Tesla doing damage-control, discounts for European fleet buyers

Tesla is working to appease some European leasing companies after the automaker’s repeated retail price cuts tanked their fleets’ value and its slow service and expensive repairs alienated their corporate customers.

The efforts include unofficial discounts on purchases of new cars if they are in stock and efforts to address widespread service, repair and ordering complaints after years in which fleet managers and leasing firms say Tesla has ignored those problems, according to Reuters interviews with nine executives from major leasing and rental-car firms, along with about a dozen corporate fleet managers.

Tesla’s (TSLA.O), opens new tab retail price cuts aimed to bolster sales in response to softening electric-vehicle demand globally and rising competition, especially from Chinese EV makers such as BYD (002594.SZ), opens new tab. But that damaged the bottom lines of its biggest customers in Europe — where fleet purchases represent nearly half of auto sales.

Leasing companies buy new cars and arrange leases calculated on how much they believe they can sell them for at the end of the lease. Sudden drops in price undercut those residual values, costing leasing firms money.

There’s “nothing worse” than continuously dropping the value of a fleet buyer’s assets, said Richard Knubben, director general of Brussels-based Leaseurope, a leasing- and rental-industry group which represents national groups across 31 countries.

“Tesla is now actively telling our members: We can give you discounts and compensate you,” Knubben said. “But Tesla’s residuals have dropped so fast, I’m not sure the discounts they’re offering are enough.”

God Bless You and Your Families!

Love,