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Thread: Teslanomics - Reality or Statistics?

  1. #1
    Senior Member smorgasbord's Avatar
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    Teslanomics - Reality or Statistics?

    The phrase "There are lies, damned lies, and statistics" is attributed to Mark Twain. The Teslanomics pages of the TeslaRumors website are dedicated to cost comparisons of the Model S to just about everything else. It all sounds great, but then I looked over the comparisons of the Leaf to the Model S:

    Code:
    Model S - 160 mile - $7500 Credit		              Leaf SL Electric - $7500 Credit
    MSRP              $57,400                                              $37,250
    Fuel               $2,025                                               $3,777
    Depreciation      $33,292                                              $21,966
    Maint              $3,000                                               $2,708
    Repair             $1,000                                                 $773
    Total:             $31,817                                             $21,724
    Looking at the numbers, depreciation is the biggest factor. So, while Model S costs $20K more than the Leaf to buy, when sold after 5 years, Model S ends up only costing $10K more. Note that the math doesn't quite add up on the Teslanomics pages, and that the depreciation they calculate for Model S is different on the Porsche page than on the Nissan page, for instance. On the Porsche page, they calculate depreciation as 50% of the tax-rebated price, for instance.

    But, is a 50% residual really the right number? According to this analysis of Edmunds.com, the best cars retain 54% of their value after 5 years, the worst only 20%. Is it right to predict EVs residual values to be at the top end, especially considering battery replacement concerns? And even then, this ignores the time value of money.

    I think there's no way to tell what actual depreciation of electric cars will be. The TeslaRumors comparisons to Prius and Rav-4 EVs are not applicable in my opinion. RAV-4 EVs are special, limited, and have been highly sought after by people wanting EVs. But, with the increased availability of the Leaf and the upcoming Tesla-powered RAV-4 EV, I predict their value will drop pretty quickly. Used Priuses are sold like regular cars getting good MPGs, but only because it's been over 10 years and people have seen that they didn't have to replace the battery at 7 years or 100K miles, as was widely predicted when the car was first introduced. Today, everyone is today worried about Li-Ion battery replacement costs, and that's going to put a huge damper on EV resale until such time as people see for themselves what replacements are/are not needed and the cost. Granted, Model S's 8 year warranty will help preserve some resale value, but maybe mostly on the 85K version with unlimited miles.

    And, while it's hard to ignore the depreciation elephant in the room, is maintenance on the Model S really only 10% higher than the Leaf? Is the Model S more efficient, resulting in lower fueling costs?

    I believe the Model S will turn out to be a cost effective way to drive compared to roughly equivalent ICE cars, and that electric drive has many other non-cost-related tangible benefits, but I don't believe what Teslanomics (not affliated with Tesla, btw) has the right cost analysis. I think one has to look at the spectrum of depreciation possibilities for Model S and then determine via one's own crystal ball at which end of that spectrum Model S will end up at. In that regard, the few thousand more expensive Signature series might end up costing less, since it might be worth more at resale time to collectors.

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    How can depreciation even be estimated on a vehicle with zero track record? You cannot even extrapolate from the Roadster. This is the first car manufactured by Tesla at their own factory.

  3. #3
    Life happens Mycroft's Avatar
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    The Sig is more than a few thousand more. You're also getting stuff like 21" wheels and dual chargers thrown in that you might not otherwise buy and the resale value on those would also drop with the rest of the car. So IMO, buying Sig as a hedge would not be a good move. You buy it because you can afford it and because you want the early delivery and nice leather.

    As for comparing to the Leaf, it's a similar calculation. You buy the Model S if you need the range or if you really want the additional space and other features the Leaf doesn't have.

    IMHO, no matter how you pencil it out, EVs are more expensive than ICE unless you're talking cars like the AMG, M-Series, or Panamera compared to the Model S Performance. Otherwise, you're paying extra for the EV driving experience (i.e. luxury).

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    I think the maintenance will be slightly higher than the Leaf simply because it has bigger tires, I think the maintenance costs for the leaf over 5 years will be closer to 1.5 K (mostly tires).
    I think the Model S will retain a better resale value than other cars, even though at the time of resale it will probably be old tech.
    The biggest issue with used cars is when they will fail.
    With the Tesla or any battery powered car it's more difficult to "hide" if it's abused (fast charging- the batteries will show it right away during the sale), where as a normal car the last driver could have abused the engine by driving it hard. You don't have to be a mechanic to look at a screen and see the battery has X amount of miles and it's full.
    I think it is a fair assessment that the Model S will only be >10K more than the leaf in the end simply because their is a bigger used car market for a 4 door, relatively fast, luxury car with lots of room verse a 4 door commuter car (slower).
    Right now, I have 3 people who said they would buy the car off of me (if and when I decide to selling it in 8 years - they wouldn't have said it for the Leaf, one's a muscle car person, and 2 senior citizens)

    In terms of collectors editions- you never get what you paid out, unless you never drive it, it doesn't matter- I had one before (every dealer only got one), it was close to 30 K new, sold it for 4 K with 120,000 miles after 8 years and the interior was immaculate

