Worried about Model X cost of ownership

[Sanny]

Hello, everyone! Looking for some information on the X.
Expected to get a model 3 sometime in 2018, but recently did the math for the Model X as a business car. Added business tax benefits might convince me to get a low-optioned X instead of waiting for Model 3.
However, I'm worried about the cost of ownership on a 100K car (I never owned a car in that range). BTW I'm driving a basic Lexus RX 2004 for the last 5 years and the cost of ownership is extremely low for me. Will be hard to justify high everyday car expenses, especially with my sub 10k annual mileage
So a couple of questions to Model X owners that might help me with the decision:
1) What are real-life annual maintenance costs in the first 4 years? Is it recommended to do annual service visits or you can just wait for something to break and then go to the service center?
2) What are the average-good insurance numbers for the X?
3) How long are you planning to keep a car? Based on your experience - do you expect it to be low maintenance costs after the warranty ends, or it might start sucking money like other luxury SUV brands?
4) Any other significant expenses that I missed?

Thanks!

 

[K-MTG]

1) The maintenance cost is pretty straightforward, listed here. It's essentially $2,750 for 4 years if you prepay. This is optional, but Tesla highly recommends the service, though if something breaks Tesla will have to fix it, free of cost for the first 4 years. If you plan to keep the vehicle beyond 4 years, the extended warranty is $4800 + $200 deductible for each visit.

2) I never got into an accident/ticket so my insurance is pretty low at $460 per year! I have a $1k deductible. Got an X90D

3) I don't typically keep my cars for a long time so I plan to sell it after 3-4 years. The X will have a higher resell value compared to the X. If you plan to keep it beyond the 4 years, I would get the extended warranty. I don't think there will be any significant cost of ownership, but after 150k miles you would probably need to replace the battery but I would imagine that it would be much cheaper in the future.

4) Charger install ($550)...and all the accessories (floor mats, tint, dashcam, etc).

If you need a referral link, please use mine, just want one!!

 

[EinSV]

2) I never got into an accident/ticket so my insurance is pretty low at $460 per year! I have a $1k deductible. Got an X90D

Wow!! Would you mind me asking who your carrier is? I *thought* I had a pretty good deal but nothing like that.

 

[K-MTG]

Wow!! Would you mind me asking who your carrier is? I *thought* I had a pretty good deal but nothing like that.

Unigard Insurance Company

Bodily Injury 100K/300K
Property Damage 100000
Uninsured Motorist Bodily Injury 100K/300K
Collision $1000.00
Comprehensive (OTC) $1000.00
Rental Reimbursement Coverage 30/900
Collision Deductible Waiver (CDW): NO COVERAGE

But they listed me as a 70D on the policy even though I have a 90D.

 

[EinSV]

Unigard Insurance Company

Bodily Injury 100K/300K
Property Damage 100000
Uninsured Motorist Bodily Injury 100K/300K
Collision $1000.00
Comprehensive (OTC) $1000.00
Rental Reimbursement Coverage 30/900
Collision Deductible Waiver (CDW): NO COVERAGE

But they listed me as a 70D on the policy even though I have a 90D.

Thanks!!

 

[number12]

Significant expense.. depreciation.

 

[Sanny]

Significant expense.. depreciation.

Indeed, a big expense.
I have it in my model - surprisingly a big part of it is consumed by the business tax write-offs (at least in my model).

 

[SageBrush]

I have it in my model - surprisingly a big part of it is consumed by the business tax write-offs (at least in my model).

Tell us more!

 

[MonkeyTOGA]

2) I have Travelers insurance and $1,228 per year. Our coverage is pretty good (below), and we supplement with an umbrella policy for liability. The reason I stick with Travelers is that, when a hit & run driver in a stolen car hit my last car, my BMW dealer fixing the car told me that Travelers was one of the two companies she has worked with that doesn't give her a lot of hassle. (I forget the name of the other company.) To me, having an insurance company who actually pays out for a claim without nickle and diming everything is really important.

I typically keep a car for 10 years, but I look at depreciation a little differently. I assume the cost of the car is essentially all negative cash flow in year one and any residual value after 10 years is positive cash flow. With this assumption, the increased resale value of the car over the next viable option is upside (though not offsetting the downside of the increased negative cash flow in year one, of course). Due to Tesla's short history with the MX, I can't reliably estimate this offset, though.

The other thing I have in my model is a safety premium. I drive my wife and two kids a lot, and by using CDC rates for motor vehicle death and major injuries, I am able to estimate the value of having a more safe car than the next viable option. How each individual ascribes a dollar value here is pretty tricky, but two points I can share are that I estimate the relative risk reduction of a MX vs an Audi Q7 at 56.2% and that I dollarized this to $15k over 10 years. (I did this calculation before the MX NHSTA ratings came out, but it seems I got pretty close in the assumptions feeding my estimates.)

