Tesla: It’s not just the sexiness of the EV, it's the money saved | RenewEconomy

Tesla: It’s not just the sexiness of the EV, it’s the money saved

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Tesla moves towards more conventional marketing methods, saying EV Models S and X save lots of money compared to similar-priced petrol cars.

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DETROIT, MI, - JANUARY 10: The Tesla Model S Signature is shown during a media preview day at the 2012 North American International Auto Show January 10, 2012 in Detroit, Michigan. The NAIAS opens to the public January 14th and continues through January 22nd. (Photo by Bill Pugliano/Getty Images)
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Telsa cars are recharging at a Tesla charging station at Cochran Commons shopping center in Charlotte, N.C., Saturday, June 24, 2017. (AP Photo/Chuck Burton)

Tesla has shifted gears (metaphorically, of course, because its electric vehicles don’t have gears!) and is moving towards more conventional marketing of its cars, in advance of a wave of EV competitors coming over the next 18 months or so.

The latest is a published analysis of the Total Cost of Ownership – basically the running costs and loss in resale value over time.

Tesla picked two current versions of each of its Model  S sedan and Model X SUV and compared them against common ICE (internal combustion engine) models that they know are in the “consideration set” (basically the shortlist that a buyer is seriously comparing).

It then used what we think is a reasonable set of assumptions around various costs and usage.

The comparisons are based on 3 years of 15000km each, and use Redbook used-car values. The energy usage is based on the Tesla included 400kWh free SuperCharger credits, and AGL’s $1 per day EV plan for the first year, and $0.33/kW for the remainder (national average – somewhat higher than the typical Tesla driver).

It also includes a $1000 home charger installation cost. Servicing is the manufacturer published service costs.

This first is a match-up between a Tesla Model S 75D Sportback Sedan AWD which includes a premium interior option, and Mercedes Benz E Class E350 4 door 9-speed 3 litre diesel. A convincingly lower cost over three years for the Tesla. It is highly dependent on the used-car value retention.

Next is the same Tesla but without the premium interior, versus a Jaguar XF X260 MY18 S Sedan 4door Sports Auto 8speed 3.0 diesel. Again, the resale value tips it well in favour of Tesla, although the cheaper Jaguar list price makes it much closer.

Now for the family SUVs. Tesla’s Model X 75D Wagon 5door Reduction Gear 1sp AWD ACOkW (Seven Seat Interior) – a luxury people mover/offroader – versus a BMW X5 40D F15 xDrive40d Wagon 5dr Sports Auto 8speed 4×4 715kg 3.0DTT (with a 3rd row of seats).

The resale value is in favour of the BMW, but the Tesla’s lower energy cost tips the balance in favour.

Last is the Tesla Model X SUV (no extra seats this time) but with a premium interior option (perhaps the equivalent of the urban “Toorak Tractor” or the “Mosman Shopping Trolley”), against a Maserati Levante M157 Wagon 5door Auto 8speed Q4 3.0DT.

The closer purchase price and the Maserati’s expensive maintenance and diesel guzzling mean a solid advantage to the Tesla.

A word of warning: these ownership costs are heavily dependent on used-car resale values, and the short time the Tesla’s have been on the market (and the pent-up demand from a restricted new-car supply) may mean the Tesla resale value drops in future once Teslas are more ubiquitous.

Now this sort of analysis is typically used for the more rational people such as fleet buyers.

Indeed, the genesis of this analysis was from Tesla’s fleet sales, but the distribution of it to a wider retail audience is an indication of Tesla gearing up for a contested market as opposed to the virtual monopoly they’ve enjoyed in the past.

The other Tesla system unique features (their Tesla-specific Super-Charger network, Over-The-Air software upgrades and fixes, and their integrated no-dealer business model) still remain, so Tesla still seems confident of being competitive in the longer term.

And they are sexy cars to see and drive!

There’s no news on the likely dates for Australian availability of the mid-market high-volume Model 3. The right-hand-drive variant won’t be manufactured prior to mid-2019, and Australia is likely to be second in line for that model (after the UK), so perhaps a few months later is the target.

