Is the Tesla Model S Really For the Rest of Us?
What does a Tesla Model S really cost to operate? Crunch the numbers and the results may be a bit surprising.
By now we’ve all heard about the new four door, seven seater (5 adults + 2 kids), all electric eco monster from Tesla — the Model S. We’ve seen the pictures of the gorgeous beast and we’ve had our chance to let the lust settle.
But the thing that’s been bothering me, and surely many of you, is that it still feels like Tesla is making cars with a decidedly un-populist bent. Tesla has been claiming for a long time now that their business plan is to start with the high end market, make some money, learn some lessons, and subsequently release cars that the rest of us can afford — using that money and those lessons to get there.
- » See also: Is the Renault-Nissan Alliance Going in Two Different Electric Car Directions?
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You know what though? For a sophomore offering, the Model S is still gonna cost $50,000 to start — and that’s with the low end battery pack that can take you a scant 160 miles. Even so, Tesla claims that the Model S is a car for the rest of us after you consider the cost to operate it over its lifespan as compared to a typical $35,000 gas guzzler.
So, being the bit of a dork that I am, my immediate thought was to test Tesla’s theory myself and pop some numbers into a spreadsheet. My basic assumptions were:
- My hypothetical average car buyer will need a loan to buy the car.
- To get a yearly payment, I set that loan at a 5.5% interest rate for 5 years.
- In my simplified world, after 5 years the loan payments stop and all you have left are energy costs (fuel/electricity) and service costs.
- My hypothetical average car buyer is financing the whole price of the car.
- Electricity costs remain constant over the life of the car and follow the current US average of 11.47 cents per kWh.
- I’m estimating that the Model S has a 4 mile per kWh efficiency which results in about a 3 cent per mile cost given average US electricity prices.
- Service cost for an electric vehicle will be about $50 per year over the lifespan of the vehicle. In the 10th year of ownership I’ve added a $4,000 service charge to that base level to replace the battery. Tesla claims battery replacement will cost “well under $5,000″ and that the battery pack will last 10 years (this value was changed from $500 after it came to light that the autobloggreen post from which I obtained this number had a typo).
- Service and maintenance cost for a gas vehicle will be about $600 per year over the lifespan of the vehicle (this value was changed after reader input in the comments section).
- My hypothetical average car buyer drives about 15,000 miles per year, half on the highway and half in town.
- My hypothetical $35,000 gas guzzler gets 20 mpg in the city and 26 mpg on the highway.
After crunching the numbers, I’ve made four graphs (below) that show the cumulative costs of owning the Model S vs. owning a hypothetical $35,000 gas guzzler. The four graphs differ based on the price of fuel: $2/gal, $3/gal, $4/gal, and $5/gal.
You can see for yourself that at $2/gallon gas it would take 15 years before the Model S made up for its initial cost. However, at $3/gallon it’s 8-9 years, at $4/gallon it’s 6-7 years, and at $5/gallon the costs are nearly identical for the first 5 years. It’s worth noting that in all cases, after you make up for the initial cost of the Model S, the savings really start to pile on.
So, the question is, how much of premium is it worth to you to reduce fossil fuel consumption and dependence on foreign oil and how long are you willing to wait for the payback?
Plus, you never know when oil prices will jump back up to $4/gallon — or go even higher. In that case, you could think of a Model S purchase as a hedge against future oil prices.
I plan on having solor panels when I build my new house. I’d like to see those #’s and payback with $0 per kWh.
Great and insightful article. I think the comparison of the model S to a $35,000 car though is unjust. Although certainly we would like to see Tesla become as mainstream as possible one day, they’re still focusing on the higher end market, even with this car. I think a more accurate comparison would be a BMW 5 series ($45,000) given the performance and amenities offered with the model S. If possible I’d like to see the comparison graphs for that.
Thanks,
Nick
Great article! My only complaint would be that argument of price difference. I think that people usually tend to consistantly stay within their price range from vehicle to vehicle. So someone who can afford a $35k car might not so easily jump to a $50k car regardless of some gas savings. They would probably be more reluctant to purchase the Volt or something comparable. I’d like to see a comparison among cars in its price range. I drive a 08′ BMW 335 coupe with a $48k sticker price. I’d surely consider a Tesla S. Only difference would be that I only drive about 7,000 miles a year. My wife has a 06′ BMW X5 4.4i sport that had a sticker price of $64,000. I’m curious to see what the savings would be there as well. In my opinion, I think the Tesla S is absolutely gorgeous! Keep up the good work
The part no one seems to mention is, its the winter , I get stuck in a traffic jam, battery charge goes down in cold weather, it takes me 7 hours to get home going 10 miles an hour on a snowy highway, the heater and defroster in the car is full blast (need heat or I freeze) will an electric car make it home, or is it only good for the sumer and spring.