--
Bodily Injury $500k
Property Damage $500k
Uninsured Motorist Bodily Injury $500k
Collision $1k deductible
Comprehensive $500 deductible
Rental Reimbursement Coverage $50/d, $1,500 max
Collision Deductible Waiver (CDW): none

 

[Sanny]

Tell us more!

Here's my worksheet. Feel free to correct me, I'm not a CPA and didn't consult to one yet. Compared TCO for 5 years including all tax consequences as a business car. Could easily miss some tricky CPA stuff, so huge grain of salt is definitely needed. Your feedback is highly appreciated
Model X section 179 worksheet

 

[SageBrush]

Thanks for the info, and nice SS

This link has I think the updated Section 179 code
I'm not a CPA either, but I would check with one in this case before I was confident of my calculations.
It looks to me like you are limited to about $11k deduction a year, although this may be less after personal use is considered.

So worse case (not saying it is, only that it might be):
Attaching the car to the business saves 11,000*0.7*0.39 = $3000 a year in taxes based on your other inputs.
Are you sure that other auto expenses are deductible if the Section 179 is used ?
Last, you had to take out commercial insurance for the car titled to the business. Did that cost more ?

When this question came up for me, I elected to simply track miles and apply the per-mile rate. I drove a lot then, and the rate was over 50 cents a mile. The IRS paid for the car.

 

[voltaren]

Depreciation can be mitigated by buying the 75D with limited options. Performance and larger battery MX have taken a tremendous hit this past year. The $140k P90DL is now $100k. If you option-out a 75D and pay over $100k, depreciation will be more substantial. Meanwhile, the $85-90k 75D is selling for $70-80k used. If you can grab one for $70k, the MX is the biggest bang for the buck, period! I think that sentiment will translate over time.

Unigard Insurance Company

Bodily Injury 100K/300K
Property Damage 100000
Uninsured Motorist Bodily Injury 100K/300K
Collision $1000.00
Comprehensive (OTC) $1000.00
Rental Reimbursement Coverage 30/900
Collision Deductible Waiver (CDW): NO COVERAGE

But they listed me as a 70D on the policy even though I have a 90D.

Unsolicited advice: increase your liability coverage!! It's very cheap and, quite frankly, if you ever hit someone in your MX, they'll think/know you have money. God forbid, you hit someone and they sue for millions. It's entirely plausible.

 

[Sanny]

Thanks for the info, and nice SS

This link has I think the updated Section 179 code
I'm not a CPA either, but I would check with one in this case before I was confident of my calculations.
It looks to me like you are limited to about $11k deduction a year, although this may be less after personal use is considered.

So worse case (not saying it is, only that it might be):
Attaching the car to the business saves 11,000*0.7*0.39 = $3000 a year in taxes based on your other inputs.
Are you sure that other auto expenses are deductible if the Section 179 is used ?
Last, you had to take out commercial insurance for the car titled to the business. Did that cost more ?

When this question came up for me, I elected to simply track miles and apply the per-mile rate. I drove a lot then, and the rate was over 50 cents a mile. The IRS paid for the car.

Thanks for the input! Again, I will definitely talk to knowledgeable CPA soon. But from what I understand $11k limit is for cars, but not for 6000+ lbs work trucks like Model X

Limits for SUVs or Crossover Vehicles with GVWR above 6,000lbs

Certain vehicles (with a gross vehicle weight rating above 6,000 lbs but no more than 14,000 lbs) qualify for expensing up to $25,000 if the vehicle is financed and placed in service prior to December 31 and meet other conditions.

For the commercial insurance and stuff, my understanding is that you can still keep a car as a personal, and used by the company. Your expenses will be reimbursed by the company as miscellaneous deductions. There is a limit - you can reimburse only expenses higher than 2% of your AGI (I didn't use it in the calculations because I already have expenses that are below 2% AGI and they will be useful when combined with car deductions). Again, I'm over my head with this stuff and will try to talk to a good CPA, maybe I'm all wrong.
P.S. And in my understanding you can use section 179 for fast depreciation and fuel and maintenance costs at the same time (aka actual expenses) vs standard mileage

 

[nrigali]

Hi Sanny,

I am doing the exact same comparison right now and your spreadsheet is very similar to mine.

I was going to get a Model 3 or S in a year or so but with the Section 179 deduction it makes more sense for me to buy the Model X for business as I drive 25k miles or business annually, 95% of all of my driving in this vehicle would be deductible. And I structured my business a bit poorly this year so I need a big deduction. Since I was going to buy one anyway, I'm looking at getting it this year instead of next year.

I believe that you can use actual maintenance costs as long as you stick with that method every year you own the vehicle.

