Finance issues for the Tesla Model 3

Finance issues for the Tesla Model 3

Elon, we have a problem….. Limited finance options for the new Model 3 are confounding Tesla customers.

Let’s not beat around the bush – The Tesla Model 3 is one of the most eagerly anticipated cars of all time. With over 500,000 deposits reputed to have been paid to Tesla (wordwide) since the car was revealed on March 31st 2016, it’s fair to say that people have been pretty excited to take delivery of Tesla’s BMW “3-Series rival”.

Priced from £38,050 in the UK, the base model Standard Range Plus is less expensive, faster and of course greener than BMW’s 330e MSport. It is also well equipped and has had rave reviews from all corners of the UK’s automotive press. It’s spacious, drives and handles really well and has a range of around 260 miles – more than enough for the average motorist. The Model 3 Performance gives buyers supercar levels of acceleration and even more kit and a 330-mile range for £48,950. A game-changer? We’ll let you be the judge of that….

Little wonder then that Model 3 fans got pretty excited when Tesla opened up online ordering on 1st May 2019 with the first deliveries expected in June. As far as we can tell from the activity on our online car finance calculator – over 600 people have configured finance for a Model 3 on our website in the first two weeks of June alone – demand is high.  But there’s a problem  – suitable finance options.

With over 80% of new cars now being purchased using finance, most private users will opt for a Personal Contract Purchase – but despite offering this facility for the Model S and Model X, Tesla isn’t offering PCP for the Model 3.

Like many of those who have placed a deposit on the Model 3, you are probably asking yourself why – here’s the reason.


Uncertainty has become a bye-word for Tesla’s fortunes – despite selling over 600,000 vehicles worldwide since 2015 –  and much of it stems from the words and actions of CEO Elon Musk. His role as a serial entrepreneur and disruptor are inextricably linked with the brand, and the uncertainty around the viability of the business has trickled down to affect customers in the UK. Musk & Tesla’s ability and propensity to change things fast and decisively – one of the qualities that makes them appealing to many customers – also has its downside.

Tesla had previously advertised a PCP facility in the UK which has since been withdrawn, much to the chagrin of those who were planning to take one out. This appears to have been due to concerns from their finance partners over being over-exposed should Tesla’s apparent financial woes get the better of them. This was compounded by Tesla realigning the ranges and slashing prices on Model S and Model X by up to £50,000 in March. Since then all other lenders that we are aware of who were planning to offer personal contract purchase facilities on the Model 3 have suspended them, no doubt in part due to the perceived downward pressure on residuals caused by dramatic price cuts. Underwriters like stability, not uncertainty.

I have a Model 3 on order – what are my finance options?

In the absence of a  PCP product for Model 3, many prospective owners are choosing more traditional hire purchase facilities to fund their new cars – particularly those with a final balloon payment. The latter is similar to a PCP and whilst the facility to hand the car back at the end of the agreement is not available, buyers can set a sensible final balloon payment to lower their monthly payments and ensure that they are in a positive equity position when the time comes to change their car.

Will PCP become available on Model 3?

We expect the landscape to change over the next few months as lenders assess the situation and respond to the pent up demand for personal contract purchase agreements. From our perspective, we believe that even in the worst case business scenario Tesla’s know-how, stock and infrastructure would be attractive to other manufacturers and that the business would continue to trade. We also believe that Tesla residuals will remain strong  – as they have over the last two years – so how great is the risk, really?

For those reasons, we have made providing a suitable PCP product a priority – watch this space. Try our online finance calculator to get an idea of figures or call and speak to our finance team for a bespoke quotation.