The Tesla Model S is a $75,000 luxury car that can go 0-60 miles per hour in a neck snapping 5.2 seconds. The $105,000 P85D model can do 0-60 in 3.1 seconds, making it as fast as some super cars. And it doesn’t use any gas. The Tesla has stunned the world by not only creating a blisteringly fast super car, but by doing one that is battery powered. People are excited about this, as electric cars point to a future where you recharge your car like your laptop. But can a six figure car save you money due to the fact that it doesn’t use any gas?
Monthly Cost of Owning a Tesla
Most people don’t buy cars by dropping cash down for them, but either lease or make payments after financing them. According to Tesla’s website, a Tesla lease of the base model is $1,331 a month (after $7,027 due at signing) for 3 years.
Alternatively, financing a Tesla at today’s auto loan rates comes out to be about $1,347 a month on a five year auto loan at today’s rates of nearly 3% for those with great credit. Let’s be honest, that’s a lot of money. The average American car payment is $471 a month. A Tesla is $876 more a month out of the budget.
Someone’s going to have to save a lot of gas money to come up with $876 a month extra.
In 2013 gasoline for running automobiles used up about 4% of American’s pre-tax income on average. The amount Americans spend a month on gasoline depends on where in the country they live, the efficiency of their current car and how far their current commute is. In 2009, when gas prices were higher, they spent an average of $198 a month. However that amount has dropped of late down to $139 a month. Over the last quarter that has been rising.
Gas prices will likely rise again to where they were in 2009. That could shave almost $200 off the $876 extra that a Tesla would cost over the average car, bringing the premium a Tesla would cost an owner to $676 a month. Tesla owners can use Tesla superchargers, which are free for Tesla owners, cutting recharging costs very low. Even if Tesla drivers recharge their cars at home, electric cars seem to cost the average American about $50 a month extra on the electric bill.
Average car maintenance costs in America
An electric car like the Tesla doesn’t work the same as a gasoline-powered car. There are fewer moving parts knocking around. It uses an electric motor and batteries. Brake pads don’t wear as quickly due to regenerative braking. Right now electric car owners report that yearly car maintenance is about 2/3 that of owning a combustion car. They’re mainly buying new tires, not putting in oil, brake pads, belts and other complicated moving parts.
The average American family spends over $1,000 a year on car maintenance. Slicing a third out of that saves $30 or so dollars a month.
So we’re down to maybe $650 a month extra to run a Tesla. No matter how optimistically the scenario is spun, the average American consumer is not going to save money driving a Tesla.
Model S Is a Luxury Car, Not an Economy Box
But the Model S is not a car aimed at the Average Joe. It’s actually intended to compete with cars like the Mercedes S Class. And when it’s compared to luxury cars, the Model S more than competes. An S Class costs over $100,000. Other Mercedes cars are also six figure cars.
Compared to the Mercedes S Class, the Model S is the same price… but without the gas and maintenance costs. Anyone looking at a luxury car is probably not thinking about how much they can save in gas costs, but it certainly means the cost of ownership of the Model S is going to be better than that of many of the luxury cars potential owners are looking at.
Tesla Will Be Coming Out With a Cheaper Model 3
Tesla is planning on a new car after the Model X comes out: Model 3. The Model 3 is to be a $35,000 Tesla electric car. Using today’s loan rates, that’s a $628 a month car payment. That’s more expensive than $471 that the average American spends on car payments, but add in the $150-200 a month in gas costs, and a Model 3 is equal to, or in some cases slightly cheaper on a monthly basis than the average American car payment and gas costs.
Other Electric Cars May Still Save Consumers Money
A new Nissan Leaf is around $21,500 after the $7,500 US government tax credit. That would come out to a $500 a month car payment, which is close to the US average. The Nissan Leaf doesn’t offer free superchargers like Tesla does, so recharging costs could eat as much as $50 a month out of an electricity bill. But with the tax credit and not having to pay for gas, the Leaf often works out to cheaper than a gasmobile when owners plug in their monthly miles, gas costs, car payments and compare them to what a Leaf would cost. A Leaf could save the average American about $71 a month and possibly even more if gas prices rise.
Tesla Model S – Tesla
Americans borrowing record amount to buy cars – CNBC
U.S. household expenditures for gasoline account for nearly 4% of pretax income – EIA.org
How the average US consumer spends their paycheck – Creditloan.com
What consumers spend each month – Statisticbrain.com
Electric Car Maintenance A Third Cheaper Than Combustion Vehicles? – Green Car Reports