In the market for a new car? Thinking about getting an electric vehicle to save the environment (and gas money)? Tesla (TSLA) might just have the car you want.
Tesla’s Model S is its most popular model, and it comes with a few options. In America, consumers have three choices of Model S that vary based on the number of motors and battery power. If you're interested specifically in the popular Model S, here's a closer look at how much you can expect to pay to purchase and own one.
- Tesla's are popular, but expensive electric vehicles, starting at at around $82,000 for a 2021 base Model S.
- Owning a Tesla, however, can be affordable as there is no need for gas or oil changes.
- Some Tesla owners can further benefit from electric vehicle tax breaks and lower ongoing maintenance costs.
Initial Cost: How Much Is It to Buy a Tesla?
The initial cost of purchasing a Tesla Model S is steep. According to Edmunds, the MSRP for a 2021 Model S $81,190. without any options or upgrades. If you're interested in the Plaid or Plaid+ trim packages for the Model S, the MSPR increases to $121,190 and $141,190 respectively. By comparison, the basic Model 3 starts at around $50,000.
These prices don't include add-ons that may enhance your driving experience when owning a Telas. For instance, there’s the autopilot feature, Smart Air Suspension, and upgraded sound system, each at $2,500. You can enjoy a higher quality finish for $5,000 and executive rear seats for $3,000. The Subzero Weather Package costs an extra $1,000 and two additional seats will run you $3,000.
These features are optional, of course. But if you want something more than what's included with the base model, you may choose to splurge on any or all of these extras.
While the federal tax credit has been phased out for Teslas, California, Colorado, Georgia, Massachusetts, and Utah offer state tax incentives to help offset the cost of buying one.
Is a Tesla Worth the Cost?
This is an excellent question, as buying one can be akin to buying a home, depending on the model you purchase. In short, this car is expensive. But the initial cost is slowly recouped over the years through savings on gas, maintenance, and intangibles like convenience. Whether you should buy a Tesla or consider a different electric vehicle depends on your needs, what you want from a vehicle and how much you're comfortable paying.
Here are some of the advantages of purchasing a Tesla and how that can translate to potential savings over the long-term.
No More Stopping for Gas
First, the biggest savings: no more expensive gas. With 100 miles using 34kWh (about 100 MPG) and electricity costing an average of $0.12/kWh, the yearly cost to drive a Tesla Model S 15,000 miles is $612. Compare that to Toyota (TM) Camry’s 30 MPG and an average cost of gas of $2.40 per gallon. At 15,000 miles per year, the Camry will cost $1,200—almost double what the Tesla Model S costs.
Another benefit of plugging in 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.
Tesla’s Model S has far less projected maintenance because its electric engine has far fewer moving parts than a regular internal combustion engine. The battery is guaranteed for eight years with unlimited miles. The vehicle itself comes with a limited warranty and $600 yearly inspections are optional.
All Model S cars financed through Tesla come with the option to sell the car back to Tesla at a fixed price at the end of the term. This price is about 46% of the purchase price or $37,347 for the 2021 Model S example. That's a solid incentive to use Tesla's financing options to complete the purchase.
Tesla financing is not available for all models or in all states, which may limit your options if you're planning to use a loan to complete your purchase.
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. Say you purchase a 2021 Model S with an initial cost, including all options, of $95,690. Let's assume you put no money down for simplicity's sake and you qualify for 2% financing over five years. The interest charges would be $4,494, bringing the grand total to $100,634.
When we apply Teslanomics (subtracting every dollar possible to lower the effective monthly payment), we can subtract the gas savings of $600 per year and an average of $400 per year on maintenance. This figure doesn't include any tax benefits you may realize at the state level if you're able to qualify for a tax credit when purchasing a Tesla. Remember that tax credits reduce your tax liability dollar for dollar.
After five years and $100,634 in costs, the savings add up to $5,000. Selling the Model S back to Tesla could net you around $37,000 (although it could bring in more if sold on the private market), reducing your net cost to own it even further.
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.
The Bottom Line
The 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 S 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 the car seats seven (or has more storage space)—and its claim of having “the highest safety rating of any car ever tested”—and Tesla’s Model S is a strong economic choice for today’s consumers who are able to qualify for financing or afford a cash purchase. And if you're considering something other than a Tesla, remember to compare the best car loan rates when seeking financing.