Under the new deal, Tesla owners should be able to get their payments down to about $580 a month just factoring in gasoline savings alone, Tesla said.
Is he subtracting fuel savings from the car price? I recall there was an HN thread complaining about this but I can't find it...
Here's the calculator. They claim an "effective cost" of $579/month (default choices), which it seems means $917/month in actual payments, plus negative $261/month in fuel savings:
I don't spend $261 in fuel every month. Actually, closer to $70.
A friend of mine makes a road trip every week for business. Do they also add the cost of the time you spend waiting for a charge at charging stations vs a quicker gas pump for road trips? A full charge is about an hour. Should the price be higher for him?
Look, I'm not saying it's still not a decent bargain when all is said and done, I'm just saying you can't roll it into your 'cost' and advertise that as the price you want me to pay. I am not paying that. I'm paying 190 bucks more a month based on my current fuel usage. My friend would be paying for it in an extra hour a week at least. These things count too.
Have you been to the website? It's a calculator, you put in your mileage and other costs and it gives you the TOC. $580/month is the best case scenario.
You'll see they actually do the opposite, discounting for saved time, since 90% of the time you'll just plug it in at home and never worry about recharging during the day, instead of a trip to the gas station every week.
Adding the cost of gasoline to gas-powered car makes sense in making a buying decision. So does adding the cost of electricity to a Tesla. But subtracting the gas costs that you aren't paying from the Tesla does not make sense. The cost of owning a Tesla should not vary based on what you're comparing it to.
If I decide to get a Tesla instead of bike to work does the Tesla now cost more than $900?
Why not? The comparison assumes you are otherwise in the market for a gas-powered car that will cost $300/month above and beyond your car payment.
Yes, if you park the car and never drive it, the gasoline-fueled vehicle will be cheaper. But that isn't a meaningful use case. I don't get the controversy...?
The only honest comparison is ADDING the gasoline cost to the gasoline car: otherwise you are simply LYING: because the payment is 900 whatever the gasoline costs. What it I spent 1000$ in gasoline a month? Would I get a free Tesla?
But I don't understand why you wouldn't consider the cost of gasoline when considering how much it costs to own and operate a gasoline-powered car.
It just doesn't make the slightest bit of sense.
If your transportation budget includes $1200 a month for gasoline, then you could get another Tesla simply by giving $900/month to Tesla instead of the oil companies.
(All of this assumes that the cost of electricity is free, which is of course bogus.)
It is weird that they don't stress the reduced maintenance costs. When something breaks down it is always extremely expensive (or they are overcharging you). Consider the life cycle of a car and there is something expensive that will break down.
Most cars these days don't "break down." There are maintenance costs which may well be lower on the Tesla (though some new car deals include free scheduled maintenance), but bottom line, if you can afford a Tesla or another car in its price range, maintenance and gasoline are not costs that are going to be significant in your budget.
What about battery replacement cost? AFAIK, Tesla buyers are looking at a $20k line item 5-10 years down the line here. Something gasoline cars don't need.
By talking about gasoline cost in their car price calculator, Tesla is going for a "total cost of ownership" thing, so why is battery replacement cost not included?
It looks to me as if Tesla is eager to talk loudly about the unique costs of their competitors, while keeping quiet about the unique costs of themselves.
That will be reflected in the resale value of the vehicle. Very few first time buyers will own a car longer than 5 years (even if that would be the most effective way of using their money). Likely the car will be traded at least once in those 5 to 10 years.
Of course it might be reflected there. But Tesla is not saying anything to the line of "resale value might be lower than a comparable gasoline car because the battery will have to be replaced" either.
Interesting. But my original point stands: if you don't sell your car, you're looking at a $20k bill a few years down the line, and on the page Tesla are happy to talk about total-cost-of-ownership of their competitors, they're not telling you about that $20k replacement.
No reason to think it will be dramatically different from the cost now. With technology, the cost typically remains constant, while capability improves. The battery you need to buy in 10 years may be a lot better than the one you have now, but it won't likely be much cheaper.
