Tesla lessors pay for depreciation the same way owners do, but the lease is effectively bundled in with a 6% APR loan, which is a lot worse than people with good credit would pay for a new car auto loan.
Except that they charge you for all of the depreciation plus a rental fee. The dealer/manufacturer ends up with an asset that is more valuable than the price they paid for it less the money they've received for it through the terms of the lease.
Further, it doesn’t matter. I don’t care if the manufacturer makes or loses money. I only care about maximizing utility per dollar.
Also because lease terms are complex they can stack with other promotions or incentives and allow for leases lower than the cost of ownership would have been otherwise. There is a whole lease community dedicated to finding these crazy deals but they wouldn’t be something you could do by just walking into a random dealer.
You certainly are, in most places, if you crash it into something. This wasn't a failure of the manufacturer's materials or workmanship, it was a collision loss.
Making subassemblies replaceable in part rather than in whole is definitely a bonus. When they're only replaceable in whole, I do consider it deficient engineering, especially if a small change would make it possible.
An example from motorbikes: I would never buy a Triumph Tiger 800 because the rear subframe is welded to the rest of the frame. Any drop which causes a bend in the rear subframe - easily enough done since the passenger footpegs and exhaust are attached to it - would require replacing the whole frame to fix. In most high performance bikes, the rear subframe is bolted on.
Although if we're just talking plain-english and not legalese, I'd say that your assertion is a stretch: that colliding with debris is not a "collision".
And yes, Tesla repairability is poor. That's kind of what you can expect to get when you prioritize time-to-market above anything else. I like to buy old motorcycles that don't have any parts availability and everything has to be custom done... but I wouldn't do that with my daily driver.
I also think insurance is a bit of a red herring here. You wouldn't claim on insurance for a flat tyre either; some things are just bad luck. It's the quality of engineering - what I do think is on topic - which controls the risk.
This I would say is more of design oversight on tesla’s part. At the very least there should have been a shroud or cover over more vulnerable parts.
The insurance that covers such an event is literally called collison insurance.
For posterity: https://www.investopedia.com/terms/c/collision-insurance.asp
> ... it will cover damage from potholes, and accidents involving an inanimate object.
In the rental space, collision damage waivers - CDWs - explicitly don't cover undercarriage, wheels, windshields and so on, the kind of damage we're talking about here.
https://www.aviva.co.uk/insurance/motor/car-insurance/what-a...
https://www.avis.com/en/help/usa-faqs/cdw-insurance
https://www.avis.com/en/products-and-services/protections/lo...
Well the other night some asshole decided to pac-man all the cones on the highway late at night so we had to navigate a field of almost impossible to see cones (the borders are black and there were no lights up). Several cars, including mine ended up running over a few. I got lucky as it just messed up my paint a bit on the front bumper and I lost a license plate. Two other vehicles crashed over it, really sucked.
Called Geico when I got home and was informed I don't have collision coverage. They told me for this I would have needed comprehensive coverage and collision coverage.
Well joke's on them, my renewal is this month and I'm bouncing. I'd rather find another company that won't weasel out on me. When I signed up I said I wanted to be covered no matter what. I pay enough monthly I should be.
Forcing nsurance (health and renters, cars,etc) should be illegal,it doesn't work as it should. It ends up being a tax we pay to still have to pay out of pocket no matter what.
I am fairly certain that it would be illegal for an agent to sell that to you without clarifying.
Funny enough, one of the first articles to pop up in a search for this is from Geico: https://www.geico.com/information/aboutinsurance/auto/full-c...
I have a feeling the rats are collaborating on price.
What's your alternative to mandatory liability insurance, given that there are drivers with much greater liability risk than others?
As another reply to me mentioned, 'full-coverage' should be just that. The US allows so much lies I believe nothing, our gov't lies ,ads lie, politicians lie,police lie,lawyers...well
You'd also need some new framework for dealing with high-risk drivers - e.g. instead of increasing the insurance cost for someone with a DUI conviction, you'd need to simply take away their ability to drive.
There also exist numerous jurisdictions with publicly provided insurance, e.g. https://en.wikipedia.org/wiki/Insurance_Corporation_of_Briti...
Definition of collide
intransitive verb 1 : to come together with solid or direct impact
https://www.merriam-webster.com/dictionary/collide
Its a stretch to describe road debris coming together with solid impact to the undercarriage a collision?
