Volkswagen is taking its lease agreement with Tesla off the table, and the automaker is hoping it can make a fresh start with a new vehicle to replace the Model 3.
The company said Thursday it would buy Tesla’s Volt plug-in hybrid sedan, a plug-n-play option that Tesla plans to make available in 2021, and it said it plans to build the new vehicle in the United States.
The automaker said it would offer a 20 percent financing rate to lease the vehicle in exchange for $3,000 in cash.
Volkswagen said the lease agreement would not be renewed, but it didn’t specify how long the lease would be.
Volkswagen will lease the Volt to Tesla for the next 20 years and then buy it back at full price, according to a company statement.
Volkswagen leases a large percentage of its vehicles, such as its Golf and Passat, from its dealers.
The company doesn’t lease cars to consumers, but the lease agreements help it sell its vehicles to customers.
The lease agreement is for the Volt, which will have a base price of $57,500, the company said.
Volkswagen already has a lease agreement for the new Chevrolet Bolt EV, which it says it will start making available in 2019.
The Volt is expected to go on sale in 2021.
Tesla is still looking to make a full-on entry into the car industry with the Model S, but that is in the works.
The Model 3, which Tesla is selling for about $70,000, will be available in late 2021 or early 2022, according a company spokesperson.
Tesla has said it expects to release the vehicle later this year.
Volkswagen’s announcement doesn’t include any details on when it plans on making the Model X SUV.