Have you talked to a CPA yet to check your numbers? I will be speaking with mine in the next weekend so and would be happy to share what she has to say.

 

[LyftupX]

I have not looked at your spreadsheet but have done my own analysis on buying an X for business use myself.
I drive Lyft and have been doing so for a few years now. They have introduced black service in the area and I have thought about moving tiers and utilizing the tax benefits for a purchase.

Before anyone asks , I drive during busy times and at many times can net 30-50$ per an hour and that is currently in a car on the Plus (suv) platform. I take home after their fees $1.50 per every mile driven including unpaid.
When you drive smart and the income is incremental to the spouse the tax liability is quite high even after expenses , I'm currently @ 5k liability and may hit $10-12 k by year end.

So my thought is her access to the higher tier, better clients but that also leaves you access to all tiers below. I would only use the car during non drinking bar hours so cutoff is 9 -10 pm them I'd switch to my current rig for late night crowd.

So the benefits, sec 179 the vehicle $25k (you can only sec 179 the amount of net business income you bring in up to $25k$


50% bonus depreciation , additional $46k for the model I am pricing out.

All remaining years are about $8960 dep... you can also write off maintenance , reg and insurance up to the % of business use.

My wife is due for a new car and can afford this on her own salary, don't want to get into details but I'm picturing after year one of (90%) business use especially with only 3
months if I buy in Q4 ... we switch over to 65-35% since her commute is only 30 miles a day and I
Can blow by that week commute in a nice busy day.

So that's where I am , close but I also think Tesla will need to do something by year end to push sales. Even factoring all the above in and anticipating increased earnings from driving it's still a big bite to chew. My other options were buying a suburban or Yukon but those are $75k and 19 mpg.... if that. It would also not solve my wife's daily driver issue so she would still desire a car.

So that's my breakdown and thoughts on a potential purchase... we need to take one for a test drive maybe even an over night.

 

[LyftupX]

I believe that you can use actual maintenance costs as long as you stick with that method every year you own the vehicle.

Have you talked to a CPA yet to check your numbers? I will be speaking with mine in the next weekend so and would be happy to share what she has to say.

You must stick with the method you start with. If you do actual expenses and depreciation that's what you stay with or mileage for that's the route you go. It all comes down to how much you will drive as to the method that works out better.

I talked with my friend who is a CPA, he also let me know a nice little phrase that has me hesitate "don't let the tax tail wag the dog".... or something like that.

 

[nrigali]

You must stick with the method you start with. If you do actual expenses and depreciation that's what you stay with or mileage for that's the route you go. It all comes down to how much you will drive as to the method that works out better.

I talked with my friend who is a CPA, he also let me know a nice little phrase that has me hesitate "don't let the tax tail wag the dog".... or something like that.

I one hundred perfect agree with your CPA friend. I wouldn't buy the car just for the savings because I know I would pay less by just paying taxes but considering I was going to buy one anyway it might make a whole lot of sense to buy one sooner than later with all the available deductions and credits before they're gone.

 

[Sanny]

Hi Sanny,

Have you talked to a CPA yet to check your numbers? I will be speaking with mine in the next weekend so and would be happy to share what she has to say.

Good to know I'm not alone here. I didn't talk to my CPA in detail, just a phone conversation yet. In general, he supported my assumptions. For me the complicated parts are 1) having a vehicle registered by an individual and reimbursing the expenses (inc. depreciation) from the business 2) deciding whether it is worth additional risk of the audit.
Please share the info you'll get from your CPA.

 

[nrigali]

My CPA has been slammed but I will fill you in when I speak to her.

I don't mind risking an audit because every deduction I take is legal and fairly well documented. I'm a little lax on a few things like recording my miles but that's because I drive 95% for business and Google maps location tracking can prove that. I use another car for personal purposes.

I calculated all the numbers including the federal tax credit and section 179 deduction and the TCO on a Model X would be lower over 5 years than just keeping my 2005 Prius (owned outright) and driving it into the ground. The reason it would be lower is because of the huge tax savings I would see.

The icing on the cake is that I drive 4-5 hours per day visiting clients and I would save about an hour a day using carpool and HOV lanes here in CA. I would also have a much more comfortable drive with AP2 all the all the way there and back.

How much is 250 hours per year x 5 years worth to me? That's the next calculation I need to attempt to make. I'm working on a formula for that one.........

 

[ThomasB]

All this math for a car???

Look the model x is expensive but it's the only car in that category. Either you want it ( and can afford it) or just wait for the model Y.

If you can afford it Life's to short to over think it. Get the car and enjoy someone unique.

And get ready for people to ask you tons of questions about your car. People will give you thumbs up at red lights. It's weird at first but you get used to it.