Pricing is also yet to be firmed up, although Elon Musk (Tesla CEO) has tweeted that the intention is parity with US pricing (allowing for exchange rates and differing taxes).

Addendum: Tesla later advised of an error in the trade-in price, and did not include LCT (luxury car tax) for the Tesla Model S 75D v Jaguar XF. The trade-in price for the Model S 75D is in fact quite a bit higher than the $65,656 stated, and is actually $72,211. But this actually brings a better comparison for Tesla because the total overall saving is lifted to $13,728.

 

 

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50 Comments
  1. Rod 2 years ago

    The servicing and tyre costs intrigue me.
    One of the positives for EVs is much lower servicing costs but that doesn’t seem to be the case here.
    And unless the driver is a bit of a hoon, I would expect only one change of tyres before 45,000km.

    • MaxG 2 years ago

      Yes, agree… the servicing had me wondering too… futur book value (trade in) is also great guess work. However, it is close to what I figured as well; only if you drive significantly above average will the EV be in front.

      • Rod 2 years ago

        Yes, our small car only did 8k last year for about $850 in Premium fuel.
        I was/am hanging my hat on low maintenance costs making an EV a realistic positive financial outcome.
        And the other take from this. Don’t buy a NEW luxury car unless you enjoy high depreciation rates.

        • Andy Saunders 2 years ago

          “Don’t buy a NEW luxury car unless you enjoy high depreciation rates”

          Twas ever thus. Drive it out of the showroom and it’s worth a lot less…

          • Rod 2 years ago

            But it is not as stark if it is a $15k Fiesta.

            Although, I do like a new car, it makes little financial sense.

          • Hettie 2 years ago

            Dealer’s demo. Almost new, on road costs paid, substantial saving over brand new, all the bugs ironed out, what not to love?

          • Rod 2 years ago

            Yes, they say treat your modern engine mean to run it in. You can be sure the dealers demo is run in correctly 😉
            My last one was an actual run out as in last of the chassis, not facelift. When they first came out they were 48k. I paid 33.5k and couldn’t squeeze any more from either dealer. As it is a bit of hoon car, I have my suspicions it was pre run in for me.
            A mechanic Uncle used to swear by Government auctions. Of course he would know the good ones and if he got a brummy, could fix it.

          • Peter Campbell 2 years ago

            Yes, to dealer demo. My Mitsubishi iMiEV almost 5 years ago was half the price they originally asked. Has run flawlessly.

      • Andy Saunders 2 years ago

        Servicing cost is each manufacturer recommended interval and program cost. Should be reliable, if a little understated perhaps due to unexpected extras.

    • Ren Stimpy 2 years ago

      Same. It will be disappointing if the $500+ glorified grease and oil change type of rorts don’t end with the ICE.

      • Rod 2 years ago

        Yes, I used to be a grease monkey and do all my own oil changes as well as brakes etc.
        I don’t have the facilities and I’m too old to be getting under cars now so it really grinds my gears the price mechanics ask to do the basics.

        • Andy Saunders 2 years ago

          Very little fluids in modern EVs!

          The servicing starts with a download of the key fob, which contains a lot of running data. Vastly different from traditional servicing.

          • Ren Stimpy 2 years ago

            Then from where is the 3-year $2100 ($700 p.a.) servicing cost to customers justified?

            Surely it’s not just for upgrades over the wireless thingyjig?

          • Rob BDR529 2 years ago

            Multi point mechanical check including brakes, steering and suspension, depending on service interval there is also Aircon service and possible re-gas, battery coolant replacement, brake fluid replacement, wheel rotation, wheel alignment plus a few other minor replacements, could it be better value? For sure it could and as more cars hit the road and Tesla make better use of the workshop space it has to or customers will go elsewhere. Over the air updates are a seperate matter and are free.

          • Ren Stimpy 2 years ago

            A yearly $700 multi point mechanical check when the car is less than three years old?

            R O R T ! ! ! ! !

