Tesla's 2025 sales started out slow. A new lease deal could change that.
Tesla is looking to sell more cars in the second quarter after a difficult start to the year.
A new lease it is offering should help. It's a pretty good deal.
Tesla is offering a long range rear wheel drive Model 3 for $349 a month for 24 months with no money down. That's pretty good considering the average new car payment is roughly $750 a month, according to data provider Edmunds.
The deal is new. It wasn't on the website a few days ago. Tesla didn't respond to a request for comment about when it went live.
Auto makers always offer deals in the form of cash back, subsidized leases, or below market interest rates. The average incentive amounted to about 7% of transaction prices in March, according to Kelly Blue Book. The average EV incentive amounted to 13% of the transaction price. It takes a little extra to get drivers in a battery-powered car. (That is an industrywide number, not specifically for Tesla.)
Tesla sold about 337,000 cars in the first quarter, down 13% from the same time a year ago. It was the worst quarterly drop in the company's history. Elon Musk's position in the Trump administration turned off some buyers. Even the company mentioned brand damage on its first-quarter earnings conference call. An upgrade to the Model Y was also responsible for some of the decline. Buyers typically wait for new models.
Investors are looking for any evidence of a recovery. Slower declines, paradoxically, offer some hope. Tesla's European sales fell 28% in March from a year earlier. That was actually an improvement from February and January, when sales were down 43% year to date.
Eventually investors want to see positive numbers.
Whatever the causes, Tesla is looking to rebound. Wall Street projects some 410,000 vehicles sold in the second quarter, according to FactSet. The increase is despite tariffs and trade wars increasing prices for consumers.
In Canada, a Model Y now costs about $85,000. That's up about $11,000 from 2024. Tesla's Canadian website still lets buyers search for inventory that was available there before Canada put retaliatory tariffs on cars imported from the U.S., which was a response to President Donald Trump's tariffs on cars imported to the U.S.
New cars coming into the U.S. face a tariff of 25%. Imported parts face a 25% tariff beginning in May.
It won't be easy to grow and grow profitably amid tariffs, trade wars, and weakening consumer confidence. Tesla reported a first-quarter operating profit of $399 million in the first quarter. Regulatory credit sales amounted to $595 million.
Tesla earns credits by producing more than its fair share of zero emissions vehicles, so it sells credits to other auto makers that are looking to avoid fines. Still, it was the first quarter that credit sales exceeded net income since the second quarter of 2020. Since then, Tesla has sold $9.2 billion in credits amounting to almost 25% of reported operating income.
Coming into Monday trading, Tesla stock was down 29% so far this year, about 23 percentage points behind the S&P 500.
Write to Al Root at allen.root@dowjones.com
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