Everyone’s talking about Electric Vehicles and how different they are compared to gas cars. At the end of the day, we all like to spend our money wisely. A car is an expensive investment. Let’s look at what is important if choosing a Tesla.
A Tesla will save you money on fuel costs, maintenance, and depreciation, however much of the running cost savings are lost due to increased insurance costs on Tesla models. Buying a Tesla won’t save the average driver money on running costs but likely will save them money when depreciation is factored in.
- Fuel cost savings per year $800
- Maintenance savings $500
- Depreciation saving (year 3) 18%
- Additional Tesla insurance cost $2,200
Tesla’s are expensive, no two ways about it, but people don’t buy a Tesla because of the money. They choose a Tesla because of the conscious effort to do their bit to save the planet. Let’s look at all the costs involved.
Tesla Cost Price
There are three main Tesla options on offer. Model 3, Model S, and Model X. Also in the pipeline are a Model Y and Roadster.
They are undoubtedly better looking than many of the other electric vehicles on the market but can their cost be justified?
|Tesla Model Cost||Chevrolet Model Cost|
If we compare a Tesla to a Chevrolet the cost difference is staggering. The base Model 3 is almost $20k more than a Chevrolet Malibu but there is the matter of comparative running cost which we will talk about in a moment. In this article, I haven’t factored in the additional finance costs between these vehicles.
But what are you getting for this extra $20k? Zero emissions. Your Tesla is producing no carbon emissions. The technology that’s behind the battery pack is driving the price up. Tesla is constantly striving to get those extra miles into their batteries and the R&D behind that costs money.
Tesla is the market leader in Electric Vehicles. Elon Musk’s dream is to eradicate all gasoline internal combustion engines. But all Teslas, even the Model 3, are seen to be luxury cars and they all carry the luxury price tag.
But regardless of the price, people are still lining up to purchase them, and even willing to wait up to 3 months for the Model 3 and up to nearly a year for the Model S.
But are people blinded by the price? Thinking they will never have to buy gas again. Unfortunately, Tesla’s don’t run on air and electricity is a cost that needs to be factored in. Albeit not as expensive as gas, there are initial charges that need to be considered.
Tesla Running Costs
After Sales costs on a Tesla are good news, to be honest. You can just plug your charger into a normal 110V wall socket and charge your Tesla overnight. Or you can opt for a Tesla Wall Connector. This is a further cost of up to $2000. The cost depends on a couple of things, who carries out the installation and how involved your connection may or may not be, i.e. in your garage or on an exterior wall.
Charging at home is the most popular means of charging among all Tesla owners. A standard socket (110V) will take 8 hrs and give you about an 80-mile range.
Many utility companies now offer reduced nighttime rates to Electric Vehicle owners. If we compare a Tesla Model 3 to a comparable size gas engine. Here’s how they pan out.
|Tesla Model 3||Chevrolet Malibu|
|Fuel cost||Home Charge $0.13c/kw||$3 / gallon (32 mpg)|
|Cost per mile||$0.04c / mile||$0.10c / mile|
|Monthly Cost (1.1k miles)||$44||$102|
The average drive for many is just over 1100 miles per month.
Looking at these figures over the lifetime of your car there are considerable cost differences between the EV and ICE.
Annual maintenance costs are also much lower for Tesla. Without the need for oil, an oil filter changes every 10k miles. The cost of maintenance is spent on tires, wiper blades, brake fluid, and cabin filters. Fluid needs to be changed every 3 years and cabin filters yearly.
The average maintenance cost for a Tesla is approximately $300 / year compared to an average gasoline car at $700-$800 / year (or more depending on the car model). The annual cost of a Tesla is much cheaper than a gasoline car, but the initial outlay needs to be considered and then there’s the insurance.
Tesla’s are considered luxury cars and rightly so. If I’m paying $40-$50k for an entry-level car I would definitely expect to be buying a luxury car. Insurance on a Tesla reflects this.
The average cost of Tesla insurance is from $3500 – $5000, for the Model 3 and Model X.
Progressive Insurance offers the cheapest rate at $2500 with Tesla’s own insurance at $3300 (in California). The cost of insurance varies greatly from state to state. California has the most amount of Tesla’s per 1000 Electric Vehicles and so the cost is more competitive.
Insurance costs are higher on a Tesla for a couple of reasons
- They are more expensive to repair after a collision
- The aluminum frame is more expensive to replace than a regular steel frame
- The parts needed ie computers and battery are not available in every repair shop
Realistically they are specialized repairs and this drives the insurance cost up. A replacement battery, needed after 150,000 miles is going to cost $12-15,000.
