The plan: Get a brand new $125,000 Tesla Model X to pay for itself. The Model X will be rented out via carsharing services Turo and Getaround most days and weekends. Leveraging the diminishing returns of luxury, I’ll allow myself the pleasure of the occasional weekend jaunt or roadtrip, while improving my health and well-being on my daily 10-mile bike commute to work.
Sure, I could make it my daily driver, but this would be both a massive financial mistake and, like all luxuries, something I’d quickly become accustomed to. With occasional use, the novelty won’t wear off and I’ll appreciate the opportunity much more deeply. I’m still a firm believer that luxury is a weakness – but, damn, this car is AMAZING and Elon Musk is one of my favorite humans.
Plus, by switching to a solar energy + EV charging plan with my utility company, I can make a firm step towards fully renewable transportation. You might call bullshit because, you know, roads and tires are made with inordinate amounts of oil, and because manufacturing a new car is by definition resource intensive. These concerns are, for the moment, outside of my circle of influence. Plus, Tesla is driving significant improvements in EV adoption, battery technology, and efficiency in car manufacturing. For ambitious readers, I highly recommend the incredible writing by Tim Urban at Wait But Why on Musk’s grand ambitions – linked here.
What this is going to cost:
- Monthly Payment: $1,047 (first month due at signing)
- Annual Mileage Allowance: 12,000 miles
- Duration: 36 months / 3 years
- Lease Fees: $950 (due at signing)
- Capital Cost Reduction (“Down Payment”): $10,000
- Residual Value (what you can buy it for at end of lease): $70,000
- Monthly Taxes: $85
Financing and Leasing: Unique Issues with Electric Vehicles
Financing or leasing a new car is always a commitment to stuffing gobs of cash in the toilet, peeing all over it, and then flushing it away. Yet, 90 percent of Americans with little to no savings continue to literally piss their money and health away with the fail-combo of (i) a driving-centric sedentary life and (ii) buying high-cost depreciating assets every few years.
With respect to electric vehicles, the math does change somewhat. In California, purchasing or leasing an EV comes with $10,000 in federal and state tax benefits. Nonetheless, it is, at this juncture, incredibly risky to buy an electric vehicle outright. Other than the GM Bolt and Teslas, no EV can reliably attain more than 100 miles of range on a charge. With rapid impending advancements in battery technology, a three-year old EV with shitty range is going to be even more painfully depreciated than your average three-year old car.
The way I think about leasing is that you are paying for a medium-duration call option on the car. The leasing company promises to pay you X dollars for the car at the end of the lease! If the car is worth considerably more than that after three years, exercise your option to buy the car for the residual value, then resell it and pocket the difference. If it’s worth less, you’re protected from the extra financial hit as the leasing company has already committed to “buying” the car back from you after three years.
With something as untested as electric vehicles, I believe that there is a great deal of downside depreciation risk, much more than with a conventional, predictable new car. Think about how little risk-averse auto giants actually change a car’s design from year to year, versus the sorts of engineering feats and advancements taking place with EVs.
OK, moving back to the Tesla specifically, I’ll explain why I’m so bullish on the car, and why I think driving one is an incredible opportunity.
Free Energy FOREVER
It’s like your own little perpetual motion machine. One of the most seductive things about owning a Tesla is the lifetime access to free charging within the Tesla Supercharger Network. Relative to other public charging options, it’s blazing fast. Right now, charging time is a fundamental barrier to widespread adoption of electric vehicles. Compare it to a gasoline car, which can chug energy in fluid form at a tremendously high rate. Elon Musk and others are working towards better charging technology. The goal is parity with fueling speed. In other words, plug in an EV for a matter of minutes and have hundreds of miles of range.
- You can get 400 miles of range in a matter of minutes at a gas pump.
- You can get 15 miles of range in a matter of an hour at a standard “level 2” charger (e.g., Chargepoint).
Why the Superchargers Are Key To Tesla’s Competitive Advantage
First, the Tesla Supercharging Network means you can actually roadtrip in an electric vehicle. They’re everywhere. And, when you tell your Tesla to navigate you to a destination, it automatically includes directions to needed Superchargers along the way. You’re told what your battery level will be when you arrive at each Supercharger, and how long you need to charge. It’s really sleek.
Second, the Superchargers are fast enough to get you going without too much of a wait. You’ll spend 20-40 minutes at most Superchargers. Stretch your legs, have a picnic, wander to the Whole Foods nearby. It’s definitely slower than a gas-powered roadtrip, but it’s really not bad.
Extremely Fast Charging
The Tesla Supercharger has more throughput in an hour than the capacity of any Tesla battery pack – 120 kilowatts. This means that theoretically every battery can charge completely in less than an hour. You measure an electric vehicle (“EV”) consumption as watt-hours per mile (Wh/m). At 333 Wh/m, 1 kilowatt (kW) gets you 3 miles. In other words, you use a third of a kilowatt hours (.333 kWh) to go one mile. At 120kW throughput and 333 Wh/m efficiency, the Supercharger will recharge the Tesla at a rate of 360 miles of range per hour of charging.
Since the Model X is unfortunately incapable of going 360 mph, what this means is that the Supercharger is dumping energy into the battery far faster than how fast its used on average during normal driving.
It’s orders of magnitude better than any other publicly available charger. It’s also free. It’s a buzz to roadtrip from Supercharger to Supercharger, silently catapulting your three-ton vehicle across vast lands without spending a cent on energy. Plus flapping the falcon wing doors never gets old…
If I’m Gunning for Financial Independence and Early Retirement, Why Get a Tesla??
This is a valid question, and frankly, forking over that much money for this luxurious space pod was a bit terrifying. But, I plan to rent it out 85-95% of the time via carsharing services Turo and Getaround. “Hybrid car ownership” is going to be huge as we transition out of the ridiculously inefficient system of individual car ownership and the absurd 500 million parking spots for all those leased and financed vehicles sitting idle on new pavement.
Turo is sort of an Airbnb service for cars. Owners list their private cars, and renters can pay by the day or week. While I haven’t had much experiencing renting cars on Turo, it’s a great way to shun the big rental companies and pick up something slightly from a local that’s more exciting than a Toyota Camry. (Or just get a boring car and support a local interested in hybrid car ownership). Many of the cars come with airport pickup if you’re traveling. Or, if you live in a dense urban center and are enlightened enough to eschew car ownership in favor of biking and walking, you can pick up a car for a roadtrip, hike, camping trip, etc.
If you’d like to give it a try, you’ll get $25 towards your first rental with this link.
If you’d like to take the Model X for a spin and you live in the San Francisco area, check it out here. I’d be happy to give you a full tour of this ridiculous machine. It’s going to be parked in a valet parking garage – with unlimited charging – in central San Francisco as of next week!
Once I’ve got a few rentals under my belt, I’ll start to break down the finances. Turo, for instance, takes a 35% cut if you want the best insurance coverage.