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Teslanomics - Reality or Statistics?

Discussion in 'Model S' started by smorgasbord, Feb 3, 2012.

  1. smorgasbord

    smorgasbord Active Member

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    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:           [B]  $31,817[/B]                                             [B]$21,724[/B]
    
    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.
     
  2. rlawson4

    rlawson4 Member

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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. Mycroft

    Mycroft Life happens

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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).
     
  4. Dan5

    Dan5 Member

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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
     
  5. Tommy

    Tommy Member

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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.
     
  6. drees

    drees Active Member

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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. richkae

    richkae VIN587

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    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
     
  8. JRP3

    JRP3 Hyperactive Member

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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.
     
  9. Dan5

    Dan5 Member

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    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. ElSupreme

    ElSupreme Model S 03182

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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.
     
  11. AnOutsider

    AnOutsider S532 # XS27

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    Longer service life would be another reason for Tesla to offer upgrades to older models as they introduce new features.

    Regarding the engine costs mentioned above, I know my dealer mentioned in passing that a new r8 engine would be around 12k. You'd have to add the mechanic and rust costs to the EV as well unless you plan to do your own work and Tesla has found a way to make the car impervious to the elements.
    Sent from my HTC Arrive using Board Express
     
  12. Andrew Wolfe

    Andrew Wolfe Roadster 472 - S 440

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    Why would anyone think that a Leaf uses ~2X as much fuel as a Model S? 1200 pounds or so lighter. Higher Cd - but smaller frontal area. At worst, they will be equal.
     
  13. vfx

    vfx Well-Known Member

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    I think this is a very important point. Used EV sales need to have battery life as a very prominent part of the used car add. At least equal to the the price itself.

    We have been working on telling 3rd party sellers (scrapyards) that they need to keep the electric car plugged in and now we need to press how critical battery life is in resale. It will help those who have been diligent with battery care just as someone who sells a car with proof of scheduled maintenance.
     
  14. loganss

    loganss Member

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    I don't think it makes sense how Teslanomics includes depreciation numbers to an unreleased car and a battery technology that hasn't had many public auto samples over 100,000 miles. Using a Rav4EV for depreciation statistics is wong on so many levels:
    1) battery tech
    2) quantity sold
    3) availability of service centers for repairs
    4) purchase availability
    5) car segment

    If lets say the Model S is a fantastic car but then Tesla goes under the vehicles released would reach a resale value that would be much higher than what a customer originally paid for it. This happened to the Rav4EV. It was a pretty solid EV and practically a collector's item and the resale value was insanely high. After the release of the Leaf and Volt the Rav4EV's aren't selling nearly as high as they once were.

    IMO depreciation should be taken out all together on future predictions of the cost of a vehicle. If you make a major purchase with the primary objective of being able to resell it for a high value later you're setting yourself up to be highly dissapointed, especially given the amount of new EVs the auto industry is planning on introducing.

    The type of ICE vehicles available have saturated the market with lots of use statistics and results in a fairly narrow prediction of depreciation. EV and even hybrids are not quite to that level to make "good" predictive depreciation values.
    hghjgjdfg
     
  15. Dan5

    Dan5 Member

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    #15 Dan5, Feb 5, 2012
    Last edited: Feb 5, 2012
    Specifically with Tesla Model S, comparatively its more or less rust proof. I can see 2 points where it could get rusted (around the front bumper support and the rotors) the rest of the car is aluminum and aluminum doesn't really rust (it forms an aluminum oxide layer that prevents further rust).
    In terms of the mechanic costs, taking out a battery and putting a new one in is rather easy (Tesla said battery swap in a few minutes), where as taking an engine out and installing a new engine takes alot of work

    What I was talking about in terms of "hiding" battery life.
    In a normal car, if you run until empty, fill up and do that on a consistent basis, it damages the engine- the engine and fuel system become a "time bomb" in terms of when they will go bad and if you buy a car without having a mechanic check it out, you may not notice it, and also someone can "fudge" the paperwork to say they did the oil changes themselves etc, etc.

    In an electric car, if you put in range mode, run until empty, and then fast charge it, (480V ) and do that on a consistent basis that's abusive to the batteries and they will not retain their charge as well as a battery that was not fast charged, and only slightly cycled. The minute you test drive it, you'll see the display that says "Full charge- 100 miles remaining". If I was going to purchase a used Model S and it had a 300 mile battery and 10 years down the line it said that, I wouldn't buy it, that means it was abused (that's what I meant when I said you can't hide it).
     
  16. Robert.Boston

    Robert.Boston Model S VIN P01536

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    One point to consider in Teslaeconomics is the insurance cost. Assuming as a baseline that insurance is a flat % of the price of the car, you will be paying more insurance for the Model S than for a car with a similar capital+operating cost. While this is not a huge factor, it does weigh against the Tesla in a small way.
     
  17. Tommy

    Tommy Member

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    To be blunt, Teslaeconomics is a fan-boy site in the worst sense; as others have pointed out, the true operating costs of the Model S are being under reported. Anyone relying on the comparisons of the Model S to ICE's or other EV's is going to be disappointed when the real operating costs of the Model S turn out to be much higher.
     

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