A new Tesla subscription service is coming to select US cities starting at $995 per month

Rental car startup Kyte is launching a Tesla Model 3 subscription service.
It starts at $995 per month for a 12-month term.
The subscription aims to provide more flexibility than leasing or buying.

Customers who want to try living with a Tesla without committing to a purchase or lease may find exactly what they're looking for in a new service launching next month.

Kyte, a startup that delivers rental cars to customers' homes, is expanding into the vehicle-subscription business, the company announced on Thursday. It's starting with the Tesla Model 3.

Starting April 15, customers in San Francisco and New York City (including Jersey City, New Jersey) will be able to purchase a Model 3 subscription in three-month, six-month, and 12-month terms. Kyte says it plans to expand the service to all of its 14 markets.

The subscription differs from leasing in that Kyte takes care of ownership hassles like registration, liability insurance, maintenance, and roadside assistance. Kyte also delivers the vehicle to a customer's door and lets them cancel at the end of each month's contract, or extend their subscription. Subscribers aren't locked in to a leasing term.

"We clearly see a gap between short-term rentals and leasing or buying a vehicle, and we think subscriptions is the answer," Erik Zahnlecker, Kyte's director of new products, told Insider in an email. "People don't want to wait in line for their groceries, food, shopping, or their car rental, they expect it to be delivered to them. They expect convenience, and that's what we're providing."

Kyte is launching the service with the Model 3 Long Range, which has all-wheel drive and 358 miles of range. The costs are as follows, plus a $299 startup fee: $1,350 per month for three months, $1,125 per month for six months, and $995 per month for 12 months.

Leasing the $54,490 luxury sedan for 36 months through Tesla costs $4,500 down and $629 per month, according to the automaker's website.

For years, automakers have tried vehicle subscriptions that let customers frequently swap for a different model. But most of the services, which are typically more expensive than leasing, have not caught on in any significant way. BMW, Audi, Mercedes-Benz, and Cadillac have all closed their subscription programs.

But other companies continue to make a go of it. Hertz's My Car service, for example, costs between $599 and $1,399 per month. California startup Autonomy launched in January with a Tesla Model 3 subscription that's similar to Kyte's.

While the company declined to go into specifics, Kyte said it will add hundreds of EVs to its subscription fleet this year, and thousands in 2023. It plans to introduce additional models over time.

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