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    Member Tommy's Avatar
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    For me, the most out of touch statistic Teslanomics uses in their cost comparison with ICE (or for that matter competing EV's) is the cost of electricity to operate the Model S. The EPA label on new electric vehicles for sale has a minimum annual cost of $550 be it the leaf, BMW E or Mitsubishi i. I don't think the Model S is going to be less than $550 in annual costs per the EPA. However, Teslanomics shows the Model S using aprox. 45% less electricity than the Leaf in the example given; unfortunately Teslanomics does not provide the figures at how the fuel cost was arrived at other than generalities about US averages for electricity costs. Teslanomics is either using unrealistically low Kw/hr rates and/or is using unrealistic efficiency numbers for the Model S to state the Model S is aprox. 45% less in electrical costs to operate than the Leaf.

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    Is Tesla going to bring down the price of annual maintenance ($599/year) for the Model S? If tires wear at a rate halfway close to the Roadster that will highly inflate maintenance costs there.

    Fueling costs are also highly suspect as mentioned - they should be similar between the 2 cars. We'll know once EPA numbers become available.

  7. #7
    I think that electric car depreciation calculation is more complex than an ICE.
    I would break it into 2 parts. First is the battery, the second is the rest of the car.
    The battery depreciates on some schedule dictated by its remaining life, at some point it needs to be replaced and you need to know the replacement cost at that point.
    However the rest of the car should theoretically depreciate more slowly than an ICE because the drivetrain won't wear out like an ICE does.

    I also believe that ICE cars will start to depreciate faster and faster as fuel prices go up.
    20 years ago the cost of fuel was only about 10% of the cost ( fuel + car purchase considered only ) for a new car. Today it is closer to 18% for the average car. In another 10 years it could reasonably be 32%.
    I tried to explain it with a post on my blog: The end of the ICE Age | High Speed Charging

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    Senior Member JRP3's Avatar
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    I make the assumption that EV's will eventually have better residual value than ICE's, and that assumption is based on a number of other assumptions. Batteries will last longer than expected, the drive train will last far longer than ICE drive trains, and batteries will get better and cheaper over time. The drive train assumption is pretty much a given, the battery improvement assumption is as well, but the degree to which it happens is still an unknown, and the pack life assumption is dependent on cell production quality control and actual usage patterns, which I think will be fairly light for most vehicles. The caveat will be high mileage vehicles in a short time frame, which means people are draining the packs deeply and probably fast charging them often.

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    Quote Originally Posted by JRP3 View Post
    I make the assumption that EV's will eventually have better residual value than ICE's, and that assumption is based on a number of other assumptions. Batteries will last longer than expected, the drive train will last far longer than ICE drive trains, and batteries will get better and cheaper over time. .
    I think the most telling sign of this is that Tesla offers a warranty for a new battery replacement for 12 K for the Roadster. Best guess is that in 10 years, if you put a new battery in it, minor cosmetic/mechanical work- it would would run be like new. Best guess is 16K (12 K being the battery), plus it does have an advantage of having a simplified transmission and not having a significant amount of steel (rust)

    I don't know how much a new performance car engine costs, but I know a Lincoln towncar crate engine is 10 K , then a new transmission (2 K), fuel system (1K), wiring (1K) , mechanic costs (2-4K), rust removal + routine cosmetic and mechanical repair (4K), etc, etc.
    All things being equal, for a Lincoln Towncar, you are looking around 22-24 K (more than a 10 year old car is worth and almost the price of a new one)- That's why the value is so low.

    In 10 years, if Tesla offered the 300 mile battery one for 20 K, then yes, the resale value will be less.
    My formula/guesstimate says that a new Model S in 10 years (no other options) is 65 K, so an old one should still be able to be sold for around 35 K -40 K or restore for 16 K to have it like new

  10. #10
    Model S 03182 ElSupreme's Avatar
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    Ok so I have been thinking about the Tesla Model S this way for some time now. And just figured out how to verbalize it. It is over simplified on the real TOC. But honestly since there is no history for the Model S any real TOC is just made up anyway and has little weight. So I honestly think these basic calcs work out much better.
    Plus the $7,500 from the Feds and $5,000 from the State (GA), really make this car affordable, so long as you can qualify for the larger loan, and have the financial discipline to make the payments.

    I buy a Model S, and it comes with ~5 years of gasoline equivalent. (Years at $3500 a year I currently pay in fuel to replace a battery)
    That battery will probably last 7-10 years with usable range for me. So I really get ~7 years of fuel. (Sadly unless I find a duffel bag full of cash I am probably getting the 40kWh pack)
    After battery replacement I get another 7-10 years of fuel. This will always be cheaper than fuel.

    The only thing I would worry about would be interior wear, and paint longevity. And the infotainment system taking a nose dive. The shocks will probably wear out after 150k or so miles. But I would think mechanically this car is roughly worth double the life of a ICE vehicle (12-18 years). After that point safety and other convenience items. Extended second generation battery pack design, giving significantly extend range. New car value will probably outweigh the cost.

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