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Tesla is a famous name in the electric vehicle space. Not only was the automaker one of the first to prove that EVs are ecologically and economically viable, but it made going green look good. With sleek designs, commendable performance, and greener batteries, it’s easy to see why Tesla’s broken records time and again.
But despite being one of the biggest car companies and their contributions to the auto world, Teslas remain expensive investments. And anytime you frontload a wad of cash, it’s wise to examine your tradeoffs. In this case, we’re looking at Tesla’s upfront costs versus long-term savings potential.
And even if the impact on your wallet doesn’t sway your decision, you should still know what you’re in for.
How Much Does a Tesla Cost?
As with other vehicles, you can’t measure a Tesla’s true costs by its sticker price. You also have to look at its fuel economy, insurance, and maintenance costs. And, thanks to Tesla’s EV status, the potential for tax credits, too.
The price for a new Tesla depends on the model. Currently, you can purchase one of four, not counting vehicles still in production (namely, the Cybertruck and Roadster).
|Tesla Model||EPA Estimated Mileage||Starting Price|
|Model S Sedan||390 Miles Per Charge||$100,000|
|Model 3 Sedan||330 Miles Per Charge||$47,000|
|Model X SUV||325 Miles Per Charge||$115,000|
|Model Y SUV||320 Miles Per Charge||$63,000|
*All numbers based off Tesla’s website, rounded to nearest $100, and accurate as of 23 May 2022
By contrast, in 2022, the average purchase price for a new car rose to a whopping $47,000.1
Fuel and Gas
The number-one savings associated with EVs is their fuel economy, even compared to relatively gas-efficient vehicles.
Say that you drive your gas-powered vehicle 15,000 miles per year and average 35mpg. With gas prices averaging around $4.60 per gallon, you’ll spend almost $1,972 per year on fuel. (For vehicles that get the national average of 25mpg, you’ll spend closer to $2,760.)
By contrast, the Tesla Model X costs around 4.5 cents per mile to charge, while the Model S costs around 3.7 cents. 2If we average out to 4 cents per mile with a 300-mile range, you can expect to spend around $12 per “tank” with a Tesla. Thus, if you drive 15,000 miles in a year, you’ll spend just $600 on “fuel” annually.
However, this doesn’t account for the cost of installing a charging station in your home. Currently, the average charging station install ranges from $1,000 to $2,000, depending on the station’s efficiency, your home’s current wiring, and electrician costs.3 But even if you spend $2,000 upfront, you’ll only have to pay it once.
The exact insurance bill you’ll pay for your Tesla depends on your state, model, and personal driving record. Still, insuring a Tesla generally costs more than a gas-powered car for a few reasons:
- Some insurers charge higher premiums because they classify Teslas as “luxury vehicles”
- Teslas come with higher one-time repair costs due to their alternative components
- Not every garage or mechanic can work on an EV, limiting your repair options
By contrast, the average cost of full coverage car insurance for gas-powered vehicles is closer to $1,200 to $2,000 annually.6
To counter this problem, Tesla offers its own insurance line that claims to offer lower premiums. However, it’s only available in a handful of states at this time.7
Unlike regular gas-powered cars, maintaining a Tesla is more complex – and yet, still simpler for car owners. Because your vehicle doesn’t require fuel filter or oil changes, you won’t visit the shop as often. However, you’ll still need to watch out for software updates.
On average, Policygenius estimates that maintaining a new car costs around $800 per year, or $66 per month.8
All told, that comes out to around $282 per year.
That said, if your Tesla breaks down, you may pay higher maintenance costs due to the non-standard engine and parts. That can cost anywhere from $270 for a new oxygen sensor to $600 for brake calipers. 10 And if you’re surpassed Tesla’s 8-year, 150,000-mile battery warranty, you may shell out $13,000 to $20,000 for a new battery pack.11
On the other hand, Teslas can run up to 500,000 miles on their original battery pack. (At the expense of less efficient charges.) For those keeping track, at 15,000 miles per year, that’s 33 years without a battery change.12
Still, we recommend keeping a well-stocked emergency fund at hand, regardless of your mode of transportation, to cover such costs.
Qualified Tax Credits
Teslas and other EVs come with unique tax credits as the government’s way of saying, “Thanks for lowering your carbon footprint.” The government’s $7,500 tax credit covers anyone who buys a brand-new all-electric vehicle…unless you buy from Tesla or GM.