          • Rob BDR529 2 years ago

            Let me spell something out for you, I own a Model S, in almost 3 years it has covered over 125,000kms and has cost $1380 in service fees, zero dollars in repairs, it has received attention from a committed Tesla technician that provides me with confidence that the car can travel to all parts of the state with very little chance of mechanical or electrical failure, I’m also confident it will reliably last well past the average lifespan of most cars, that’s what you do with $150k plus cars, spend a little up front and receive the rewards later on. So if you think it’s a rort please bask in the knowledge that no one is forcing you to buy a Tesla and you can drive a multitude of other vehicles with your head in the sand.

          • Ren Stimpy 2 years ago

            Good for you! How did you manage to travel 125,000km in 3 years paying only $1380 in services charges (or $460 p.a.)?

            Because the service charges in the article’s tables is $2100 (S) or $2475 (X) over 3 years. Or $700-$825 per year in the first three years, aka a gigantic R O R T ! ! ! !

          • Rob BDR529 2 years ago

            As you see Tesla service fees as a rort you have no need to worry about that, feel free to own any car you wish, pay any service fee they charge you and hope you made the correct long term decision.

          • Ren Stimpy 2 years ago

            I want to see EVs disrupt ICEs on the basis of cost, not just take over the costly rip-offs of the ICE sales model.

          • Rob BDR529 2 years ago

            The author wrote an article on how an EV has a lower cost of ownership over 3 years compared to a similar type of ICE vehicle, he used the vehicles and best data available to him yet you seem to find some minor issue with the potential cost of Tesla servicing, you also like to spell out “rort” in capital letters as if it gets you a bit more credibility, if you don’t like the potential service cost of a $150k car don’t buy one in the first place. If you want to use this forum to attack Tesla do it with Facts that will stand up to scrutiny.

          • Ren Stimpy 2 years ago

            The fact is a yearly multi-point mechanical check does not justify a $700-$825 price tag for servicing an EV within the first three years of ownership. There are no oil, coolant or other fluid changes, no manual cell by cell battery testing, and the brakes endure much less wear than brakes on non-regen cars. So give us a service price component breakdown to justify the high price. Until then I’ll continue to assume it’s a r o r t ! ! !

      • Andy Saunders 2 years ago

        Interestingly, Tesla claims they aim to make zero net margin on servicing. Conventional dealers make a lot of $ that way.

        My gut feel is the Tesla service costs could come down over time as sales volumes go up/more experience/more de-bugged parts/possibly cheaper parts.

        • Ren Stimpy 2 years ago

          How do they justify their current servicing costs to their customers? How is it broken down?

          I could understand if they had to pull out the battery pack and test each and every 2170 cell each year. Do they actually do that?

          • MacNordic 2 years ago

            No need to pull the battery out – just download the data from the BMS onto the service notebook. All data you could wish for – this is a Tesla (aka computer with attached set of wheels). Maybe even remote diagnosing from the service helpline in case of any faults occurring. I seem to remember some stories along that line…

    • Rob BDR529 2 years ago

      The servicing mentioned would be based on the yearly recommended service cost, this is not compulsory but any car owner regardless of the vehicle being $15k or $150k should get their vehicle checked by qualified and experienced technician at reasonable intervals, EVs may not have the need for engine oil changes but they still have brakes, steering and suspension that need a safety check.
      Tyre wear varies massively depending on wheel diameter and how much is city driving or freeway driving, but 45,000kms is easily achievable on 19 inch tyres/wheels.

      • Rod 2 years ago

        Agreed, but they must be premium prices at $700-$800 per year for servicing.
        My 1st service, 3000km check was free as it should be. The other touted benefit from EVs is reduced brake wear from regen braking which should reduce those costs.
        These days they just hook your car up to a diagnostic tool via your OBD2 socket anyway. EVs probably have their inbuilt diagnostics.

        Checking is cheap. Fixing is where the big bucks are.

        • Rob BDR529 2 years ago

          Servicing costs could be cheaper, it’s noticable they fall in just below the cost of most other similar priced cars, a bit of marketing going on there. Brake pad wear is 5 to 10 times less although fluid still gets replaced at 100k and a close inspection is still required. But as you say checking is cheap, fixing is where the big bucks are, better to check and catch a potential fault early.

        • Andy Saunders 2 years ago

          Yes, Tesla aims for a premium servicing experience – for instance loan cars better than yours, home or work pickup/drop-off options etc.