Oh and in the summer how does the AC drain the battery, have yet to see that either.
The simple truth of the matter is that currently Americans in general want what they want and that is the freedom that Hybrid vehicles bring to the table. Easy of long distance fill it up, go a long time. Fix it up when we have to vehicles. Nick has stated this in not so many words. It is going to be sometime before we are able to use non pollutant renewable fuel resources, to fuel our vehicles and our economy. The hybrid for the near future is a viable alternative to reduce our current need for fossil fuels. It is all about what you want and need. Not about what is going to be. But what it is right now. We only have today. Tomorrow is no guarantee. We are in a long fight. So lets pace ourselves and do what’s right for right now.
Nick as you probably know all to well statistics can be manipulated to support either side of an opinion. So I hope you’ll do like the rest of us should and use your conscious to point you in the direction that is right for you. Right now.
I have one last comment. Has anyone of you noticed that to own a Tesla S you will all have to fork out $5000.00 up front and wait over 2 years to receive your car. Can the average American afford it. Can he or she wait that long. Will Tesla still be able to offer the vehicle at that price. Will it really do what they say it will. Will they be around still.
I don’t know if I can WILL myself to take all those risks.
Read there web sight. Click on there buy tab. Then pick your country. Choose the Model S. Under Availability:(0n the right hand side of the page)
Deliveries to begin in 2012
Refundable Reservation $5,000
And will your at it. Check out the foot note next to the price of $49,900 indicated by an *’s.
It says: The anticipated base price of the Model S is $57,400. Price includes $7,500 US federal tax credit.
All Tesla vehicles qualify for the full $7,500 US federal tax credit on battery-powered cars.
Tesla’s also qualify for state incentives, sales tax waivers and rebates.
How many changes in the next 3 years is our countries Tax Credits going to go through before you can apply it to your Model S.
If you take the example of Tax Credits that Toyota customers were receiving for there vehicles; That they are all out of credits for now. Apply that to your equation and watch the possibility of you cost of ownership rise.
Again, no guarantee only wishful thinking.
What do you think?
The big variable is the price of gas in the future which is out of local control. Remember oil going to $150 per barrel? Electricity can come from many sources but can be supplied locally. Consider running a electric car calculator with a Think City, Mitsubishi iMiev and Smart ForTwo electric. The running costs of electric are much better. Most city travel could be done by electric. Electrics do not use engine power when waiting in traffic unlike gas engines. Charging at home on off peak power gives even greater savings. I have a Electric Car Calculator on my website to compare your car versus various electrics.
Why not also include some graphs for the typical European reader? In my country, fuel prices are sky high compared to the US. I have a sneaking suspicion some Tesla executive used that very same set of charts to justify why to bring out the S series in Europe from day 1.
Better still, publish your spreadsheet. So we can all use it to convince our partner.
Tesla is not marketing the S to compete with $35K vehicles. The S is their second of three models, with the third (under development) to be in the mid-30s and aimed at families. So you are not comparing like vehicles or markets and your analysis makes no sense at this point. Do the same analysis (the methodology seems sound!) in a couple or three years with the “low end” Tesla and it will make much more sense. And it’ll be accurate, fair, and a better guide to whether Tesla is indeed going to be competitive. By the way, their strategy has always been to start with a roadster just to show that electric cars don’t have to be weak, dowdy vehicles. They made their point. Next, they wanted a high-end sedan line, which they have with an S. It might be interesting to compare the S with other cars (BMW, Lexus, etc.) in the $57-$70 range and see which comes out ahead.
I don’t now if anyone has noticed but the size and scale of the prototype models are not consistent with there claim of a occupancy of 5 adults and two children. that is unless the tire size is about 39 inches. I broke the vehicle down to scale from all the data from Tesla Motors and from internet pictures and the vehicle is about the size of 3 Series BMW. We all know you cant fit 7 people in a 3 Series. If you look at tire size in relation to width and length of door to door and a little passed the back door you will see that it doesn’t add up. The more research I do on The Model S the more I am beginning to think we have another Madolf on our hands here. What’s the deal. I wouldn’t buy one tell I could see it for real life.
If You have seen one in real life please explain how the passenger occupancy claims are real.