Under current law, the federal tax credit for EVs disappears once an automaker sells 200,000 qualified vehicles. Because Tesla hit that milestone in 2018, new Tesla buyers are out of luck.
However, you may still qualify for state credits with price tags ranging from nominal up to $5,000. You can look at aninteractive state-by-state map here.
Breaking Down the Math to Calculate a Tesla’s Cost
Tesla leads the EV space for a reason – but their innovation comes at a cost for drivers. Let’s look at the difference in five-year costs between a new Tesla Model S and a gas-powered car.
|Total Cost Over 5 Years*||Tesla Model S||New Gas-Powered Car|
|Purchase Price (Financed)||$102,500**||$48,500***|
|Electricity / Fuel Cost||$5,000****||$9,860|
|Total Expense - Tax Credit||$121,400||Does Not Apply|
*Unless otherwise stated, cost is the averages from previous sections times five
**Assumes a financed price of $95,000 (included taxes and fees, minus down payment) at 3% interest
***Assumes a financed price of $45,000 (included taxes and fees, minus down payment) at 3% interest
****4 cents per mile, includes $2,000 charging station
*****Assumes $3,000 per year
As you can see, a high-priced Model S nearly doubles from five-year costs compared to a new gas-powered vehicle. However, if you spring for the more economical Tesla Model 3, your costs drop considerably.
|Total Cost Over 5 Years*||Tesla Model 3||New Gas-Powered Car|
|Purchase Price (Financed)**||$48,500||$48,500|
|Electricity / Fuel Cost||$5,000||$9,860|
|Total Expense - Tax Credit||$62,400||Does Not Apply|
*Unless otherwise stated, cost is the averages from previous sections times five
**Assumes a finance price of $45,000 (included taxes and fees, minus down payment) at 3% interest
***Assumes $2,000 per year
In this case, switching to a more affordable Tesla model actually does save money over five years. And given that Tesla has fewer moving parts to worry about, their long-term maintenance costs can drop substantially compared to those of aging gas-powered vehicles. (Unless, of course, you replace the battery out of pocket.)
How Much Money Do You Save with a Tesla?
A U.S. Department of Energy report found that after 15 years, electric cars generally cost less than similar gas-only models. Their calculations consider purchase price, financing, maintenance and repairs, fuels costs, and tax breaks.13
But ultimately, how much money you stand to save depends on what you compare your Tesla to.
For instance, if you buy a secondhand gas-guzzler for $5,000, you’re probably going to save more money for the life of the car. But the car may not last very long – and if it does, you’re still spewing out more carbon emissions than a comparable Tesla.
By contrast, if you buy a brand-new model with a flashier price tag, a Tesla may cost less long-term depending on your insurance and maintenance costs.
How Much Money Do You Save with a Tesla Per Year?
Once again, that depends on what you’re comparing your Tesla to. You could spend more with a Tesla each year, or you could easily save a few thousand.
Is Buying a Tesla Worth It?
That said, owning a Tesla isn’t just about going electric for the status or savings; it’s about lowering your carbon footprint. And with more EV markers hopping on the road every year, they may soon be comparable to – or even cheaper than – gas-powered vehicles full-stop.
But for now, many car owners have to think practically. Aside from the costs, you also have to consider your charging options.
For example, if you can afford a Tesla and live in an area with plenty of charging stations, a Tesla can be a worthwhile investment. But if your area suffers a dearth of chargers, you’re limited to a 150-mile radius (300 miles round-trip).
All that to say, owning a Tesla is worth it for the environmental benefits – but that doesn’t mean it’s always possible or practical. But as more automakers move into EVs, the benefits of owning one will rise year after year.
Bottom Line: Saving Money with a Tesla
Whether or not you save money with a Tesla depends on too many variables to accurately pinpoint an average answer. If you buy used vehicles and keep up with maintenance, a Tesla may cost more long-term. But if you prefer brand-new luxury vehicles, buying a Tesla may save money.
That said, Teslas aren’t the only EV around anymore. In fact, it’s estimated that by 2025, 20% of all new cars sold globally will be hybrid or electric. That number will increase to 40% by 2030.14
The road to cleaner emissions is paved with EVs – are you along for the ride?