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

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.