Cost Analysis

Cost Analysis

I've been working on a 10 year cost analysis of my family's driving needs. My wife and I are both teachers so we typically drive your average car. A BMW 5-series type car is not in our budget. However, in my cost analysis, it seems as though the savings from mileage will just be enough to offset the premium in price.

I'm wanting to make my analysis as accurate as possible and want to make sure my figures are correct. While the Model S is very low in your typical maintenance, there are a couple pricey expenses. My question is this: Is the annual maintenance plan required to satisfy the warranty? Should I budget $12000 for a new batter in 8-10 years? I can make my cost analysis available if anyone is interested. Thanks for any insight (or is that a curse word around here?)

HaroldS | September 10, 2012

@langzaiguy -- The annual maintenance plan details were posted today. There has been much discussion in the forum previously concerning the annual service with relation to the warranty. Basically, as for any car in the U.S., the warranty can't be denied unless you messed the car up with improper maintenance or repairs which relate to the item that failed.

With respect to the battery pack, I certainly expect to buy a much more powerful pack in less than eight years -- not because I expect problems, but for the same reason I'm not writing this on an Osbourne 1 computer (you have to be really old to get that reference!). When I do buy the future pack I would expect that I would feel just as if I had a new car again, and would anticipate more years of use.

Brian H | September 10, 2012

The first portable carryable computer! They bragged it would change the world, and look at us now ...

Volker.Berlin | September 11, 2012

Here is the blog post Harold S is referring to:

Here is a detailed discussion on maintenance cost. The discussion started before actual info was released by Tesla (see above blog post) but is largely based on assumptions that turned out to be correct:

Here are some considerations (speculative, naturally) on battery life:

And finally, here's a site that is kind of dedicated to cost-justify the Model S:

Teoatawki | September 11, 2012

Elon has said he expects the battery packs will easily last twice the warranty period. Since degradation is gradual over a long term, especially if you can avoid a lot of range charging and supercharging, you can keep driving with your original battery pack until it no longer provides adequate range for your typical driving pattern.

langzaiguy | September 11, 2012

Thanks so much for the information! I spend about $4500 in gasoline a year and I feel like I'm just lighting that money on fire. I would much rather "invest" that money into a nicer vehicle. Certainly so over burning it up and lining the pockets of OPEC.

Another question: Are the software updates contingent on the $600 service or will they be made free, "over the air"?

I put an average around 30,000 miles a year right now which obviously would translate to 300,000 miles over ten years. The vast majority of these miles would NOT be under range mode and I will not be using the superchargers very often. Also, the majority of these miles (240,000 miles) will be under the 8 year warranty that the 85kwh battery holds with it.

Next question: Due to the amount of miles I'm putting on the car, I've factored in battery costs in the 10 year analysis. Would it be smart to do Tesla's prepay battery option or hold out with the belief that battery prices will be dropping?---I suppose we can only answer this purely speculatively.

If I do project 300,000 miles in 10 years, are there any concerns among us that the car will last that long (battery aside)? I figure with the lack of heat, friction, and moving parts that an ICE vehicle would have that a Tesla would have no problem meeting this distance. The only major expense I might see in 300,000 miles is a failure in the suspension system--as would any vehicle with that mileage.

skystream3.7 | September 11, 2012

so how do you think the service of $600 a year will work for us? will it cast us $1900 for 30,000-35,000 miles a year? i am a sales rep and drive a lot

pilotSteve | September 11, 2012

I also posted this under the Service Cost thread, but it has primary bearing on new buyer's cost analysis:

Tesla has given up the simple, clean "EV has much lower cost of ownership" statement that buyers want to hear..... in exchange for a niggling "oh by the way you also need to buy" message.

BMW etc. all include this level of service with the base price. Diluting the lower cost of ownership by adding back in $600/year for basic service will turn out to be a BAD decision by Tesla imo.

