Can You Really Get A Tesla Model S For Under 500 Dollars Per Month?
businessinsider.com
businessinsider.com
Well done.
It also assumes that gas costs $5 a gallon in the same area that electricity costs 11 cents a kWh. Which city is this again?
[1] http://www.cityofpaloalto.org/civicax/filebank/documents/305... [warning pdf]
Arco, 699 San Antonio Rd & Middlefield Rd, $3.93 as of 15 minutes ago.
http://www.cityofpaloalto.org/civicax/filebank/documents/808...
9, 13 or 17 cents a kWh for residential, depending on usage tier.
Or if you want green energy in Palo Alto it's 11, 15 and 19 cents a kwH.
http://www.cityofpaloalto.org/civicax/filebank/documents/809...
If it's a business meter, such as one would have at a refueling station, or recharging at work or at the store, it's 15 cents a kwH for green energy:
http://www.cityofpaloalto.org/civicax/filebank/documents/809...
And 14 cents for non-green:
http://www.cityofpaloalto.org/civicax/filebank/documents/809...
Let's say this number is 8 hours. One will work for 8 hours no matter what. Just because you saved 15 minutes, doesn't mean you will work extra for those 15 minutes.
I am sure there is a name for this kind of a fallacy in this purportedly logical argument.
Changing it to five minutes (or less if you just top your car off at 1/2 or 3/4 tank) is much more realistic.
$15,000 would buy outright a decent car with good mileage for someone poor but responsible who couldn't get to work otherwise.
As a foreigner, I won't be able to afford an EV for along time but I think this makes it more likely I'll get it sooner, due to the technologies proliferating.
On the specific issue, they have to start with a narrow market and high cost. Classic crossing-the-chasm stuff, or Porter's differentiation strategy focusing on a different market segment than the Prius. They've changed the perception of EV's, making them desirable where alternatives were ugly tradeoffs that screamed "bunnyhugger". You couldn't get me into a Prius, but I'd really like a model S.
I suspect Mr Musk would have done just fine without government support, but I'm sure it's helped a lot.
Not that your point isnt valid as well, I imagine that they see it as a welfare solution on the bottom end.
Aside from gas, the remainder of the "savings" are BS attempts to get the "effective monthly payment" as low as possible.
Sounds like a deal to me.
== insert word here, and its true. or not.
AFTER EDIT: I should bring over here part of my comment in the other big Tesla Model S thread today. It's not clear that Tesla can genuinely manufacture its cars at a profit.
http://247wallst.com/2013/04/01/teslas-awful-sales-news/
That results in the "ridiculous numbers" of its lease plan described in the article submitted here.
ONE MORE EDIT:
bradleyland's nuanced reply below
https://news.ycombinator.com/item?id=5483759
is what I had in mind when I indicated that Tesla is probably blowing smoke about business deductibility of their car. That depends on business use, which is a fact-based inquiry.
Also, to clarify, "expensive car" for the IRS and most states is >$250K and none of the Tesla cars are that expensive.
First, there is no trick. There used to be a tax benefit to leasing in that you could depreciate 100% of the lease expense immediately, just like any other business expense. Unfortunately, the IRS has changed the way they treat automobile leases, and you now have to depreciate them on a schedule like you would any other asset.
Prior to the change in this rule, and assuming that you were able to write off a Ferrari as a business expense, structuring a lease with a $1 residual would mean that nearly the full value of the car would be paid as lease payments. This meant you could depreciate the payments immediately, receiving immediate tax benefit.
I'm not sure what niggler was talking about with the >$250k, but I suspect he's talking about the limits imposed on business deductions. There's a ceiling to the amount of business expenses you can deduct before you have to start using depreciation schedules. IIRC, that ceiling is around $250k, but I'm fuzzy on this one. All I know is that my little consultancy never hit a big enough number that I had to worry about it. I took everything as a straight business expense, including 50% of my lease payment for my car.
Here's where things get shady though. Writing off a Ferrari as a business expense is a high-risk proposition. The IRS has very specific rules about automobile deductions. You have to be able to substantiate the business use of the automobile. If you can't, or if the IRS strongly disagrees with you, they can stick you with the back tax.
