[TusharK]

The Tata Nexon EV is now available on a monthly subscription basis.

Customers can opt for 18, 24 or 36 months tenure, for which the monthly subscription rate (inclusive of taxes) is Rs. 47,900, Rs. 44,900 and Rs. 41,900 respectively.



The process of subscribing to the Tata Nexon EV has been completely digitalized. The subscription covers insurance, on call roadside assistance, free maintenance with periodic servicing and doorstep delivery. Besides this, customers will also get an EV charger installed at their home or office as per the convenience. Once the tenure of the subscription is over, customers have the option of extending it or can return the vehicle.

In the initial phase, the subscription service will be available in Delhi-NCR, Mumbai, Pune, Hyderabad and Bangalore.

The Nexon EV uses a 30.2 kWh lithium-ion battery that powers an electric motor which has an output of 127 BHP and 245 Nm. The company claims that the car can do a 0-100 km/h sprint in 9.9 seconds. The battery is said to have an ARAI-certified maximum range of over 312 km on a single charge (MIDC cycle). It has fast charging capability and can be charged to 80% of its capacity using a DC fast charger in 1 hour. Using a standard AC charger, it takes 8-9 hours to charge to 100%.

Link to Team-BHP News

[d3mon]

I am a finance noob, but can someone explain why Indian leasing options are so exorbitantly overpriced as compared to the US options? Is it just the interest rate difference or is something else going on here?

Tata wants 15 Lakh over 3 years, which is basically almost the full price of the car (100%)

Tesla will lease a Model 3 to you for $506 a month for 3 years with 0 downpayment. That's only $18K paid for a vehicle that costs about $39K to begin with (<50%).

[Tassem]

Another one with less than logical pricing. I've said this many times - Unless and until the lease amount over the lease period is lesser or equal to loss in depreciation if the car were fully owned, only a small percentage of buyers with very specific reasons would opt for it.

Reasons could include:

1. Specific remote assignment for a year or two where you want to have your own vehicle
2. Company leases
3. Too much money, too little sense
4. No money to buy/finance

Originally Posted by d3mon

I am a finance noob, but can someone explain why Indian leasing options are so exorbitantly overpriced as compared to the US options?

Excerpt from the below linked report:

"About 8% of Model 3 deliveries came via leasing in Q3 2019. In comparison, about 15% of Model S/X customers opted to lease their vehicles."

Original Report Here

It's all about economies of scale. In india, only a tiny tiny fraction of customers are attracted by lease currently. Maybe in a few years time, when a lot of customers opt for the lease route, we should start seeing sensible offers. However, for that, the prices have to drop.

There is also the very real possibility of theft, misuse, abuse etc that some people will subject the vehicles to simply because they don't own it and maintenance is covered.

Not to mention people who cannot afford the vehicle going the lease route and deciding to cross the bridge when it comes. Similar mentality exhibited by people opting for premium used vehicles because they get a 50L car for 10L. However, when you want to service it, it's still a 50L car. Only that in this case, the headache is the manufacturers'.

All bad for the manufacturer. So they'd want to cover all these bases with exorbitant pricing. Sensible? Yes, kinda.

Essentially the market is stuck between a rock and a hard place.

[punto_]

This is very expensive! I doubt anyone will be interested with this pricing. I was interested in Nexon EV subscription earlier, this pricing just killed it.

[sri_tesla]

As usual, all the leasing and subscription options continue to be very expensive in India, effectively killing the model at the launch itself.

• The variant available for the subscription is XZ+ which has ex-showroom price of Rs 15 lakhs. 36 month option costs 36 x 42000 = Rs 15.12 lakhs.

• Tata is saying the subscription covers road tax and registration. But there is no road tax for EVs in 3 out of the 5 cities listed (Mumbai, Pune, Bangalore). There is an additional Rs 1 lakh subsidy in Mumabi and Pune. In Delhi there is Rs 1.5 lakhs subsidy for EVs. Road tax waiver proposed but not sure of implementation in Delhi yet. Road tax for EVs is less in Hyderabad compared to petrol/diesel vehicles.

• The difference will be insurance for 3 years and interest amount for the loan. Maintenance for the initial 2-3 years for petrol vehicles itself will be very less. For EVs it will be even lower.

• Also, there is a limit of 18,000 kms per year.

I doubt there will be any takers for this at these exorbitant prices.

[sreeharipv]

At 40k, one should be able to rent without any commitment. I think zoomcar or similar outfits can do better.

[tinshark]

I’m not sure why they are wasting their time and money without a sound model. Do they expect to see ‘interest from people’ and based on that they can confidently take a bolder step?

Why not directly tie up with companies who lease out cars and work out a lucrative pricing model and educate general users that it is possible for them to have similar benefits?

Just like d3mon suggested, I’m also a noob and maybe it is lot more complicated. Regardless, it may just kill the market before it takes off.

