
Can You Really Get A Tesla Model S For Under 500 Dollars Per Month? - coloneltcb
http://www.businessinsider.com/can-you-really-get-a-tesla-model-s-for-under-500-dollars-per-month-2013-4
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orangethirty
_Puts 4-square sales form on the desk_. So tell me, what kind of payment did
you have in mind? $500/month? That sounds doable. Do you have anything down?
No? That's fine. I can _still_ get you a good deal, though it will take a
_couple_ of extra payments to cover that. What's some extra payments here and
there? You are still _basically_ paying the down payment as a monthly payment.
So it works out for you. Ok, great. What color were you looking for? Blue?
Sure, we have that. Though the blue comes with the optional supercharger
package. Yeah, Tesla only sells the blue model with that package. Uh-huh. It's
basically an extra $13 a month? I mean, that's nothing for the convenience of
the supercharger. You are already saving _thousands_ of dollars in gas by
buying an electric car. An extra $13 a month is no big deal. Ok, so let me run
this by finance, and we will have an answer in five minutes. Let me show you
the car a bit more while we get a response. Please follow me to the lot...

~~~
meritt
I hate you so much right now.

Well done.

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jamesaguilar
Heh, the part where they factor in the time you save on pumping gas is really
pushing the envelope a little on "savings."

~~~
droithomme
It also assumes you will drive 15,000 miles a year, then in a separate area
notes you pay a 25 cent a mile penalty for all miles driven over 36k before
trade in at 3 years or beyond.

It also assumes that gas costs $5 a gallon in the same area that electricity
costs 11 cents a kWh. Which city is this again?

~~~
kbrosnan
Fairly close to Palo Alto, CA. According to a sample bill the rate was around
12c [1]. Premium gas is currently $4.25-$4.50 it has been higher in the past.

[1]
[http://www.cityofpaloalto.org/civicax/filebank/documents/305...](http://www.cityofpaloalto.org/civicax/filebank/documents/30586)
[warning pdf]

~~~
droithomme
<http://www.sanjosegasprices.com/Palo_Alto/index.aspx>

Arco, 699 San Antonio Rd & Middlefield Rd, $3.93 as of 15 minutes ago.

[http://www.cityofpaloalto.org/civicax/filebank/documents/808...](http://www.cityofpaloalto.org/civicax/filebank/documents/8089)

9, 13 or 17 cents a kWh for residential, depending on usage tier.

Or if you want green energy in Palo Alto it's 11, 15 and 19 cents a kwH.

[http://www.cityofpaloalto.org/civicax/filebank/documents/809...](http://www.cityofpaloalto.org/civicax/filebank/documents/8090)

If it's a business meter, such as one would have at a refueling station, or
recharging at work or at the store, it's 15 cents a kwH for green energy:

[http://www.cityofpaloalto.org/civicax/filebank/documents/809...](http://www.cityofpaloalto.org/civicax/filebank/documents/8099)

And 14 cents for non-green:

[http://www.cityofpaloalto.org/civicax/filebank/documents/809...](http://www.cityofpaloalto.org/civicax/filebank/documents/8098)

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droithomme
The part where the government gives $15,000 to pay for a luxury car for ultra-
rich white folks is what irritates me the most of this scam.

$15,000 would buy outright a decent car with good mileage for someone poor but
responsible who couldn't get to work otherwise.

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richardw
If it makes electric cars more desirable and encourages research and
competition, everyone will benefit as the technologies trickle down. The EV
industry has needed a kick-start and the US auto industry should be energized
by this rather than just racing to the bottom against foreign carmakers. More
US jobs.