Teoatawki | September 11, 2012

We don't have enough history, even with the Roadster, to really know how long the car will last. However, with so much less to go wrong, no steel body to rust, there's no reason the car can't go on practically forever.

Back to battery life, we know one Roadster owner drove 200,000km (125,000 miles) and the battery pack still had 70% of the original capacity. The Model S battery pack is a newer generation of cells and even more coddled by the power and temperature management systems. We should be able to expect much better performance over time.

Vawlkus | September 12, 2012

"Free service" plans. Hope you read the fine print for what they actually cover: everything an EV DOESN'T HAVE.

Besides, I'll lay odds that once Tesla is established, they'll work their service cost into the car price without raising that cost. It'll hinder their margins a bit, but by then it won't matter.

Hi_Tech | September 12, 2012

I've been running numbers for about a year now as well... all speculative and with lots of assumptions.

@langzaiguy - From your statements, I'd recommend thinking about the following:
1. Over the 10yr/300,000miles period, would you have typically stuck with just one decent quality car, or have had worked through two of them? I typically sell my used cars after about 125-150k miles. That alone would double your cost of typical ICE car.
2. With #1 above in mind, I'd compare the Tesla with a new battery pack about 8 years into ownership. I'd factor in about $20-25k. This will allow you room to not just replace, but to upgrade.
3. You may want to look into a 5 years plan, instead of 10 years. This way, you could consider the financing monthly figures of the "more expensive" Tesla and it's charge costs, with the financing figures of "decent ICE" car with it's fillup costs. This gives you a way to start the savings right away, instead of waiting for 5-10 years out.

In short, my best guess figures told me that the ownership of a "nicely loaded" Model S w/85kWh battery pack will cost me a bit less over 5 years, driving about 20k miles a year, than a BMW 550. The difference goes more in Tesla's favor with more miles driven per year. The Model S w/40kWh battery pack runs similar in cost over 5 years to a well equiped Hyundai Genesis!

From pricing stand point some of this sold it for me (I'm a new expecting owner of the Model X). On top of that, there is always the significant improvement to the overall ride and comfort for those countless hours you will be driving!


langzaiguy | September 12, 2012

I've considered points 1 and 2 and have already included those numbers. Concerning point #2, I only factored in about $12,000 for a battery replacement. Perhaps that is too generous?

I am a bit confused by your third point. In order to experience the savings, wouldn't ten years allow for more savings?

I am not a 5-series kinda guy. That is to say, it is a bit above my price range. Maybe I'm foolish to consider a vehicle as expensive as Tesla. My debate is this, do I want to keep my Corolla and purchase a new RAV4 (for my wife) and pay 10 years of gasoline--not to mention buying another vehicle to replace the Corolla in 5 years----or do I want to keep my Corolla (for my wife) and purchase a Tesla.

My numbers say that at the end of the ten years, it would be $14,000 more expensive to purchase the Tesla. That being said, I think that the Tesla would have retained its value much better and I would be ahead $10,000 because of its value. Am I unreasonable to assume that my $70,000 Tesla would be worth at least $35,000 after ten years and 300,000 miles (after a second battery)?

petero | September 12, 2012

IMO, TM will begin to show interest in pre-owned cars about 36-48 months after they set up a leasing program. Buying “undervalued” trade ins are the profitable part of the auto business (when you sell them at market price).

langzaiguy. Generally, ICE cars depreciate 50% in 36-48 months. I feel you are being unreasonable expecting your $70K, 10 year old, 300K miles, "S" to have a market value of $35K. Depending on the condition of the car and the battery, I think you would be lucky to see $15K. In a few years, leasing will provide a plentiful source 36-48 month old, 36-50K miles, 'certified pre-owned "Ss" and my guess is they will have a value of perhaps 60% (maybe less).

IMO. The EV market will see an interesting shift in approximately 4 years when the Gen III reaches market. The Gen III will give new BEV buyers the option of a base "S" or a fully loaded "III" for roughly the same money. I feel the "S" will move up market and sell very heavily optioned and expensive flagships.