If you've got the kind of money laying around that allows you to lease a Ferrari with a $1 residual, then you probably have the money to pay lawyers to fend off IRS auditors too. For your average person, it's not worth the risk, IMO. If you have a justifiable business use for your car, and you're comfortable keeping mileage logs that explain the business purpose, then go for it.
Which makes the 36,000 miles allowed under the Tesla 3 year lease problematic -- they'll have to pay 25¢ a mile for those extra 24,000 miles, or $6,000 at turn-in time. Even if they prepaid those extra miles at a cheaper rate, it'd still negate the advantages of the cheap(er) lease from Tesla.
After three years, you have the option of (a) doing nothing and paying nothing besides your normal payments. After all, you bought the car. (b) selling the car back to Tesla. You are not obligated to sell it, but if you want to, Tesla is obligated to buy it back. If you sell it to them you then pay the penalty.
So this hypothetical salesman need only not sell it to Tesla, or sell it to someone else after the tax credit period (which I believe is amortized over three years or something).
Where did business insider get what seems like a direct quote? You certainly can get the cost to lower than $500/mo if your life has a specific niche the Tesla can fill, based on the calculator. The electric car is just like minivans, pickup trucks, and motorcycles. Each has benefits and downsides which fit well in certain lifestyles, and not with others.
I would certainly benefit 15 minutes a week using a home charger instead of a gas station, but the opportunity cost for me is certainly not $100/hr.
The biggest saving is that parking is generally free in the UK for motorcycles. That, for me, is a huge saving. Lower taxes and road tolls are also significant. My insurance is also lower than when I drove a car - I guess because there's less chance of me seriously damaging someone else's property (clean license + no claims bonus, but young driver). If you want to count your time, you can get places much faster on a motorcycle too, between lane splitting and driving on bus lanes (which are both legal).
But even excluding all that, the motorbike itself was less than half the price of my previous car, and has required a fraction of the maintenance. Besides tyres, part cost is minimal. Service labour costs have generally been a lot lower - most parts of a motorcycle are quite quick and easy to access. My last service cost £60, whereas my car services tended to cost around £150. It's also far easier to work on a motorcycle yourself and you don't need many expensive tools that you probably won't already have if you're that way inclined, besides a paddock stand.
For me, the biggest maintenance cost with motorcycle is far and away tyres and associated labour costs: they don't last as long, and punctures can't usually be repaired. But at least in the UK where you're not usually driving huge distances, the other running costs tend to outweigh the cost of tyres.
If you compare a brand new entry level 250 cc japanese motorbike to a brand new entry level korean hatchback,over say 5 years, the motorbike TCO will be less than half, with the most of the difference accounted for by lower depreciation and finance costs. Assuming - and this is very important - no medical bills from motorbike accidents.
edit: US average is $368 per month: http://money.cnn.com/2011/05/05/news/economy/gas_prices_inco...
Yet according to the US DOT Federal Highway Administration, the average annual miles driven is 12,334 per year.
So the $368 that CNN claims is a lie.
Except it was per two adult/two car household, and taken at a point in 2011 when gas prices were at $3.98 a gallon.
Here's more recent numbers.
http://dailycaller.com/2013/02/05/report-u-s-households-spen...
"The Energy Information Administration reported that the average household spent $2,912 on gasoline in 2012."
Note that the 2012 number is a secondary high record (2008 held the record), and uses the actual final numbers for the full year, rather than a CNN number that cherry picked a momentary peak and extrapolated to the whole year and then never published a follow through with the actual numbers. Typical CNN! Not reliable to cite.
Anyway that's around $1500 a year per adult/car, or a bit over $100 a month. $1500 buys 408 gallons of gas, which gets you 12,240 miles at 30 mpg. Now these numbers make sense because they match what we actually know about how far people drive.
* Gas car costs financing + gas each month.
* Tesla costs financing each month.
* Tesla does not cost financing - gas each month!