Electric Vehicles The Farnum's Tesla Model S 70D

Published on December 30th, 2015 | by Steve Hanley

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Is It Possible To Break Even On A Tesla?

December 30th, 2015 by  
 

Craig and Collen Farnum of Carbondale, Colorado are the proud owners of a Tesla Model S 70D, a car they paid $75,000 for in May. The Farnums are environmentally conscious people who are serious about reducing their carbon footprint.  They are a middle class couple with professional jobs, a mortgage, school loans, and a 9-month-old daughter. Buying a $75,000 automobile meant they had to examine their finances closely to make sure they were not getting over-extended. After much soul searching and crunching of numbers, they decided they could afford the Tesla because it would basically pay for itself.

The Farnum's Tesla Model S 70D

Wait. Can we have that again? A car that can pay for itself? How is such a thing even possible? Here’s how Craig and Colleen analyze things. Deduct the $7,500 federal tax credit and the $6,000 Colorado EV incentive and the car ends up costing $61,500. Craig says his Toyota Tacoma, which he sold to buy the Tesla, cost $4,000 a year to operate and maintain. He says the Tesla uses only $20 worth of electricity a month. That saves the family $3,750 a year.

They were able to obtain a no money down 6 year loan from Alliant Credit Union in Chicago at 2.2% interest. The couple took the $18,000 they got from selling Craig’s Tacoma and used it to build an apartment in their basement. The income from that covers most of the car loan. When the loan is paid off, the net cost of the car will be about $40,000, Craig says. He expects to keep the car for 10 years. The combination of rent from the apartment and minimal operating costs over the next 4 years means the cost of the car will be zero when all is said and done.

Okay. Let’s take a step back here. Any first year economist could blow holes in the Farnum’s analysis without breaking a sweat. First of all, not everyone can build an apartment in their basement and use the proceeds to pay for a car. Second, Craig is assuming no maintenance costs for the Tesla other then wiper blades and tires for 10 years. Third, he assumes any repairs needed will be covered by the Tesla warranty.

We all know a car — any car — is a lousy investment. Unless you’re talking about an original Ferrari Testa Rossa or a COPO 396 Chevelle in pristine condition, cars cost money. Craig and Colleen may have stars in  their eyes when it comes to running the numbers for their Tesla, but there’s a larger point here.

“We looked at our behavior, and asked ourselves how we could make a difference,” Farnum said. They had already started by adopting a mostly vegetarian diet. Transportation was the next milestone. “We wanted to buy a long-range electric family car made in America, and there was only one option. So we made it a priority,” Craig told Colorado’s Post Independent.

But the real story begins when the Farnum’s leased a Nissan LEAF in 2013. “We wanted to have zero local emissions for all of our transportation. We leased the Nissan Leaf as a test. We saved so much money on it, because we had no maintenance and no operating costs. After the first month of driving the Leaf, we realized we could never turn back. We were committed. So we saved for two and a half years to make it happen,” says Craig.

And that’s really the point. People who drive electric cars love electric cars and never want to go back to fossil fueled dinosaurs. Federal and state incentives may be all well and good. Improving the charging infrastructure may be needed. But when it comes right down to it, the way to get people to buy electric cars is to give them a chance to drive electric cars. There’s an old expression in the car business that goes like this: “The feel of the wheel seals the deal.” It’s still true.

In order to get the green car revolution to move forward, it’s essential to get more people behind the wheel of an EV and let them experience the joy of electric motoring for themselves. So far, manufacturers, dealers, and governments seem to be blissfully unaware of this simple proposition. Here’s a piece of free advice for all of them: Wake Up!!!!

Photo credit: Heather McGregor / Clean Energy Economy News


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About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.



  • serge delinois

    I own a Chevy Volt and a Tesla Model S and can tell you this is the stupidest article written. Thanks for wasting 5 minutes of my life I will never get back.

    • Steve Hanley

      No problem, Serge. Happy to help!

    • Joseph Dubeau

      That still doesn’t change the fact, that it will not pay for itself even if you use Elon math to do your calculations.

  • Your forgot to calculate being internet famous inthere.