As a foreigner, I won't be able to afford an EV for along time but I think
this makes it more likely I'll get it sooner, due to the technologies
proliferating.

~~~
patrickaljord
A bit ironic to read a liberal supporting trickle-down economics. I guess it's
ok when it comes from government subsidies.

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philwelch
It's not "trickle-down economics". Trickle-down economics is when you use
economic policies that benefit the rich hoping that the rich will spend that
money in ways that benefit others. This is subsidizing the adoption of new
technology, hoping that the technology itself develops to a mass-market state.

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chrisgoodrich
This calculator is crap. Expect to shell over the full price of the car in
cash or pay $1k per month.

Aside from gas, the remainder of the "savings" are BS attempts to get the
"effective monthly payment" as low as possible.

~~~
jamesaguilar
I think it's fair to count the tax credits too, at least the state one.
Although many people considering it are probably hitting the AMT . . .

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chris-allnutt
The calculator automatically includes "business" write off, take that away and
you're at the 700+ mark. This is just smoke and mirrors.

~~~
toomuchtodo
I'm paying $580/month for a 48 month loan on an Infiniti G37S, plus about
$300/month in fuel. That's almost $900/month. I can charge a Model S for
between 1-3 cents/KwH (time of day metering between midnight and 5am). Oil
changes? Gone. Brakes? Probably every 100K miles like a Prius/Camry Hybrid.
So, goodbye fuel and goodbye most maintenance costs.

Sounds like a deal to me.

~~~
smackfu
Yes, the Tesla is probably a good choice for someone who is in the $40k+ range
already, since your gas costs can go to a better car. The odd thing is Tesla
trying to sell this as a $500 a month car.

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tokenadult
Maybe the employees of Tesla can drive a Tesla Model S for "business," but I
doubt that that is the general treatment of buying an expensive car by the
Internal Revenue Service.

AFTER EDIT: I should bring over here part of my comment in the other big Tesla
Model S thread today. It's not clear that Tesla can genuinely manufacture its
cars at a profit.

<http://247wallst.com/2013/04/01/teslas-awful-sales-news/>

That results in the "ridiculous numbers" of its lease plan described in the
article submitted here.

ONE MORE EDIT:

bradleyland's nuanced reply below

<https://news.ycombinator.com/item?id=5483759>

is what I had in mind when I indicated that Tesla is probably blowing smoke
about business deductibility of their car. That depends on business use, which
is a fact-based inquiry.

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niggler
The trick is to get a $1 lease (where the terminal price to buy the car back
is $1) and buy it with your personal dollar (incidentally, the local ferrari
dealer showed how to set this up, and it is apparently a common practice)

Also, to clarify, "expensive car" for the IRS and most states is >$250K and
none of the Tesla cars are that expensive.

~~~
nvr219
Can you explain the lease trick?

~~~
bradleyland
Before I say anything, please understand that I'm not an accountant. However,
my sister is, and she does my taxes. I'm a curious type, so I ask a lot of
questions, and she doesn't mind. The trouble is that this stuff is very
nuanced, so I often get the details wrong. I'm going to try and explain (in
broad terms) why niggler's suggestion pushes the boundaries, based on my
understanding.

First, there is no trick. There used to be a tax benefit to leasing in that
you could depreciate 100% of the lease expense immediately, just like any
other business expense. Unfortunately, the IRS has changed the way they treat
automobile leases, and you now have to depreciate them on a schedule like you
would any other asset.

Prior to the change in this rule, and assuming that you were able to write off
a Ferrari as a business expense, structuring a lease with a $1 residual would
mean that nearly the full value of the car would be paid as lease payments.
This meant you could depreciate the payments immediately, receiving immediate
tax benefit.

I'm not sure what niggler was talking about with the >$250k, but I suspect
he's talking about the limits imposed on business deductions. There's a
ceiling to the amount of business expenses you can deduct before you have to
start using depreciation schedules. IIRC, that ceiling is around $250k, but
I'm fuzzy on this one. All I know is that my little consultancy never hit a
big enough number that I had to worry about it. I took everything as a
straight business expense, including 50% of my lease payment for my car.

Here's where things get shady though. Writing off a Ferrari as a business
expense is a high-risk proposition. The IRS has very specific rules about
automobile deductions. You have to be able to substantiate the business use of
the automobile. If you can't, or if the IRS strongly disagrees with you, they
can stick you with the back tax.

