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Tesla Model 3 ‘Too Good’ lease at $299 makes it competitive with Honda Civic despite lower price

Tesla is offering strangely cheap leases on its Model 3, essentially creating a cheap car that’s available now and offering one of the best deals on the market, according to a veteran auto market observer and entrepreneur.

The 2024 rear-wheel drive Tesla Model 3 is available now – starting Sunday, May 5 – with a lease amount of $299 per month, excluding taxes and fees.

“This is their way of creating a $30,000 car today. This is a way for them to effectively enter the lower-priced car market,” Pat Ryan, founder and CEO of CoPilot, an AI-enabled car shopping app that debuted in 2018, said in a phone interview.

Ryan made the following comparison with lease deals for the Honda Civic Sport:

  • For example, the Model 3’s current lease terms are very similar to those of the Honda Civic Sport, which currently has a list price of $25,500. (compared to $38,990 for Model 3)
  • Still, monthly payments are very similar: $257 for the Civic Sport, compared to $299 for Model 3 and the down payments are exactly the same: $2,999

Model 3 deal too good, makes no sense: Ryan says the lease deal is so good that he has some “suspicions” about why Tesla is doing this. “By far the best deal on the market is the Tesla Model 3. By far. It’s the kind of deal that’s so good it doesn’t make sense,” he said. “This is the first lease agreement in a long time in which you cannot buy out the car at the end of the lease period. (Tesla has) some kind of assumption that this Model 3 is going to be worth more at the end of the lease than it should be,” he said.

Robotaxi ready: Tesla may be laying the groundwork for the Robotaxi, which could explain the highly competitive leasing deal. “They’re subsidizing this somehow” in preparation for Robotaxi, Ryan said. Tesla is essentially saying, “we’re going to make our lease deal twice as good as our purchase deal, but you have to give us our car back. Which could (suggest) they want it for the Robotaxi,” he said.

Model 2 on the horizon? Tesla’s existing models are starting to get “long in the tooth,” Ryan says. So the company needs something new. “It’s clearly a new model,” he said, referring to the Model 2, a nickname given to Tesla’s next-generation affordable car. “That’s why it’s so hard,” Ryan said. “If you’re just updating the Model 3, it’s pretty easy.” But there’s a lot more to a brand new car, he said. “It’s an extremely aggressive timeline. If they’re talking about a $25,000 car, their cheapest car right now is a $39,000 purchase,” Ryan said. According to Ryan, a lot of efficiency can be achieved from a new production process. CEO Elon Musk described future “new vehicles” that will “use aspects of the next-generation platform as well as aspects of our current platforms” during the company’s first-quarter earnings conference call on April 23.