Financial Independence and Affording a Tesla Model S – Part 2: The Numbers

One month into beginning our journey to financial independence (FI), we nearly liquidated $100,000 of our after-tax brokerage accounts to buy a Tesla Model S. I know I’m new to this, but the financial independence early retirement (FI/RE) community would probably advise against that decision. But… I mean… have you ever driven a Model S? Ultimately, we decided not to buy a Tesla – at least not yet.

This post is the back-half of a two-part series breaking down our experience (part 1) and the numbers (part 2).

Stale Number Disclaimer

It’s guaranteed the second I publish this post the numbers on it will be stale. The numbers I represent are based on Tesla prices when we originally considered purchasing in March 2017, and then based on new prices at time of publishing in September 2017.

The Selection

Acronyms Suck. The Model S Does Not.

I was going to create a lame acronym to explain the reasons we were a few mouse clicks away from buying a Model S, but then I remembered Elon Musk would not approve.

For us personally, the reasons why we wanted the Model S are:

  • Safety: It’s really safe, and we value safety when our family’s involved
  • Innovation: My favorite – over-the-air software updates! 
  • Experience: Particularly the serenity you experience while your car drives you
  • Maintenance: Less of it
  • Happiness: The result and culmination of other reasons

Driving the Model S did to cars what our first trip to Napa did to wine… it ruined everything else by comparison. For more on this, read part 1.

Author’s Note: If you work in a corporate environment… actually… if you communicate with people on a regular basis, read and learn from this email to SpaceX employees in 2010 with the subject line “Acronyms Seriously Suck” 

Range and Cost = Top Factors

As fun as going 0-60 faster than you can say the first name of everyone in your family was, there was no way we were getting a P100D. We cared about the mileage range and cost.

At the time the S60 was still an option, which as I understand was a software-limited S75. All the same we eliminated it because the range was 208 miles. In comparison, the S75 base was a few thousand more and got you up to 249 miles, 259 miles with the all-wheel drive 75D. At this range, we can make it to Port Aransas on the Texas coast without a stop. South Padre Island is a 46-minute charge at a Tesla Supercharger Station while we eat lunch. Anything longer than that is atypical for us.

Supercharger and route planning thanks to

The Numbers

Out of Pocket Expense

We ran the numbers based on our ideal Model S 75D configuration and the minimal S 75 that would meet our needs and desires.

tesla options march 2017
Tesla pricing and options in March 2017

Unless we’re getting 0% financing, we have no desires to finance a car. We don’t consider the value of our cars as an asset in our net worth calculation, and we don’t want the monthly payments or liability associated with the loan.

Just in case any of my friends point it out, yes I am aware Tesla currently offers 0.99% financing for 72 months with $5k down. However, we don’t actually need a Tesla, we want one. What we don’t want is a $1,324 monthly car payment for the next six years.

We’re looking at $86,552 to purchase the base model with a few upgrades, or over $100,000 to buy the car we want.


Updates to Reflect September 2017 Options and Prices

Since our initial research, Tesla has:

  • Shipped a few Model 3s, the wait list still grows
  • Eliminated the S 60
  • Lowered the price on the S 75 and S 75D
  • Repackaged the add-on options

Since we still want a Tesla, here are the numbers for our ideal 75D and minimal S 75.

September 2017 Tesla pricing and options

The new pricing saves us about $5,000 on either version, but with the way they repackaged the add-ons, these cars have a few nicer features than back in March. The exception to that is how the Cold Weather Package is now bundled in the $5,000 Premium Upgrade instead of $1,000 a la carte.

Despite living in Austin, if I’m going to spend this much money on a car, it better damn well have a feature standard on vehicles a fraction of the price. Well… at least this newly speced out model could also serve as a bioweapon shelter while delivering an incredible acoustic experience. Where’s that on your safety tests IIHS?

Total Cost of Ownership

Astute Tesla owners and financially-savvy individuals alike would point out that my numbers are incomplete. Comparing the purchase of a $96,519 Tesla Model S is not the same as a $96,519 internal combustion vehicle.

For instance, Tesla’s online calculator markets the $96,519 Model S cost after estimated savings to be $84,500 – take the $96,300 list price less $7,500 government rebate and $5,500 energy savings over five years.

A caption from Tesla’s website on estimated savings

Their estimates are fair. I punched my numbers into a Tesla Total Cost of Ownership and Comparison spreadsheet found online.

Total cost of ownership of a Tesla Model S 75D

Common Assumptions

We both drive about 10,000 miles/year. I could increase this to around 12,000 since we’d drive this car more than our second car. We hold on to cars for a good amount of time. For a car that runs well, we can safely estimate keeping a car for 8-10 years or more.

Tesla Assumptions

Here I’m using the ideal S 75D model with September 2017 pricing. Car taxes are 6.25% in Texas. We have no state rebate on EVs, only the fed rebate. The kWh/mile is simply the battery capacity divided by the range. I looked through a few electric bills to determine our average kWh expense. This number would probably be slightly less with a Tesla because our kWh cost goes down the more you use.

The maintenance costs and service intervals are based on the spreadsheet author’s research. I added $2,000 of additional lifetime maintenance over 8 years because it seems unreasonable to not expect something to need work. I also bumped up the charging installation by $500.

Internal Combustion Engine (ICE) Assumptions

I modeled the ICE to my most recent car purchase – a two-year old Audi A6 Premium Plus in great condition with low miles. If we purchased a car other than a Tesla, we’d probably stay in the used car market with $30k as our upper end. Note: we reserve the right to renege on this in the near future.

Miles per gallon and gas price is based on actual data. Between tires, brakes, and other maintenance on a premium vehicle, the number I used for maintenance seems fair over 8 years.