Relying on the dictionary alone can mislead you.
Here's the pertinent definition from my policy (USAA specifically):
"Collision" means the impact with an object and includes upset of a vehicle. Loss caused by the following is covered under Comprehensive Coverage and is not considered collision: fire; missiles or falling objects; hail, water or flood; malicious mischief or vandalism; theft or larceny; riot or civil commotion; explosion orearthquake; contact with bird or animal; windstorm; or breakage of window glassThe person I was replying to wasn't referencing any particular contract. They were just speaking generally about hitting road debris being a stretch to define as a collision.
> It's a stretch to describe road debris hitting the undercarriage of a car a "collision".
Seeing as how neither I nor he referenced any particular insurance contract, why would we then bother to use your insurance contract to define the term instead of probably the one shared point between us to define the term (the dictionary)? Why not reference a contract I'll sign with a friend where for the purposes of the contract a collision is defined only as a 5 foot person running into a blue colored wall. I guess a car slamming into a wall isn't a collision anymore since this one contract defines it a different arbitrary way!
> bird or animal
I want to know the background behind why some lawyer found that necessary. :)
Now insurance certainly can exclude things that are collisions. A common on in the US are animal collisions like deer ect...
While I am on the side of right to repair I don't see how this is that relevant to the issue. It seems like more of an issue with insurance/rental laws, transparency in legal agreements, tesla's pricing & service being a bad deal, and possibly negligence on the renter's behalf. I don't think that any company should be allowed to hold a renter liable unless it's proven they damaged the property on purpose. Usually there are a lot of protections in place for renters so it's possible tesla is breaking the law or the renter accepted some liability attempting to save money.
Rentals and shared ownership situations are always messy anyways... A lot of this just reminds me of: "My condo HOA decided to hire the most expensive roof repair company in town!! Why can't we just pour some cheap tar across the roof and call it good for a few more years?!?!"
An other possible reason would be you don't have enough money on hand at the moment the issue was discovered giving you a few months to set asside enough money. Similar, thing the contractors schedule is packed so a quick temp repair can hold you off while you wait the week or two for his crew to begin work. An other similar issue is waiting on materials if your roof uses a material that is not locally stocked.
Tar also has a nasty problem of becoming brittle from UV light something roofs get plenty of. So instead of flexing under thermal expansion and contraction it just cracks. So its not ideal for anything but a temporary fix.
Now for choosing the most expensive contractor that is on your condo. Although they could have certainly been valid reasons.
If he has comprehensive at all then he almost certainly has collision coverage. It’s just that, then it’s $16k accident that’s he’s at fault for.
> "the owner's insurance policy didn't cover comprehensive claims from road debris"
My guess was that this would have been a comprehensive claim, but he didn't have that insurance plan. Could just be a deceptive play on words to evade the real issue...
Last I checked, the average age of cars in the US is 13 years. on average you are going to be better off buying.
The number of people who, after an item is paid of, go out and replace it immediately are the same people who are bad with money anyway, so it makes sense that those people think it's financially better to rent.
Of course both of those are moving targets to some extent.
Not in my experience. You either pay in depreciation or in maintenance, there is no escaping car expenses.
A 10 year depreciated car may need a timing belt/water pump, possible head gasket issues, possible transmission issues, etc.
And, in snow belt areas, you start to run into rust issues 15 or so years on.
A nice new BMW SUV is likely to depreciate 30k in 5 years, but that same car is extremely unlikely to need 30k of repairs if bought after 10 years and kept for another 5.
More critically you’re also paying dramatically more in sales and property taxes.
The electric water water pump alone was $2,000.00. $1,200.00 in parts and $800.00 in labor. This is basically a “maintenance” item. The car has less than 100k miles and is on the third pump.
The electric pump is great from a performance/efficiency perspective because the car can make choices about coolant temp irrespective of engine speed. It's a horrible device from a reliability perspective though. I have already been stranded by it once.
My turbos are "fine". But I know they will fail in the next 30k miles. In talking to my mechanic the prices fluctuate quite a bit, so I am going to start keeping an eye out and just buy a pair to have on hand when mine finally let go.
The reality is BMWs just have a lot of stuff on them and so it is a numbers game. Things are going to break. Cars are a hostile environment. This is compounded by the fact that it is a BMW. I expect everything to work. If it was a used Corolla I may not complain as much about the seat mechanism not working perfectly every time.