    • Steve Hanley

      We tend not to deal in figures that fall to the right of the decimal point!

  • Joe Viocoe

    I think there is a confusion of “breaking even” on a car… vs. having a balanced family budget.

    Unless the car itself is a source of income (like an Uber car)… then yes, it is IMPOSSIBLE to break even.
    *Unless you find a sucker who doesn’t understand depreciation to buy the car from you*

    • Steve Hanley

      Sadly, I am not the person who is deluding himself. If the Farnum’s believe their car will pay for itself, then who am I to tell them they are wrong?

      The story is how people convince themselves all the time of things that are patently false. Such machinations are at the heart of the capitalist system…..and religion.

    • Joseph Dubeau

      So after a long winded comment, the answer is NO?

      • Steve Hanley

        Yes. The answer is no.

        • neroden

          I noted up above two ways where a buyer can break even on a Tesla:
          (1) As a limo or taxi
          (2) If your job requires that you drive >250 miles per day, but never more than ~100 miles from home

      • Joe Viocoe

        I was in a windy mood 😉

  • tcouey

    I think the last paragraph is supposed to be saying that it’s essential to GET more people behind the wheel…

    • Steve Hanley

      Yup, you’re right. Correction made. Thanks.

  • Marc P

    Such negativity in many of the comments… (was going to say something else, here, but there’s enough negativity already).

    Anyway, the Tacoma cash and basement apartment are completely unrelated to the Tesla since they could have bought just any car, an Escalade for that matter, and still come out even, although with gas and maintenance on an Escalade, it would have taken them about 42 years to break even…

    Just glad to see people enthusiastic about their EVs, whatever the brand and whatever way they choose to justify the expense. I, for one, am looking forward to buying and extended range PHEV in about 3-4 years, when budget permits.

    • Steve Hanley

      Thanks, Marc. Appreciate the input. There is an expression in sales that goes like this: “People buy on emotion and justify their decision afterwards with facts.” Clearly that is the case here, and if all those financial calculations float their boat, good for them.

      I especially liked your comment that it would take 42 years to break even on an Escaladio. Funny stuff. ; – )

  • Przemysław Lib

    Recently needed taxi. Ended up in some better hybrid.

    Electric accel is really, really instantaneous… But I knew what to look at. Others may note that car have two steps in acceleration or that car need dino-engin to get required power :/

  • airchompers

    $4,000 a year for a Tacoma sounds really high. But I bet it’s sincere. I just wonder how they get there? That’s probably fuel + insurance + maintenance + repairs at the dealer. The Tesla doesn’t need a ton of money for fueling, but I thought free service and repairs were only possible if you got the service plan which is $2,000 or so?

    Also, any first year economist would have a bone to pick with paying a premium for a specific country of origin to ‘keep money in the economy’.

    I think this is an article about how a couple was finance a Tesla. In reality, they could have sold the Tacoma, built the apartment, and bought a $12,000 used Prius C and they’d be so far ahead on cash flow vs the tesla it wouldn’t even be funny.

    And if they can make investments of 18k that make so much cash flow, why didn’t they just make more of those investments and keep the Tacoma?

    Nice story though. It does demonstrate ways that average folks can get things like Teslas.

  • neroden

    Can you actually break even on a Tesla?

    Yes. A number of Taxi drivers and Limo drivers have done so. They can charge more to their clients by having a Tesla, while their running costs are lower than for a typical low-mpg limo or taxi vehicle. The Tesla is a profitable dollars-and-cents move for them.

    OK. So, as a private owner, can you actually break even on a Tesla?

    Yes. Someone whose job as a home inspector required that he drive nearly constantly — almost 300 miles a day — but never more than 100 miles from his home — ran the numbers and the Tesla was cheaper to operate than any other option.

    OK. So, as a private owner who doesn’t drive obscene amounts per day, can you actually break even on a Tesla?

    Not really. But if you drive a lot, the premium you’re paying to avoid gasoline isn’t *that* high.

  • TrueNorth00

    If they really wanted to minimize their emissions and save money, they’d be using public transit, biking, walking and living closer to work. Just saying.

    I love EVs. But suburban living will always be bad for the environment and your health.

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