Our total cost of ownership (TCO) for a new Tesla compared to a two-year old, luxury sedan is two-times higher over an eight-year period – $102k for a Tesla S 75D versus $50k for a two-year old Audi.

The cash down on the Tesla after tax, rebates, charging installation is almost three-times the cost of the Audi. Over time, we begin making up some ground with the Tesla as it costs three-times less to operate on an annual basis – $738/year versus $2,181/year.

I’m not factoring resale value into this calculation because with the amount of innovation that’s going to be released over the next 8 years, I don’t think there’s an accurate way to predict the residual value on today’s Tesla, but it’s probably safe to assume that an eight-year old Tesla will maintain value better than a ten-year old luxury vehicle. TCO could go from 100% more to 65-85% when accounting for resale.

A few other things to point out about TCO:

  • Energy costs go from $96/month to $20/month – CO2 emissions eliminated
  • Lifetime maintenance and service is down from $8,240 to $4,000

Is It Worth It?

The Model S starts off three-times more expensive than a two-year used luxury sedan and ends around two-times more TCO. But… what about the intangibles?

  • Geeking out over new technology
  • Thrill of driving
  • Trill of a car driving you
  • Environmentally friendly alternative to ICE cars

Is it worth it? From a pure cost and FI perspective, no. We can own two nice cars for the price of one. Heck, from a FI perspective, many people aiming for FI/RE might point out that they could own a satisfactory vehicle for 30% of what I’m using for my ICE estimates. And then the Mustachians would tell me to cut my clown-car habits entirely, live closer to the office, and ride a bike. I’d love to, but it’s easier said than done.

The Decision

What’s the Plural Form of Tesla?

If we’re being honest, we’d be buying two Tesla, not one. There’s a reason 90+% of Tesla owners say they will purchase another Tesla. I also hear spousal-envy is a real thing when a Tesla enters the relationship.

One of our motivations for considering a Model S is to buy one of the first 200,000 Model 3s with the $7,500 rebate. Tesla owners get priority over the general public in the 400,000-long Model 3 wait list. So let’s look at those numbers.

Tesla Model 3 + Model S combined total cost of ownership

Estimating $45,000 for a Model 3 and re-running the rest of the numbers, the Model 3 eight-year TCO is a much more swallowable $46,302. I estimated fuel expenses based on 220 mile range on a 50 kWh battery, and I lowered the charger install to $500 assuming I could work a deal to get two installed at the same time. I kept other cost of operations the same. For the comparison car, I’m simply cloned the same numbers as the initial ICE vehicle.

The Model S + Model 3 is basically a mortgage with $152,131 up front costs comprised of car, taxes, and home charger. We’ll get a $15,00 rebate on our taxes. And then it’s smooth sailing with very low cost of operations at $11,391 over eight years. The combined total cost of ownership comes in at a hefty $148,523, or 47% more than the estimated TCO on two used premium cars. Assuming Tesla resale value will perform better than internal combustion engine vehicles, I estimate the TCO of owning a Model S and Model 3 to be 20-25% more than my comparison cars.

So We’re Getting Two Tesla? Sweet!

Is that worth it? In my opinion, yes. Looking strictly at TCO estimates with resale, it’s about $50k more in lifetime expenses. Accounting for resale – let’s assume 30% and 20% residual value on the Model S and Model 3 after eight years, respectively – that gives us $37,890 of resale value. We’ll give our 10-year old (bought two years used + eight years of ownership) ICEs resale value of $6,000 each. That brings the Tesla TCO to be a $21,892 premium – 25% more.

But no, we’re still not going to buy them.

Tesla in FI-Year Terms

To date, we still haven’t purchased the Tesla. We currently own our two cars outright. We’ll make some moves in 2018 as we’ll be in the market for a three-row vehicle. Mrs. FI Exec says no minivan.

The Tesla with rear facing seats are still an option. However, it’s going to take some work. More specifically, some earnings.

Purchasing two Tesla delay our time to FI by about one year. We could liquidate $150,000 from our current savings and reduce our annual automotive category budget due to gas savings. Accounting for the lost gains from not having $150k working in the market, combined with our income and savings rate to rebuild the account, this equates to about one-year tacked on to our FI calculations.

Are we willing to work an extra year, 10 years from now to have something? Yes, especially considering our plans are to reach FI in 10 years, not necessarily stop working.

So….. Buy?

Spending Earnings, Not Savings

We’ve worked hard to get to where we are and where we project to be in 10 years. While we’d like those plans to include a Tesla (or multiple Tesla), they currently don’t. Instead, we’ll treat the Tesla as a goal which we pay for through the earnings of a net-new investment. In short, create the necessary cash flow to purchase the car instead of tapping into investments to purchase something with no return. Rich Dad Poor Dad, anyone?

This route rewards our hustle, discipline, and investing without removing a significant sum of money that’s working hard for us in the market. And if we can sustain the cash flow, the benefits will outlive the time it takes to pay for the cars.

Had we given the purchase of a Model S the same amount of consideration this time last year, we probably would’ve liquidated the money and been cruising around in a Tesla. Since learning about FI/RE, this was the first major decision that came across our plate, and we feel good about where we ended up with it.

Join Us for Our Trip!

If you made it this far in the post – thank you! If you made it this far and I don’t personally know you – THANK YOU! I hope you enjoyed it, and I hope you reach out to introduce yourself.

Mrs. FI Exec and I will be documenting our experience as we aspire for FI as a high-spending family. We hope you’ll  join us by joining our mailing list and visiting us on Facebook, Twitter, and Instagram.

Talk to you soon.