Let's Do Some Math

The Tesla Model 3 is an all electric four-door sedan with autonomous driving capabilities. Tesla has priced the base Model 3 at $35,000 and $43,000 with self-driving Autopilot. Production is scheduled to begin July 1. However, Tesla has received over 400,000 pre-orders so you and I will probably not be able to buy one for at least a couple years. But just for giggles, let’s do some math.

You want to buy a Model 3 with Autopilot ($43,000). You own a car that’s paid off and has a trade-in value of $5,000. You also have $5000 for a down payment. Thus, you are going to have to finance $33,000. A loan amount of $33,000 at 3.11% for a 60 month term will cost you approximately $600 a month once you figure in tax-title-license. That’s a pretty big car payment. So, let’s do some more math.

Tesla is currently selling discounted auto insurance on it’s current models. The discount is based on the crash rate reduction as the result of Tesla’s Autopilot. Tesla’s Model X with its first-generation Autopilot has shown a crash rate reduction of 40%. Thus, Tesla is selling insurance with their cars at a 40% discount. It’s been estimated that the Model 3 with second-generation Autopilot will have a 90% crash reduction rate. Let’s say your car insurance costs $1200 a year. That’s $100 a month. If Tesla sells you 90% discounted insurance you would only be paying $10. Take the $90 savings and put it towards your car payment and you’re down to $510 a month. That’s still a pretty high car payment. So, let’s do some more math.

Let’s say the average price of gasoline in the US is $2.35/gallon and you drive 15,000 miles in a year. That’s about $1400 a year or about $115 dollars a month. Now let’s say the average cost of electricity in the US is 12 cents per kWh. Therefore, the average Tesla Model 3 owner driving 15,000 miles in a year pays about $540 a year to charge it. That’s about $45 a month. Take the $70 savings and put it towards your car payment and you’re down to $440 a month. Still too high a car payment? Let’s do a little more math.

Let’s say when you had payments on the car you currently own you were paying $300 a month payments. You won’t be able to buy a Tesla Model 3 for at least two years. Continue driving you current car and put the $300 in the bank. In two years you will have saved $7200. You originally had a down payment of $5,000. Now you have $12200. Now, let’s redo all this math keeping in mind you were originally looking at a $600 a month car payment.

Tesla Model 3 with Autopilot costs $43000, less your trade-in value of $5000 is $38000, less your down payment of $12200 is $25800. A loan amount of $25800 at 3.11% for 60 months is approximately $470 a month once you figure in tax-title-license. We’re going to save $90 a month on insurance a put that towards our car payment. We’re down to $380 a month. We’re going to save $70 a month buying electricity instead of gasoline. Put that towards our car payment and we’ve cut that $600 a month car payment almost in half.

Can you afford NOT to buy a Tesla Model 3?