    • Andy Saunders 2 years ago

      Tyre cost here is one set changed in each case. A commercial quote was used (the tyres for each vehicle are slightly different)

      • Rod 2 years ago

        Sorry Andy, I’m really not trying to pick holes. Just those two stood out like canine testicles.
        I was probably thinking my low profile 18″ tyres could be had for about $1000.

        • Andy Saunders 2 years ago

          With 15k per year, that makes 45k over three years. Depending on driving style many people may not need a tyre change.

          Theoretically there *could* be more Tesla tyre wear due to the higher acceleration, especially in ludicrous mode. If you look at some of the youtube clips there’s a fair bit of squealing as they accelerate.

          But of course you don’t need to drive it like that.

          • Rod 2 years ago

            I bought a middle age crisis car and after reliving my youth modifying it set about “driving like that” and managed to go through the original tyres in no time. I’ve gotten over that and the next set will last much longer.
            No doubt some will drive like that at times, but I expect most EV drivers will be a little more mature in their actions than me and as you say may even reach 45k before a change.

    • Nick Kemp 2 years ago

      Me too – ignoring tyres my last service cost around $400 on an ICE vehicle but $270 of that was oil, oil filters and air filters suggesting possibly around $100 a service for a BEV because they should be doing it faster if they don’t have to do all that draining and pouring.

      • Ren Stimpy 2 years ago

        At least.

  2. Tom 2 years ago

    No one buying a $150k car gives a damn about running costs.

    • Erich Schulz 2 years ago

      Everyone has a spouse they need to convince!

      • rob 2 years ago

        Not me fortunately.

    • John Smith 2 years ago

      According to the article, these were comparisons targeted for fleet owners (i.e. businesses owning multiple vehicles), where operating costs are a major factor.

      • Ren Stimpy 2 years ago

        Which co. owns a fleet of Jags, Mercs, Beemers or Maserati’s … and are they currently hiring? 🙂

        • Andy Saunders 2 years ago

          High-end hire car fleets, corporate executive fleets. Maybe even governments soon.

          Given the wild acceleration of especially the dual-motor Teslas, the average corporate fleet would be thinking of disabling “ludicrous” mode! Or paying a lot in tyre wear.

        • neroden 2 years ago

          Limousine fleets. Pretty common for them to own very high-end cars actually. Several limo companies have gone all-Tesla since their running costs are *so* much lower.

    • Rob BDR529 2 years ago

      For some owners you may have a point but for many running costs are still a factor, Tesla’s are being used on a commercial basis in the USA, Europe and Australia, replacing a $125k petrol with a 125k Tesla has large total cost of ownership savings.

    • Peter Campbell 2 years ago

      I know someone with a Tesla who argues that it will last as long as four cars he might have bought. So, rather than thinking of it costing $120K, he thinks of it as a much better car than he could have got four times for $30K.

  3. Barry Alternative Fact Covfefe 2 years ago

    If you can afford these cars a few thousand here or there is small potatoes.
    That said the Model 3 standard range will appeal to more people buying regular middle class vehicles.

  4. neroden 2 years ago

    Tesla resale values will hold up long enough for anyone buying a new Tesla *now* to take advantage of them. In 20 years, maybe not.

  5. remoteone 2 years ago

    Insurance costs were not mentioned in this analysis. Are there or will there be differences in manner between EVs and conventional vehicles?

    • Andy Saunders 2 years ago

      I may write an article about these – there’s some strange insurance pricing going on. Some insurers treat Teslas as equivalent to extremely high-powered ICE vehicles.

    • Peter Campbell 2 years ago

      My two plug-in vehicles, a Mitsubishi iMiEV and a Holden Volt, have quite normal insurance costs from an ordinary insurer.

      • remoteone 2 years ago

        Thanks for the info Peter. I was also wondering about whether the ATO have a deduction schedule for electric vehicles (as in a rate per km for work related use)? I did a brief search of their website and couldn’t find anything. Any thoughts?

        • Peter Campbell 2 years ago

          A few years ago I think we claimed for work related car use when my wife was using our iMiEV to travel between two work campuses on a regular schedule. From memory there was a per km formula for a small car which we applied.

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