This seems designed to prevent customers from following through:
During the period between 36 months to 39 months from your Guarantee Effective Date, you have the option to sell your vehicle to Tesla for the Guaranteed Resale Value. [...] This Guarantee automatically expires on the 39 month anniversary of the Guarantee Effective Date.
Why? If it's designed to be like a 3 year lease, and they give you a 3 month window to decide that, how is that a bad thing? It's strictly more flexible than a 3 year lease.
Tesla is offering a 8-year unlimited warranty on the battery pack. Even if it fails after that, technology will have improved enough that the cost is likely to be a tenth of what it is now.
It's still bad math. The fuel savings are relevant only where you are directly comparing monthly costs of the Tesla to other cars. Gasoline is not a cost of the Tesla; not paying for gas doesn't change your monthly Tesla costs. You'll always pay at least $X. The fact that you're not paying $Y because you didn't buy Z is not relevant to calculating $X.
It's disappointing to see that Tesla still relying on misrepresentations to sell its cars.
I think it is fair for Tesla to put that in. Many people start off car shopping by comparing monthly lease amounts for a range of cars to figure out what is in their price range. However, at this high level overview, it can be easy to forget to factor in items such as gas into the monthly cost.
Tesla marketing is simply doing their job and making sure consumers don't forget to add the price of gas to gasoline cars, by making a point of subtracting it from their car.
It always seemed to me that they're comparing total cost of ownership of cars, not direct costs of purchasing cars. If it's total cost of ownership, it's an absolutely fair comparison.
But gasoline has nothing to do with the total cost of ownership of a Tesla. If they wanted to have a calculator that showed you the "real cost" of a competitor's car (with gas included) vs a Tesla (with electricity included) that would be a fair comparison.
If I bought a Tesla it would mostly be replacing bus trips not another car. That shouldn't have an impact on the cost of owning a Tesla.
Only if you are comparing Tesla to "not having a car", otherwise gas costs are extremely important.
The problem is, when you tell someone their $30k car actually ends up costing $70k over a few years, they have a knee-jerk reaction (as seen in this thread) - "I don't spend that much" / "Gasoline hardly makes a difference" / "Maintenance costs nearly nothing".
They are basically saying a Model S will affect your monthly budget as much as a $580/month car, I see that as absolutely fair.
They've promised that Tesla owners get free charges from their Supercharger network. The Supercharger network is powered by SolarCity, yet another Musk company. If they're serious about it, then yes, electricity can be zero fairly in those calculations.
This is a plan to effectively lease the car for 3 years (with the tax credit benefits of buying). At the end of 3 years, you will get back the $95/month, when you trade it in. (so it's the resale value minus what you still owe on the car)
That doesn't make sense. Other cars have resale value too, so how is this a comparative advantage? Why are they subtracting this off?
Google suggests the "average" car actually has higher resale value, at the same age/mileage, than what Tesla is guaranteeing: (I guess they're comparing to a subclass of luxury car which depreciates faster)
I'd be more willing to accept his apology if he didn't then drop this absurdity. How much actual money do I pay for the dang car? I have my checkbook out, what do I put in this box?
You know, there's a possibility that it would suck if investors got itchy and pulled out of TSLA after these news.
I mean, it would be very understandable, but from a game-theoretical point of view, there's the question of what you want to signal as an investor. If it's too costly to make mistakes, or worse, if you inadvertently signal it's fine to err given the company doesn't ever admit it publicly, then there's a variety of possible outcomes. The least worst is you end up with glorified, electrified, GM stock. The worst is, you end up with Enron. Which, incidentally, Wikipedia says was too "one of the most innovative companies" back then.
Tesla actually has gotten to the point of making real things. Enron at its height, was, erm, uh. Yeah. I think given what we know about Enron now it's pretty easy to draw up a direct comparison. Tesla might be doing a bit of a shell game with the pricing, but as far as comparing it to Enron, I think that's a bit overboard.
Enron were also in the business of selling and trading electricity and owned a number of large power plants. A lot of the fraud was actually in the electricity part of their business.