Elon Musk is continually striving to make Tesla more accessible to more drivers and hopefully, this will reduce insurance costs going forward.
Comparing Tesla to other Electric Vehicles
Tesla’s are probably the most familiar Electric Vehicles on the market but there are plenty of other options on the market, some comparable in price and some a lot cheaper. The two comparable are the Lucid and the Polestar 2. The Lucid brand is even more expensive than Tesla but they are new to the market and their plan is to eventually have a car for each segment. The Base is their current entry-level, coming in at $77,000, and their top model is the Dream at $169,000. The Polestar 2 – which is from the Volvo Factory – is also pricey at $60,000.
But these are all luxury vehicles. Maybe we just want an Electric Vehicle, so how much is the average cost?
The lowest-priced Electric Vehicle according to Edmunds is the Mini Cooper, starting price is $30,750 but has a driving range of only 110 miles.
See Edmunds link below.Car Research and Pricing at Edmunds
Add a couple of thousand to your budget and you can choose a Nissan Leaf, at $34000 and an increased range of 149 miles, or a Hyundai Ionic for $36000 with a 170-mile range.
Do you have to ask how much daily driving you actually do? Is it worth an extra $10,000, at least, to purchase a Tesla, but the range is more than double that of the Mini Cooper.
|Tesla M3||Lucid Base||Polestar 2||Mini Cooper||Chevy Bolt|
|Range||263 miles||408 miles||233 miles||110 miles||259 miles|
When considering other Electric Vehicles we also must factor in the Federal Tax grant. This is a reduction of up to $7500. However, it does not apply to all Electric Vehicles. All Tesla’s post-2019 are NOT eligible. All Chevrolet Spark and Bolt post-January 2020 are NOT eligible. This is because once manufacturer sales pass 200,000 the grant is no longer available. So as other brands pass this quantity the grant will also be removed from them.
The amount of the grant depends on the size of the battery in your EV. There also may be other local grants available depending on where you live.
|Tesla||Chevy Malibu||Nissan Leaf|
|Range||263 miles||500 miles||149 miles|
|Fuel Cost||$1755 (Yr 1) *|
$550 (Yr 2)
|$1350 (29mpg .10c/mile)||$1350 (Yr 1) **|
$550 (Yr 2)
|Total Running Cost||$5,555 (Yr 2 $4350)||$3,450||$3,150|
* Year 1 cost includes Tesla home charging kit approx. $1,200
** Year 1 costs include Nissan Leaf home charge kit approx. $800
The Tesla is certainly the most expensive to buy initially and the depreciation on the Tesla is the lowest. Strong Tesla car sales and tight supply is having a positive effect on used Tesla prices, they remain strong according to Edmunds.com. Check out new and used Tesla prices in the link below.Tesla
In addition to tight supply, government tax credits on Tesla’s could be helping keep depreciation costs low. Tax credits are available to second and third owners of Tesla models, however not on Tesla vehicles registered after 12/31/2019. You can check out the tax credits and eligible vehicles here on Fueleconomy.gov.
|Tesla||Chevy Malibu||Nissan Leaf|
|Year 2 2019 (lost)||$39,000 (3,000)||$19,000 (6,000)||$20,000 (12,000)|
|Year 3 2018 (lost)||$38,000 (4,000)||$18,000 (7,000)||$19,000 (13,000)|
In conclusion, if we look at all we have considered between a Tesla, an alternative EV and a gas car we can see a Tesla will save you money on fuel, maintenance, and depreciation but when it comes to annual insurance, much of the running costs gains are lost. Tesla is expensive to insure.
Buying a pre-2020 brings a little extra value by way of tax credits which help tip the scales a little but buying a Tesla, by and large, won’t save you a ton of money on running costs.
The depreciation cost savings however could be significant, and only time will tell on that one. As Tesla models are designed to run 300k miles before needing a battery overhaul ($15k approx.), vehicles will depreciate faster as they approach this marker.
But keep your Tesla in good order and with average mileage, looks like a Tesla will fair out quite well on depreciation. It may indeed save you money over the life of the vehicle, even factoring in the additional finance costs.
But before buying a Tesla or any vehicle, always run a VIN check for Mileage fraud, Salvage rebuild, Title washing, and Vin cloning. There are plenty in the business, it only costs a few dollars but could save you thousands. I’ve used VinAudit (links to VinAudit.com) several times and found them reliable and fast.
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