My thoughts on the Tesla 3

Introduction

I had reserved the Tesla Model 3 over 16 months ago.  Ever since Tesla’s event a few weeks ago, I’ve been going back and forth on the car.  The base price will be $35,000 for the 220 mile range or an extra $10K for the 310 mile range car.  You’ll have to pay an extra $5K for a nicer interior, another $5K for autopilot, and then a final $3K for self-driving.  This excludes the extra $1K if you want a non-black color.  All of that added up really fast!

 

Standard or extended battery?

This decision is different for everyone.  Initially I was going to go for the 220 mile version since I didn’t plan on taking the car on road trips (use my gas guzzling SUV instead.)  Then on the other hand, people will say, ‘Well if you have self driving, maybe you WILL go on road trips more often.’  While that’s a fair point, I’ve come to the realization that what I hate most about road trips isn’t the physical part of driving… it’s the wasted time in the car.  If it’s going to take more than 4 hours to get to, I’ll just FLY instead.  I know some of you are road trip people; I’m just NOT one of them, so I think 220 miles is more than plenty for a commuting car.

 

Used Tesla S’s

Before I came to the conclusion that I was fine with a standard battery, I added up a fully loaded model 3, which would cost $58K.  That’s not far off from a fully loaded S that is 82.5K, and you don’t have to wait months or risk the $7500 federal tax credit running out and plus I’m sure the S will be nicer than the 3.  I then went to look at used S’s.  The cheapest one with Autopilot is around 70K.  That’s only 12K more than the fully loaded 3.  Eventually I started asking myself, “Do I even NEED a new car?”  The answer to that is definitely a NO.  A new car definitely ranks up there as a ‘nice to have,’ especially if you have functional cars already.

 

Tax implications

I then found a used S on CL and the car was a year old with 8K miles and the buyer wanted 75K.  I told him he was smoking crack because the KBB said it should be mid $60’s, and why would I pay $75K when I can get a new one for $82.5K – $7.5K credit = $75K.  He muttered nonsense that the $7500 tax credit would go away.  I told him good luck selling it.

In my head, I thought WA state didn’t hit you with the 10% sales tax if you bought an EV.  Well apparently since 2016, the state decided to lower that amount to a $35K MSRP car, but they eventually raised it to $42.5K MSRP.  So whether I bought a new or used S, I’d still have to pay sales tax.  However, if I bought a new 3 that is under $42.5K MSRP, I’d avoid WA sales tax and I’d be crossing my fingers the $7,500 federal tax credit would still apply.

 

Final decision

I think the play for me since I live in WA state is to just buy the standard battery with the $5K interior upgrade for an MSRP for $40K.  This would then save me $4,000 in taxes.  I could then pay for the autopilot upgrade after the fact for an additional $6K, so my net cost would be $46K.  If I add the autopilot during the initial purchase, then I’d have to pay $45K + $4.5K tax = $49.5K.  Thus, I’d save $3.5K by paying for it after the fact.

I thought about the self-driving feature, but it’s not ready yet even for the S, so I’m not going to deposit $3K or $4K for a feature that doesn’t exist yet.  I think I’ll just wait until it’s actually available first.  Maybe by then, I’d sell my used 3 and get a newer version 3 with the self driving pre-installed.  We’ll see…

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  • karlranck

    I just bought an X after riding in my buddy’s S. Can’t wait! I think the 3 is a great option as well but I’m digging the space and convenience of the X for family life. Maybe that’ll be our second Tesla after the queue gets trimmed down

  • JP

    a couple things….

    1. Isn’t the sales tax exemption on the first $32k? Meaning if you buy a $50k car you pax tax on $18k

    http://dor.wa.gov/Content/FindTaxesAndRates/TaxIncentives/IncentivePrograms.aspx

    From July 1, 2016 through expiration of exemptions:
    Purchase or lease of a new passenger car, light duty truck, and medium duty passenger vehicle which is:

    The exemptions apply up to $32,000 of a vehicle’s: selling price or the total lease payments made or
    if the original lessee purchases the leased vehicle before the exemptions expire, the total lease payments made plus the selling price of the leased vehicle

    2. Chances are that the $7500 credit will be gone before the 220 mile version is available thus basically forcing (think forced upgrade) those that want to get the $7500 credit to get the $9k option

    I have one reserved and if I can’t get the exact version I want with the $7500 credit i’ll cancel my order. Heard about 40% of those who have pre-ordered feel similarly.

    .

    • Miles per Day

      Ah yes, you’re right. So the first 32K is tax free; any after is taxed. Still, that’s a $3K savings.

      Dang, it looks like I may have to shoot for the bigger battery then. But if you have 2 reservations and you reserve 1 big and 1 small battery, you’ll have to decide whether you want the big battery w/ the tax credit pretty fast. What happens if the small battery still has the tax credit later on? You can’t change your mind on the big battery because you already bought it, no?

      • Tim

        I’m in the same situation. Not sure if you’ve gone out on Tesla’s website to confirm your place in line, but mine says that the bigger battery will be available to me in Q1 and the smaller battery in Q2 of 2018. I’ve read some speculation on when they will hit the capacity for the tax credit and most people think it wont be until 2018 Q1, which means the tax credit will be extended until Q2. That’s what I’m banking on to get the smaller battery. I also don’t plan on paying for self driving when I buy as it could be several more years before I can use it. I can do more with that money elsewhere and then pay a bit more once its available. I’m curious to see what the $5k interior upgrade gets

        • Miles per Day

          The question is – what does the interior of a non-$5K interior looks like. All the photos we’ve seen have been upgraded I believe.

  • Brad

    I bought a new S about 6 weeks ago. Absolutely love it. Have a 3 reservation and kept it just in case the 3 was something to consider downgrading to, but like you said, when you add all the options, it gets into S price territory.

    My advice for you would be get a used S. Many will be coming off leases soon. Then you can always trade in and upgrade to a new S when the next refresh (AP3 HW, new interior) happens without taking much of a depreciation hit.

    • Miles per Day

      Used S’s with autopilot now are $70K, which at that point, may as well buy a new one. Tough decision.

  • J. Greisman

    I would go for the used S…be patient and find a deal. I was recently beat on a straight line race by a Model S while going full throttle with 400 hp…that thing is powerful AND stylish. Given the nominal price differential I have my doubts as to whether the Model 3 can ever measure up.