"We appreciate the feedback from a number of journalists and customers that the first version of our financing product wasn’t quite right,”
It wasn't that they were doing really complex calculations that they made an error on, they were being intentionally misleading. That is what they should be sorry for, not that the math was not "quite right"
"Honey, look, a Tesla is only going to cost us $580 per month"
"No dear, the actual payment is closer to $900"
"No. Look here, it says the effective payment is $580."
"Sure, sure. You still have to send them a check for $900."
"What? How do we get to $580 then."
"Well, they are saying an electric car is going to save you over $300 a month in fuel and proposing you take that into account."
"Wait a minute. I don't get it. That can't be true. Can I put the $300 per month in the bank and save-up for a nice vacation?"
"Nope. That money goes to Tesla. The real payment is about $900."
"That can't be right."
"Look, go to that neat cost-of-ownership calculator and set the annual mileage to zero. Let's pretend you are going to buy the car and put it in a museum, never to be driven. What's the monthly payment? About 900 right?"
That's a fair enough argument, but the fuel expense figures Tesla uses are far too generous. This is the kind of disingenuous marketing that turns people off. If I go to their True Cost of Ownership page right now, the "Electricity vs Gasoline" section defaults to a savings of $261/month.
According to Mint, I spend $116.75/month (average) on gasoline. The little graph shows the national average is somewhere between $165 and $220. The graph is small, but the bar is about halfway between. Being generous, that'd put the national average at around $200/month on gas. So Tesla is giving themselves a benefit of around $60 above the national average.
It seems like a minor point, but "fudging the numbers" doesn't seem consistent with the character that Tesla is trying to build for itself.
No it isn't. It's creative math to get the mathematically challenged to jump in. Since math illiteracy in the US is common this is a very smart way to get idiots with money to buy in.
OK, say I have never owned a car and just got a job making $900 per month. No other expenses in my life. I jump on this deal. I then send 100% of what I earn to Tesla. Not $500. I have to send them all of it. I don't get to magically deduct fuel I will never purchase and pretend I am spending less. My bank account would be empty every month.
Do you really believe that could happen? I bet that guy owns a lot of property on the moon. A lease wouldn't even be approved with that salary in the first place.
Different scenario: you get a job making $900/month and you jump on an offer for a $400/month car. It never crosses your mind that you'll have to pay for insurance, gas, maintenance and taxes and you end up spending your whole salary on it. This actually happens all the time.
As stated on Tesla's page:
This calculator is intended to give you an idea of how
much you can save by driving Model S compared to a gasoline sedan.
We also encourage you to think about Model S ownership in terms of true
out of pocket cost. When considering the savings from using electricity
instead of gasoline, depreciation benefits, and other factors, buyers
can save hundreds of dollars per month compared to owning a gasoline
powered car.
Oh please, it was a dumb example to highlight the reality of the deal.
I am buying a Tesla. I am tired of gasoline and I like the car. I am simply not delusional as to the real cost of the thing.
Actually, I am buying two. The next one has to be an SUV though.
I just wish they didn't resort to cheap-car-salesman techniques. I had a friend get excited about buying a Tesla because he thought it would cost him $600 a month. He was not happy to learn that the real cost was closer to $1,000. Now he thinks Tesla is a huge scam. I doubt he will ever consider their cars again.
Based on that data point alone I have a feeling this creative financing campaign could be damaging their image to some degree.
There has not been a very big media backlash like there was to the first $500/month story. The lack of media backlash may seem to validate the second announcement to consumers. Tesla is proving skilled at neutralizing bad press.
It doesn't matter really, he admitted his mistake and the price is still within the price range I would pay to take this world another step in what I consider to be the right direction.
As long as the company is making waves in media, great sales, good engagement and having a good rapport with its customers, the investors would be happy even though board meetings could get hot.
And their solution is to extend the loan term so you pay the monthly payment longer than you possess the car!
I don't see what they hope to gain by lying about price to wealthy customers who presumably got their wealth through the application of something exceeding5th grade arithmetic
Is he subtracting fuel savings from the car price? I recall there was an HN thread complaining about this but I can't find it...
Here's the calculator. They claim an "effective cost" of $579/month (default choices), which it seems means $917/month in actual payments, plus negative $261/month in fuel savings:
http://www.teslamotors.com/true-cost-of-ownership