Tesla is offering discounts to European fleet purchasers as part of a damage-control effort
LONDON (Reuters) — Tesla is striving to placate several European leasing companies following repeated retail price cuts that have depreciated their fleets' value and slow service and costly repairs that have frustrated their corporate clients.
According to Reuters' interviews with nine executives from leading leasing and rental car firms, as well as about a dozen corporate fleet managers, Tesla's efforts include offering unofficial discounts on in-stock new car purchases and addressing widespread complaints about service, repairs, and ordering. This comes after years in which fleet managers and leasing firms say Tesla has neglected these issues.
Tesla's reductions in retail prices were intended to boost sales in the face of declining global demand for electric vehicles and increased competition, particularly from Chinese EV manufacturers like BYD. However, this strategy adversely affected the profitability of its largest customers in Europe, where fleet purchases account for nearly half of all car sales.
Tesla's new Model 3 sedan showcased at a trade fair in Beijing in September. REUTERS/Florence Lo (Reuters)
Leasing companies purchase new cars and set up lease agreements based on their estimates of the vehicles' resale values at the end of the lease term. When prices drop suddenly, these projected residual values decrease, leading to financial losses for the leasing firms.
"There’s nothing worse than the continuous depreciation of a fleet buyer’s assets," stated Richard Knubben, the director general of Leaseurope, a Brussels-based industry group representing leasing and rental organizations across 31 countries.
"Tesla is now approaching our members with offers of discounts and compensation," Knubben mentioned. "However, the residual values of Tesla vehicles have fallen so rapidly that it's uncertain whether the discounts they're providing are sufficient."
Leasing companies purchase new cars and set up lease agreements based on their estimates of the vehicles' resale values at the end of the lease term. When prices drop suddenly, these projected residual values decrease, leading to financial losses for the leasing firms.
"There’s nothing worse than the continuous depreciation of a fleet buyer’s assets," stated Richard Knubben, the director general of Leaseurope, a Brussels-based industry group representing leasing and rental organizations across 31 countries.
"Tesla is now approaching our members with offers of discounts and compensation," Knubben mentioned. "However, the residual values of Tesla vehicles have fallen so rapidly that it's uncertain whether the discounts they're providing are sufficient."