[mercedised]

Maybe the case that Tata does not want to sell this car to masses as of now due to lack of infrastructure and their expertise in electric vehicle segment. May be Nexon is only a test vehicle that they want to be available with fewer people to explore the possibilities in this segment or capabilities of Tata to handle electric vehicle segment. After burning their hands with Tigor EV, maybe they are trying to play it safe this time. So many maybes for a new entrant in this segment.

[GTO]

Originally Posted by TusharK

Customers can opt for 18, 24 or 36 months tenure, for which the monthly subscription rate (inclusive of taxes) is Rs. 47,900, Rs. 44,900 and Rs. 41,900 respectively.

If you take it for 36 months, you pay 15.08 lakhs. Insane. At the end of it, you have nothing. Why would anyone go for this over buying it outright? If you own it, you also get the resale value.

Originally Posted by d3mon

I am a finance noob, but can someone explain why Indian leasing options are so exorbitantly overpriced as compared to the US options? Is it just the interest rate difference or is something else going on here?

Interest rate is a contributor, but that's a difference of 6 - 7% tops between the 2 countries. So it's not the entire story. I think finance companies have just not gotten into the whole leasing thing here as - well - customers haven't gotten into it either. Every country has its own habits. USA is big on leasing, China buys a majority of its cars outright, while Indian car owners love loans.

I wish leasing were reasonably priced. As a businessman, I don't have to put any down payment (that money can be used for business) and I would get a 25% straight tax benefit on the monthly payment.

I'm not 100% sure, but I do think these subscription cars come with yellow + black taxi plates and an 80 kmph speed limiter. If that's the case, it's a deal breaker (as if the price wasn't).

[ABHI_1512]

So the cost one pays after the lease period is over:
1. 18 months- 8.62 Lakhs
2. 24 months- 10.77 Lakhs
3. 36 months- 15.08 Lakhs

I don't know who comes up with these ideas at the first place. Such amounts would lead to nothing for the lessor at the end of it all. One can in fact take an auto loan for the same amount and buy the EV and also claim IT deduction of 1.5 lakhs on the interest paid on loans. The plan is a dud even before the start although I would still think that lease of electric vehicles is still at a nascent stage and manufacturers are yet to find the ideal ground regarding the pricing strategies.

[Ketan T]

Originally Posted by GTO

Interest rate is a contributor, but that's a difference of 6 - 7% tops between the 2 countries. So it's not the entire story. I think finance companies have just not gotten into .

I'm not 100% sure, but I do think these subscription cars come with yellow + black taxi plates and an 80 kmph speed limiter. If that's the case, it's a deal breaker (as if the price wasn't).

Yes, it has speed limited to 80 kmph.

[libranof1987]

Originally Posted by Ketan T

Yes, it has speed limited to 80 kmph.

Whoever from the Marketing dept. signed off on this brochure should ideally be fired. For a country that loves "investment", it is a cardinal sin to outright mention that the very product (monthly subscription) they're advertising isn't an investment.

Going by how Tata has priced this, doesn't look like they expect the vehicle to be worth much after three years. I wish Tata's Marketing and Finance teams worked together to make this a much better proposition.

[avishar]

Originally Posted by GTO

I wish leasing were reasonably priced. As a businessman, I don't have to put any down payment (that money can be used for business) and I would get a 25% straight tax benefit on the monthly payment.

It would be really interesting if you or someone else can start a discussion surrounding leasing or the lack of it in India. The pros and cons, etc.

In developed countries the percentage of cars which are leased against bought is almost reaching 40%.


Thanks to generous tax rebates and incentives, electric car leasing is becoming extremely cheap in Europe.

Leasing deals for the E-Tron 50 Quattro which costs around 65000 Euro (Rs 55 lakh), starts from 250 Euros (Rs 25000ish) with no downpayment for 36 months at 10,000 km/year!

[GTO]

Two more points, guys.

1. I guess the government imposes GST on these leases / subscriptions? That would also be a contributor to the stiff pricing.

2. The press release makes it pretty clear who they are targeting. This isn't for sensible retail customers like you & me:

The subscription model is customised and perfectly suited for corporates who prefer to lease, individuals with frequent inter-city job transfers, and expatriates who stay for a fixed tenure, among others.

It's via a tie-up with Orix. This is nothing but a lease. "Subscribe" is the new buzz word in the auto industry, but without the innovation of Dropbox, Office 365, Netflix, SAAS companies etc. Unlike these companies, the auto industry is merely repackaging existing products & calling them subscriptions. See how the BMW fools tried to charge a recurring fee for Apple CarPlay!

[slayer23]

I think one more contirbuting factor to high subscription rates is lack of a well established 2nd hand market unlike a US. This impacts the residual value they use for pricing the subscription. The asset holder would want to minimize the risk and hence go with an assumption of lower residual value, pushing the price up.

Given the situation of auto companies, I guess nobody is willing to offer a substantial discount to give a fillip to this model.