I believe most will agree that buying a brand new Tesla is an expensive decision. As of yesterday, the prices for new cheapest Model X and Model S cars range from s $79 K to $99 K. Any extra options added on top of the already high base price and you will easily be looking at the $100 K+ price tag. So affording a new Tesla Model S or Model X is a financial commitment. It looks like all new models come with the 100 Kwh battery but limited to a given range. So the standard range Model S is $79 K base and has only 270 miles range.
Also, the federal tax credit is down from $7500 to $3750 for all new Tesla Models.
At least, there is gasoline savings but does it really offset the high price tag. It does help to reduce the cost but not much.
The recent changes to its pricing, Model 3 could be a great choice at this time.
What to do with $100 K
If you are planning to shell out $100 K for Tesla, there are many alternatives to think about before you do and which most likely make more financial sense:
- Buy Model 3 instead !
- Buy an apartment to live in or rent. You cannot live in Tesla
- Buy a full year of college education for your child
- Pay off your student loan
- Pay off your credit card debts
- Fund your retirement account and enjoy dividends later
But, if you are eager to get Tesla and you do not like Model 3, maybe considering a used Model S or X would make more sense. And now is a great time since there are a lot more used Tesla cars on the market than before.
I would divide used into the two major categories: Used and Used Demo
Used Model S
All manufacturer’s certified used Tesla Model X and S can be found here:
- The potential price savings can be more than $50 K
- You may still get Free Super Charging
- Possible to find low mileage cars
- Possible to find cheaper cars with higher capacity battery cars
- 6 year battery and drive warranty versus 8 years battery and power train for the new car
- No chance to get $3,750 federal tax credit
- No state sponsored tax incentives
- Batteries are not at their fullest capacity
- You do get battery as it is with 6 year warranty
- Tires are not new
- Tesla performs used car inspection but they do not install new cars.
- External scratches and internal damages are not fixed
- I believe Tesla only fixes major defects and not small damages
- Outdated hardware and equipment such as cameras and sensors which directly affect what generation of Autopilot including emergency braking, collision warning and blind-spot monitoring. You will also be limited to the quality and speed of your central computer display.
The list of downsides is long but the most painful to me is the last one. If you do not care about Autopilot features including safety features such as emergency braking, collision warning and blind-spot monitoring, the lack of them should not bother you. But these features will affect your selling price in the future. So, when I was buying my Tesla, I have received the following advise: buy as much hardware you can afford.
Used Demo Model S
The used demo cars are also used cars but not as much used as the used cars. They normally have little mileage and do not get discounted as much as the used cars.
Demo cars are not normally sold on the inventory web site. You may have to work with Tesla sales to locate the used demo car.
- There are potential price saving of at least $10 K
- You may still get $3,750 federal tax credit
- Lower mileage than used cars
- Free Supercharging
- You may also still get the full 8 year battery warranty
- Almost full battery capacity
- Little to no scratches or damages
- The state sponsored tax incentives may not be available because of the mileage limits
- Used tires
- Outdated hardware and equipment such as cameras and sensors which directly affect what generation of Autopilot is in the car
Demo used cars may also have outdated hardware and equipment which affects your car’s future sales price. Same applies here: buy as much hardware as you can.
Tesla does not seem to upgrade hardware in the old cars. You get what you buy. Some hardware such as cameras and sensors are very hard to retrofit but the internal hardware used for the central display should be possible to replace. However, Tesla does not replace internal hardware either.
These cars are similar to IPhones. If you want the latest, you would need to keep on buying the latest. The over the air updates only work so far.
Tesla has just introduced new lower priced Model 3 versions. The cheapest standard range (220 mi) Model 3 is $35 K before $3750 K federal tax incentive and any state based incentives. This is clearly a very well priced option if you want a rear wheel Model 3 and only 220 miles of range. I believe in US, most of the buyers will not go for the rear wheel drive option. The dual motor (D) long range (310 mi) version would be more attractive and it is priced at competitive $47 K base with no incentives.
At the end of the day, you really need to decide what car do you want. For example, if Model 3 is too small for your purposes, then even it is cheaper, you would not want to buy it.
Also, regarding cameras, sensors, and hardware, Tesla is not retrofitting old cars with new hardware as far as I know. I asked many times and they did not. This means buy as much hardware you can afford now because it will affect the future sale price of your car.
Finally, it is at times frustrating to see Tesla being not consistent with their car’s configuration and pricing. You need to be smart and careful with your purchase. The company seem to be chasing the correct strategy to capture more customers and constantly changing their pricing strategies and car’s configurations.
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