Additionally BMW also expects the car to work perfectly and the car is eager to tell you any time something is abnormal. This creates something of an illusion of unreliability. An old Toyota also has a lot of problems, you just don't notice until you go looking.
And finally, dealers are predatory. They take advantage of the reputation of BMWs as expensive unreliable cars and sell unnecessary services, which perpetuates the expensive/unreliable reputation.
I'm also lucky enough to be trained in vehicle maintenance; The only service I've had done by professionally were recalls and when I didn't have garage available to do the expansion tank (and Pep Boys didn't have a supply chain, so I got my choice in parts)
Head gasket shouldn't be a problem if the pump and coolant are changed before they go bad.
Anecdotal source; bought a 7 year old bmw at 123k miles (timing chain is still good at 185k), clutch is still good, brake parts cost $250, shocks less than $500, a valve cover gasket and oil filter housing gasket. Coolant expansion tank has to be replaced every 5 years ($150). My 10 years, 180k miles has been a better experience than many friend's first 5 years.
Eventually starting over is cheaper, but that’s usually at 15+ years when facing a major repair.
Like any other depreciating asset, the renter charges the rentee(sp?) the depreciation anyway, plus a small profit.
You appear to be under the impression that renting is better; this cannot be correct. The rent for any asset is ($COST_OF_PRODUCT + $COST_OF_ADMIN + $PROFIT). How do you figure that it's cheaper to pay those additional costs than to buy?
You only rent if you want something temporarily and don't want to deal with the hassle of resale. For this convenience, you pay extra.
Except that it obviously can be correct by virtue of being a common financial construct. Your formula is meaningless to a person making a choice between buying a renting. There’s seller profit in both situations but it’s irrelevant to the purchaser. A fundamental assumption of our economic system is that value can be created in parallel with profit.
If I always want a car that is less than five years old then a lease is a great option. It’s a matter of what fulfills my needs for the least money. That could be buying or leasing depending on my needs.
In the early 2000s it was not unusual for leases on slow-selling models to have negative interest rates (and that's with a realistic residual), not sure if that is still the case today. I certainly don't ever remember seeing a negative interest rate on non-lease financing offers, not sure why.
Pushing those costs years into the future can be to my advantage. That argument applies to any loan.
Leasing also gives me the option to buy the car at the end of my term, so I can end up owning the car while deferring much of the up-front cost in exchange for interest payments.
It’s stuff like this that’s the real reason dealerships love leases. Their much more complex than a sale so the dealerships have far more options to screw people.
Close but it's a little more nuanced.
You lease a trendy car (4Runner or something) and they expect able to turn it around, detail it and sell it on their CPO lot for way to much money to someone who thinks they're being savvy by buying CPO. You wanna keep it then you gotta pay them the way too much money they'd otherwise make.
You lease a black sheep (say a Sentra, Chrysler 200, Focus or some other cheap lower end compact that there's gonna be a ton of with high miles in a few years) and the buyout will be minimal because they expect to make peanuts reselling it.
Your lease rate is based in part on their expectation of how much profit the car will get them at the end of your lease. Something with a low MSRP and customer base that drives the used value straight into the ground won't make them squat after cost of turning it around and selling it used. So in those case you pay much less on the buy out.
They loose more money but they make up for it in volume and get to book profits now and losses later (financial engineering).
I don’t think leasing a 4Runner ever makes financial sense unless you flip though cars every 2 years and live in a high sales tax state.
For example, if there is heavy tax on new cars, but no tax on cars over 6 months old, then you add more terms to your addition: + $DEPRECIATION - $EXTREME_TAX
They aren't on the hook for anything - those costs are billed to you in the standard lease so you're paying the cost of the vehicle, plus the cost of the expected maintenance, plus a profit for the bank.
Trust me, no bank is leasing assets at a loss.
You are replying to a counter argument to the claim that leases are always a bad idea.
If you're talking about a short-term rental to pootle around in for a while: they're on the hook for the car itself, because that's now a car they can't rent to someone else.
If they weren't on the hook for anything, there wouldn't be much of a business.
> I would read this as a cautionary tale against renting your cars. If you can’t buy it, don’t! This holds true for any depreciating asset.
If the asset depreciates what's the benefit in buying it? The fact that cars depreciate seems like the best reason to "rent" them. The manufacturer ends up dealing with the now less valuable asset.