any other state credits. “The company estimates that the net cost of owning this sleek car will likely be between $500 and $600 per month. Nice!” commented the New York based Steve Picarillo, who is also the lead analyst at Creative Advisory Group, Inc. “Well that all sounds enticing!” Mr. Picarillo continued, “Yet the most interesting part is, after three years, the owner can sell the car back to Tesla, if they don't want to keep it. And Tesla will guarantee the return price”. The buy back price will be based on the rate of depreciation to the Mercedes-Benz S550 luxury sedan. As stated earlier, Mr. Musk will personally guarantee this and has “put his money where his mouth is” even if Tesla was to fail. There is no hint of company trouble at Tesla, which said this week it expects to show a first-quarter profit. “To me, this interesting proposal will do what it is designed to do. It will persuade me to hunt out a Tesla dealer, test the vehicle and give serious consideration to a Tesla (assuming I like the product). Certainly, it looks very cost-effective. Bravo Tesla and Mr. Musk!” Mr. Picarillo concluded. Steve Picarillo is an internationally known financial analyst and author. Steve has spent most of his career on “Wall Street” as a lead analyst covering global financial institutions. Mr. Picarillo recently launched several businesses, including consulting services to large financial institutions and a cost savings consulting service designing cost savings solution for small and mid-sized companies. Steve is also a branding expert, motivational speaker and an expert on the global economic environment.
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