Tesla Cost of Ownership & Is It Worth It?

Investing

Tesla (TSLA) has become one of the world’s most popular car manufacturers. In fact, it’s one of the largest auto companies by market value. The company had a market capitalization of $785.68 billion at the end of the Oct. 7, 2021, trading day with shares closing at about $794. Tesla reported total revenue of $31.5 billion for the 2020 fiscal year.

Tesla was founded in 2003 and released the Roadster five years later. This vehicle came equipped with electric powertrain technology. The automaker now manufactures four different models, including the Model S (the first one), the Model 3, the Model X, and the Model Y. Models 3 and Y are the most popular, according to the company, which produced 454,932 vehicles and delivered 442,511 of both models in 2020. But how much do these models cost? Here’s a closer look at how much you can expect to shell out to purchase one of your own.

Key Takeaways

  • Tesla is one of the world’s most popular car manufacturers and one of the largest auto companies by market value.
  • Models 3 and Y are the most popular Teslas on the market.
  • A standard Model 3 and Model Y with no upgrades is fairly comparable to some of its gas-powered and electric counterparts.
  • Teslas do not require trips to the gas station or regular maintenance like oil changes.
  • Some Tesla owners can take advantage of electric vehicle tax breaks to offset the cost of ownership.

How Much Does a Tesla Cost?

The cost of a Tesla depends on which model you’re interested in purchasing. The manufacturer’s suggested retail price (MSRP) for a new 2021 Tesla Model 3 standard range sedan is $43,190. The price goes up to $51,190 for the long-range and to $59,190 for the performance editions. The Model is the top-rated electric vehicle and the second most popular luxury electric car on Edmunds, earning an 8.4 out of 10 expert rating.

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A brand new 2021 Tesla Model Y is the most affordable of all of the company’s models. A standard range Model Y comes at a price of $41,190 while the long-range and performance editions cost $61,190 and $63,190, respectively. This model is rated an 8.2 out of 10 on Edmunds. The Model Y is the second most popular luxury electric SUV and the second most popular small performance SUV among consumers.

Keep in mind that these prices don’t include add-ons that may enhance your driving experience when owning a Tesla. For instance, you will have to pay extra if you want a color other than the basic white, which doesn’t come at an additional charge. Changing the color of your interior (other than the standard black) also comes at a cost. And Tesla’s Full Self-Driving technology costs an additional $10,000 to install.

Tip

The federal tax credit for Teslas expired but some states provide new Tesla owners with rebates and tax incentives to help offset the cost of buying one, including California, Colorado, Connecticut, Delaware, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia. Income restrictions may apply in certain states.

Is a Tesla Worth the Cost?

Buying a Tesla Model 3 or Y without any extras is fairly reasonable when you consider the cost of some of the comparable gas engine vehicles, notably:

  • Model 3 comparables: 2021 Mercedes-Benz C (starting price $46,986), Lexus ES ($48,492), BMW 3 Series ($44,578)
  • Model Y comparables: Mercedes-Benz GLE ($54,750), BMW X5 ($59,400), Audi Q8 ($73,500)

And don’t forget the other electric vehicles that are on the market today. The following are some of the most popular electric economy and luxury sedans, crossovers, and SUVs:

  • Kia Niro ($39,090)
  • Volkswagen ID.4 ($39,995)
  • Porsche Taycan 4S ($79,900)
  • Ford Mustang Mach-E: ($42,895)
  • Audi e-tron ($65,900)

The costs listed above reflect base model prices with standard features and no upgrades.

Remember that costs don’t just mean the purchase price. The expenses associated with car ownership also include maintenance, convenience, and gas—if you purchase a traditional gas-powered vehicle.

No More Stopping for Gas

Tesla owners are bound to notice the biggest savings come from never having to fill a gas tank. Model 3 owners can travel 353 miles on a single charge while the estimated range for the Model Y is 326 miles. The Model 3 comes with a 54 kWh battery, while the Model Y has a 75 kWh battery. The average cost to fully charge a Model 3 is under $8. The Model Y, on the other hand, costs just under $12 to fully charge.

Let’s compare that to the most affordable sedan and SUV listed above: the BMW 3 Series and the Mercedes-Benz GLE. This BMW’s 330i model has a combined city/highway fuel efficiency of 30 MPG while the GLE 350’s combined fuel efficiency comes in at 22 MPG.

Let’s say the average cost of gas is $3.27 per gallon. At 15,000 miles per year and 55% of driving done in the city, the BMW 3 Series will cost $1,635 each year while the GLE 350 will cost $2,230. This translates to 10.9 cents per mile compared to 14.9 cents for each, respectively.

Another benefit of plugging in a Tesla instead of fueling up is the peace of mind that comes from knowing each morning that the vehicle is ready to go. No more planning to stop at the gas station, no more standing in the cold or smelling gasoline fumes—just plug in at night, unplug in the morning and the battery is full.

Maintenance Savings

The maintenance projected for Telsa vehicles is far less compared to gas-powered vehicles because their electric engines have far fewer moving parts than regular internal combustion engines. Batteries are guaranteed for eight years.

Tip

While it’s unlikely that you may need to do so given how long they last, be aware that the cost of replacing a Tesla battery for a Model S can run anywhere from $3,000 to $7,000.

Do The Math

When deciding whether a Tesla is a good buy based on the cost to purchase and own it, it helps to analyze the numbers in black and white.

All Teslas are financed directly through the company itself. The annual percentage rate (APR) for a 72-month loan for a standard Model 3 and Model Y is 2.49%. With a down payment of $4,500 and delivery fees of $1,200, the total amount financed for a Model 3 and Model y would be $39,890 and $37,890, respectively.

Using Investopedia’s loan calculator, you’ll pay a total of $42,985.25 for the Model 3 with a total of $3,095.25 in interest. The total cost for a Model Y is $40,830.06, which includes $2,940.06 in interest.

Important

Tesla financing is not available for all models or in all states, which may limit your options if you want to use a loan to complete your purchase.

The Bottom Line

The average cost of owning a typical luxury sedan is about $730 a month, give or take. For the same price as a Lexus or an Audi, you can purchase a Tesla Model 3 or Y and benefit from the convenience of not having to fuel up, as well as the peace of mind and extra time that comes from not having to worry about maintenance issues like oil changes or buying new filters.

Couple that with the fact that they boast of having “the highest safety rating of any car ever tested” and the fact that the Tesla is a strong economic choice for today’s consumers who are able to qualify for financing or afford a cash purchase. If you’re considering something other than a Tesla, remember to compare the best car loan rates when seeking financing.

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