I took delivery of my Model S on June 14, 2013 at the Chicago Grand Avenue service center. There has been so much written and said on both sides of the fence about the Model S. Much of the discussion surrounds the stock and it’s meteoric rise since the company went public. The company is under a microscope everyday and each move or stumble is deconstructed and debated.
My last car was a 2003 Acura TL. It was a terrific car and I loved driving it. Very reliable, but as with all internal combustion engine cars it required a lot of care and feeding. Weekly stops at the gas station accompanied by an outlay of $60. Oil changes, belts, hoses, catalytic converters, brake linings, transmission and on and on.
I grew up in a family of car guys. One uncle was a racer of sprint cars in the midwest who retired to a career of selling cars. Two others were mechanics, one professional the other amateur. My father did almost everthing on his car and taught me. He owned 37 cars and trucks over his lifetime. So you see gasoline, oil and grease run deep.
I’m the kind of guy that keeps his cars quite a while. I owned a 1993 Toyota Camray for seven years and the Acura for ten. I know what it means to stay in a car and I knew I was going to be driving my next car for ten or more years. I wanted a big upgrade. Early on in my search I considered Mercedes Benz, Jaguar and Porsche. Loved all of them, but they are very expensive once you add on all the options.
The more I read about Tesla the more I became interested. My neighbor received his in March of 2013 and he let me drive it. That was all it took. Well, not exactly. I had to convince my analytical wife. So I dove into the analysis.
Comparing Total Cost of Ownership: Model S vs. an Acura TL
I ran the numbers. I went to the Acura web site and built a 2013 TL with the options I would have included had I purchased that car. I am using the actual price of my 2013 Model S. I feel it’s fair to use the 2013 TL price and not my 2003 TL’s price because I’m buying in 2013. I drove my 2003 Acura TL for ten years and so all of the maintenance, insurance, license renewals and insurance are actuals Keep in mind I am a stickler for details and kept track of every visit to the dealer as well as kept all itemized receipts. These numbers are dead on. I had to estimate the gas costs so it’s not perfect, but I believe I’m close. Here are the high level results of the analysis.
If you stay in the Tesla for ten years the numbers show that the Model S is less than 1% more costly to own than an Acura TL. That sounds pretty hard to believe, but I have double and even tripled checked the numbers and run my methodology past a couple of PhD’s. They did not find any significant flaws.
Some might argue that I should throw out the personal time investment because it’s not a hard cost. I argue it is the hardest cost because it’s your life, not money. This calculation includes time you will spend waiting at the gas station to fuel your car, time you waste sitting in a dealership for oil changes, regular and unexpected maintenance. I used $50 per hour for one’s time, which is very low in my book. Time is one of our most important assets. We have a fixed amount of it. Once it’s gone you can never recapture it. My father used to say, “Kill time and you murder success.” Why not spend that extra week (yes, 7 days) with your family or vacationing, or working on a project you’re passionate about? Maybe even volunteering.
Here are a couple more things to consider. My 2003 Acura TL cost me $29,480, the 2013 TL is $43,310. Not the base price, but including my personal preferred options. So the Acura has gone up in price 47% in ten years. The Model S will likely become less expensive over time as battery technology improves. It is unlikely gas prices will go lower but highly likely they will rise.
If we think about a potential “Moore’s Law of Batteries,” they will improve in range and performance and become cheaper to make. The 60kW battery I have costs roughly $10,000. It’s not officially published by Tesla, but insiders say this is a good number. After ten years of driving the TL, I will likely trade it in. If I were to buy another gas car I’d likely pay $65,000 for a comparable automobile. In eight years, when my Model S battery is no longer under warranty, I might visit a service center and have it replaced with a new battery pack. If the cost of Tesla batteries went down in cost 10% per year, that means I could replace my current battery size with a new one for $4,305. And if the range went up 10% each year I spend that money for a 125kW battery pack that could exceed 400 miles in range. I’d have new car, from an energy perspective.
But why would I trade in the TL and not the Model S? One big advantage the Model S has over other cars is the software nature of the design. Tesla has promised at least four software enhancements per year. These upgrades are done over the internet, no need to visit a service center. They add new features and capabilities, improve battery life and make existing features better. All at no cost to me. The reason I may not trade in my Model S is because it becomes a new car 40 times over the ten years. I took delivery of the car in June and I’ve had three upgrades so far.
The next obvious elephant in the room is range. Range anxiety is apparantly running rampant across the country, perhaps the world. The pharmcutical companies have a big business opportunity here. I frequently get this question these days, “What happens when the battery runs down?” I reply with, “The same thing that happens when you run out of gas. My guess is you don’t often run out of gas.”
My commute is very short. Let’s call it a 10 mile round trip. My 60kW battery has a range of 205 miles. That makes me the poster boy for an electric car. However, I know many other Tesla owners that commute 75 miles each day and have been doing it for a year in their Model S. They seem to be just as mentally stable as your typical gas car owner.
It takes my home electrical grid 20 minutes and will use 3.e kW to recharge that 10 miles. I pay .04999¢ per killowatt hour. So it costs me .16¢ per night to recharge the battery. If I were to make that same commute over ten years, accounting for weekends and days off, it add up to a grand total of $387 for the entire decade of commuting!
Tesla has a mission. Elon Musk, Tesla’s CEO re-stated it in a recent email.
“Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.”
Of course other car companies have a vision or mission statements as well.
- General Motors: To design, build and sell the world’s best vehicles.
- Ford: People working together as a lean, global enterprise for automotive leadership.
- Chrysler: Build cars and trucks people will want to buy, enjoy driving and will want to buy again.To create the type of exciting, efficient, reliable, safe vehicles you expect and deserve.
Ford, GM and Chrysler all sound the same. Tesla is different. It’s a Silicon Valley software firm, which means it moves fast and focuses on innovation.
I will decline to comment on climate change. That debate plays out on many other, much larger stages. What I do believe is that the supply of fossil fuels is not unlimited. Internal combustion engings create pollution. Neither of those points are inaccurate. There’s something very satisfying about driving a vehicle that does not burn fossil fuel and has exactly zero emissions.
Read more of my posts on driving Tesla here.