If you've got the kind of money laying around that allows you to lease a
Ferrari with a $1 residual, then you probably have the money to pay lawyers to
fend off IRS auditors too. For your average person, it's not worth the risk,
IMO. If you have a justifiable business use for your car, and you're
comfortable keeping mileage logs that explain the business purpose, then go
for it.

~~~
nvr219
Thank you!

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parfe
_When considering the savings from using electricity instead of gasoline,
depreciation benefits and other factors, the true net out of pocket cost to
own a mid-range Model S drops to less than $500 per month._

Where did business insider get what seems like a direct quote? You certainly
_can_ get the cost to lower than $500/mo if your life has a specific niche the
Tesla can fill, based on the calculator. The electric car is just like
minivans, pickup trucks, and motorcycles. Each has benefits and downsides
which fit well in certain lifestyles, and not with others.

I would certainly benefit 15 minutes a week using a home charger instead of a
gas station, but the opportunity cost for me is certainly not $100/hr.

~~~
trashcan
Off-topic, but the cost of owning a motorcycle is not much lower than a car
(generally). They have much higher maintenance costs in general which offsets
great gas mileage, even in the smallest motorcycles. I can't find the
comparison spreadsheet, but here are some of the costs -
<http://faq.ninja250.org/wiki/Motorcycle_TCO>

~~~
cameronh90
I ride a motorcycle, and it has been definitely far cheaper for me than when I
drove a car. My motorcycle isn't even very fuel efficient, but most of the
savings are region/use case dependent.

The biggest saving is that parking is generally free in the UK for
motorcycles. That, for me, is a huge saving. Lower taxes and road tolls are
also significant. My insurance is also lower than when I drove a car - I guess
because there's less chance of me seriously damaging someone else's property
(clean license + no claims bonus, but young driver). If you want to count your
time, you can get places much faster on a motorcycle too, between lane
splitting and driving on bus lanes (which are both legal).

But even excluding all that, the motorbike itself was less than half the price
of my previous car, and has required a fraction of the maintenance. Besides
tyres, part cost is minimal. Service labour costs have generally been a lot
lower - most parts of a motorcycle are quite quick and easy to access. My last
service cost £60, whereas my car services tended to cost around £150. It's
also far easier to work on a motorcycle yourself and you don't need many
expensive tools that you probably won't already have if you're that way
inclined, besides a paddock stand.

For me, the biggest maintenance cost with motorcycle is far and away tyres and
associated labour costs: they don't last as long, and punctures can't usually
be repaired. But at least in the UK where you're not usually driving huge
distances, the other running costs tend to outweigh the cost of tyres.

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wavesounds
Did I miss it or does this article not mention the gas savings? You can charge
this car for free at Tesla's superchargers or cheap at home, with gas at over
$4 a gallon thats a huge savings, theres people who easily spend $300 a month
on gas, thats probably going to be the biggest part of the savings for most
people, this article should have at least mentioned that.

edit: US _average_ is $368 per month:
[http://money.cnn.com/2011/05/05/news/economy/gas_prices_inco...](http://money.cnn.com/2011/05/05/news/economy/gas_prices_income_spending/index.htm)

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codex
That's the household cost, not the per-car cost. Most households have more
than one car.

~~~
wavesounds
You're right I should have mentioned that. But It gets complicated because a
family would probably use this car for their longest trips/commutes, would use
this one more then their secondary car for elective trips. Also this is
grouping in single person households with coupled households and its including
people who dont drive to work and the states containing the most people who
would buy this car are also the states with higher than average gas prices as
well. I haven't been able to find the statistic on how much an average
Californian who drives to work spends but I think its on the order of hundreds
of dollars in savings per month, which this article doesn't mention.

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smackfu
Subtracting off the cost of gas is pretty shady.

* Gas car costs financing + gas each month.

* Tesla costs financing each month.

* Tesla does not cost financing - gas each month!

