Personal Finance

How Much Does Tesla Cost

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 6 minute read

How Much Does Tesla Cost? Even without Elon Musk’s social media fame, Tesla has been a household name for many years now. You’re not alone if you’re wondering how to invest in Tesla stock or if you should trade in your existing vehicle for a new Tesla Model S as the electric vehicle market continues to develop.

However, despite Tesla’s many advantages, many people wonder: Is it really worth it to acquire a Tesla? Is it on the list of the most costly mistakes?

Because Teslas are among the more costly vehicles on the market, doing the math before making a purchase is always a good idea, and that’s precisely what we did for you here. We’ve crunched the numbers to get a clear picture of how much money you’ll save on petrol and how much money you’ll pay in taxes if you buy a Tesla.

Buying a Tesla? Here’s everything you need to know, including the pros and cons, to help you make an informed decision.

Is it worthwhile to purchase a Tesla?

Tesla vehicles are a popular alternative for anyone interested in purchasing a premium vehicle that is also an electric vehicle. Apart from being more environmentally friendly than a standard gas-powered sedan, these vehicles have developed a kind of a prestige symbol, especially considering their high price.

However, is the hefty price tag justified? In this part, we’ll examine the purchase price, insurance expenses, and possible savings on gasoline, auto maintenance, and taxes to paint the most full picture of the true cost of owning a Tesla and determining if the high price is justified.

Purchase price

Tesla’s Model 3 is the most cheap car in the company’s lineup, followed by the Model Y Long Range crossover and the stylish Model S sedan. Additionally, there is the top-of-the-line Model X, which starts at a staggering $104,990. Naturally, the final price of a car may vary depending on the features and extras you choose.

While some sources state that the Model 3 is the world’s most popular electric car, many would-be Tesla buyers are more interested in the company’s flagship vehicle, the Model S, which is why we’ll use it as our primary example here.

Assume you were to purchase a Model S for $94,990. This price tag has the potential to be far higher, particularly considering the options available on Tesla’s basic models, but let’s keep it simple and stick to this figure. If you don’t have $95,000 on hand and choose to finance your Model S, the payment schedule would look something like this.

This results in a monthly payment of around $1,365, which equates to a total of $107,765 ($98,265 loan payback plus $9,500 down payment) for your new Model S over the course of six years. It’s worth noting that this figure includes just anticipated state tax for Arizona and excludes municipal taxes, title, registration, and other potential expenses.

Another factor to consider is the APR. While many automakers claim low APRs if you go via their finance department, your interest rate will ultimately be determined by your unique borrower profile, which will include your credit score, chosen loan term length, and down payment.

Fuel

Obviously, the most significant cost reductions connected with an electric automobile are in fuel. Even when we examine the cost of gasoline for a moderately fuel-efficient and similarly sized car, such as the Toyota Camry, which averages around 32 miles per gallon, the savings in this category are rather considerable.

Assume you travel 15,000 miles each year in your Camry. With average gas prices presently hovering at $3.39 per gallon, driving your Camry will cost you $1,589 in petrol. If you drive a less fuel-efficient car, your costs will increase even more. On the other hand, the Tesla Model S has an electric charge cost of $0.037 per mile (approximately equivalent to the cost of charging your Tesla at home), which equates to $555 for the same 15,000-mile voyage. Thus, the fuel savings associated with a Tesla are considerable.

However, let us not forget the expense of installing a charging station in your home, as opposed to relying solely on the Tesla Supercharger network. The average cost of installing a home charging station, according to the home repair professionals at Fixr, is $1,200. While you will save money on fuel each year you own your Tesla, you will also have to consider the upfront cost of the charger.

Tax credits

The federal tax credit for Tesla used to be rather remarkable, but that large $7,500 benefit was phased away on January 1, 2020, leaving customers with just state-level tax incentives.

Depending on the state in which you live, the tax credit may be as high as $2,500, but it may also be less than that or nothing at all. While states such as California, Colorado, Delaware, and even Maine are now leading the way in terms of hefty tax benefits for new Tesla customers, there is considerable variance between states. For instance, some jurisdictions limit the incentive to automobiles with a purchase price more than or equal to a specific amount.

Other states impose restrictions on the Tesla models eligible for incentives.
If the magnitude of your tax credit is crucial to determining whether or not a Tesla is a good investment for you, do your homework on what is available in your state.

Insurance

While the actual cost of insurance for your Tesla may vary according to your state, the model you choose, and your particular driving history, Teslas have historically had higher insurance rates than other vehicles. This is partly owing to the possibility of greater repair expenses associated with its out-of-the-ordinary components such as the electrical system and aluminum frame. Additionally, some insurance companies define Teslas as luxury vehicles and charge prices accordingly.

Tesla has established its own insurance coverage, which the company claims offers lower costs than traditional insurers, although it is now only accessible in California.

Your choice of vehicle insurance will also affect your costs, but according to some estimates, the average cost of insuring a Tesla Model S is $3,673 per year, compared to $2,200 for a new Toyota Camry. While these figures may undoubtedly vary depending on your driving history and zip code, the greater cost of insuring a Tesla is something to consider for prospective purchasers.

Maintenance

Unlike conventional gasoline-powered automobiles, Teslas require very little maintenance. Without a conventional engine that requires oil and gasoline filters, you won’t need to bring your car into the shop as frequently, and maintenance will likely consist of software upgrades.

Motor1 forecasts that a Toyota Camry’s five-year maintenance cost will be $4,981, or $996 per year on average. On the other side, Motor1 forecasts that a Tesla Model S’s five-year maintenance will cost $1,490, or an average of $298 each year. While this annual savings is substantial, it’s critical to remember that Teslas are not completely immune to automobile problems. Indeed, when your car’s battery pack finally has to be replaced, the cost can range between $12,000 and $16,000.

Tesla’s battery guarantee covers you for the first eight years or 150,000 miles, whichever comes first, so you’re not concerned about this expenditure in the short term. There are cases of older Teslas that are still operating strong after 300,000 and 500,000 miles on their original battery pack, however their miles per charge are reduced.

How the math works out

Without a question, Tesla produces some excellent electric automobiles. However, they are not free. Whether or not a Tesla is a good investment for you depends on your unique financial situation and how critical it is for you to acquire an electric car. If you can afford a Tesla and live in an area with chargers, this purchase may be worthwhile.

Assuming you have acceptable credit and can finance your new automobile at the current 2.49 percent annual percentage rate for 72 months with a down payment of around 10%, this is the pricing breakdown between the two vehicles. We calculated these statistics over a six-year period (the average length of time that individuals maintain new automobiles), which means that everything you see here includes your initial six years of ownership expenditures.

If you’re wondering why we’re comparing a premium electric car to a Toyota Camry, it’s because we’re comparing Tesla’s most popular model to a well-known fuel-efficient vehicle. However, for comparison, below is a breakdown of the cost of purchasing a Tesla Model 3 (the company’s most cheap model).

As the data indicate, a Tesla Model 3 and a Toyota Camry are significantly more affordable than the premium Model S — and the Tesla may even overtake the Toyota after a few more years of use. However, a great deal of this will rely on how you drive and maintain your automobiles.

Another thing to bear in mind is that these totals are calculated using a large number of factors. For instance, automobile insurance prices are affected by criteria such as your driving profile and credit score, while the amount of your tax credit is determined by your location. Fuel and energy expenses will also vary depending on your location and the trajectory of energy prices over time.

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