For some, leasing a car is a good idea. It allows access to a car that otherwise might have been unaffordable, even if it is essentially little more than a long-term rental agreement. Electric vehicle giant Tesla (TSLA) is no exception, but there may be fewer lessees coming to the market soon. Tesla is warning that huge new lease prices will hit with the end of this month. But Tesla investors welcomed the news, sending Tesla shares surging nearly 4% in Monday afternoon’s trading.
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Tesla has been eagerly attempting to sell cars over the last few weeks. As reports suggest, offering deals on vehicle leases was no exception. But with December’s end, those deals are about to vanish, and in their place leave some huge new price tags. Early reports suggest price increases as high as 67% in some cases will hit the market.
One key example is the Model 3. The current lease arrangement is for $299 a month, which is doable by nearly any standard. There is also a $1,500 down payment involved. However, the Model 3 Premium RWD will increase to $499 per month with $3,000 down, which doubles the down payment and increases the lease rate by 67%. Price hikes will hit all over, though perhaps not so pronounced. The Premium AWD will go from $449 a month with $1,500 down to $549 a month with $3,000 down, which is a 22% increase.
Grok a Bad Idea When You See It
Tesla’s plan to include the Grok AI system in its cars, meanwhile, is also being considered a bad idea on some fronts. While an AI assistant can certainly do some exciting things, like offer mapping information or impromptu suggestions for places to eat and things to do, it also has an unfortunate tendency: hallucination.
An AI hallucination is when AI delivers inaccurate information. While that is the kind of thing that can be embarrassing, it can also be a disaster in the making. One example featured an AI suggesting that users add glue to their pizza sauces to “help cheese stick better.” While the kind of use cases Grok would have while driving are a bit limited, and probably not that risky to drivers, it will be worth taking its suggestions with a grain of salt.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 12 Buys, 12 Holds, and nine Sells assigned in the past three months, as indicated by the graphic below. After a 0.88% rally in its share price over the past year, the average TSLA price target of $386.42 per share implies 19.02% downside risk.
