Tesla Model 3
Silas Stein | picture alliance | Getty Images
If you’re thinking of switching to an electric vehicle, chances are that you have considered a Tesla.
The debut of the Model 3 — which starts at $35,000 — is Tesla’s most affordable model. And it has many individuals wondering if they want to convert to gas-free driving.
In 2018, electric vehicles — including plug-in hybrids — saw a big sales bump to reach a 2% market share, up from 1.1% in 2017, according to Edmunds, a provider of car research and reviews.
Most of that growth can be attributed to the Tesla Model 3, which made up 59% of pure electric vehicle sales in 2018, according to Edmunds. Overall, Tesla’s cars represented 79% of electric vehicle sales, including the Model S and Model X.
More from Impact Investing:
MBA students face off on next best impact investing idea
Not just millennials have socially responsible investing in mind
Homeowner avoided ‘energy guzzlers’ for more efficient options
“Not only does it have a long range, but people have always looked at Tesla as sort of a cutting-edge brand,” said Ron Montoya, senior consumer advice editor at Edmunds. “You can show them off as gadgets.
“It’s like a fashion statement,” he added. “It really has appeal to them that even other vehicles with similar range do not.”
That appeal — plus the environmental benefits — may have you thinking about converting. But there are a few things you should know.
Leave recent headlines out of your decision
Tesla CEO Elon Musk made headlines last week when he decided to raise $2.7 billion to fund the company.
The move was met with a rally in the company’s stock. But Musk’s message about focusing on autonomous vehicles left some experts wondering what a pivot from auto profits could mean.
But speculation about the company’s corporate strategy should not worry consumers who are thinking of buying one of its vehicles, analysts said.
“Tesla and Musk took any liquidity worries off the table in the near term,” said Dan Ives, managing director at wealth management firm Wedbush, of the company’s latest moves.
That means consumers shouldn’t worry about Tesla’s future in the next three to seven years, and even beyond, he said.
“Our view is, longer term, this is potentially going to be one of the more transformational automobile manufacturers over the next 20 years,” Ives said.
Sam Jaffe, managing director at research firm Cairn ERA, also said he thinks the company is here to stay.
“The brand is established,” Jaffe said. “The company is established.
“It’s not going anywhere,” he added. “It’s not going to disappear.”
You can now lease instead of buy
In April, Tesla began offering leases on the Model 3.
For a model with standard range plus — 240 miles — the purchase price is roughly $39,500 if you pay cash, excluding taxes and fees, according to the company. That is provided you pay $2,500 up front.
That price goes down to $31,450, once the federal tax credit plus six years’ of savings on gas are factored in.
If instead you decide to take out a loan, your payments could be roughly $563 per month before tax credits and gas savings. Or if instead you lease, you could pay approximately $399 per month.
Those prices will vary based on how much you put down, interest of a loan or terms of your lease.
There is one catch: You will not be able to buy the car at the end of the lease.
From a personal finance standpoint, experts generally discourage consumers from leasing cars because you set yourself up for indefinite payments without ever owning the vehicle.
For electric vehicles, however, leasing could be a positive for one reason: quickly changing technology.
Most electric vehicle owners do not plan to keep the car for 10 years, said Eric Ibara, director of residual values at Kelley Blue Book.
Going autonomous may be risky
The riskiest part of deciding to drive a Model 3 is whether or not you want to add on the autonomous driving features, Jaffe said.
That is because autonomous driving may never be legally allowed, and those features may not be as safe as they are purported to be, he said.
Plus, there are actually two parts: autopilot, which comes with the vehicle, and the autonomous driving package, which can cost about $6,000 at the time of purchase.
“That decision whether to buy the option of having the autonomous driving is actually very expensive,” Jaffe said.
Then, those features may not be as fully functional as you’re expecting.
“You are bringing risk into the equation that is very rare in the car-buying process,” Jaffe said.
Because the self-driving equipment — including the necessary computers and sensors — comes already built into the car, consumers may want to wait to activate those features later, even though you may have to pay a bit more, Jaffe noted.
Charging will cost you
Tesla offers its own Supercharger stations that contain multiple chargers.
In North America, including Canada and Mexico, there are a total of 1,441 stations with 12,888 Superchargers, according the company’s website, which provides a map of those locations.
Car owners are billed either by kilowatt-hour or per minute, based on the station. Charging costs about 26 cents per kilowatt-hour for a Model 3.
Those costs can add up, particularly if you are not able to charge your car at home or at work.
“It’s really critical that non-EV owners understand the state of charging,” Jaffe said. “It’s gotten very expensive to publicly charge an electric vehicle.”
The company has faced delivery issues
The estimated delivery time for a Model 3 is up to four weeks, according to Tesla’s website.
But the process hasn’t always been smooth.
“The people who stood in line the first day you could reserve a spot waited two years,” Jaffe said. Unlike other car companies, Tesla doesn’t build your car until you order it, he noted.
Last year, the company wrestled with production delays and a subsequent phase that Musk dubbed “delivery logistics hell. “
Johner Images | Getty Images
The company seems to be still finding its footing when it comes to scaling deliveries.
Tesla delivered 63,000 cars in the first quarter, below analysts’ expectations for 76,000. That includes about 50,900 Model 3s in the first quarter.
The company does still plan to deliver 360,000 to 400,000 cars in 2019, Tesla said in April.
Tax benefits have decreased
Tax credits are available for buying an electric vehicle, but for Tesla, those incentives have been reduced.
The existing $7,500 tax credit phases out once an automaker sells 200,000 electric vehicles. Tesla has already crossed that threshold, which means consumers who buy its cars are only eligible for half that amount — $3,750.
Lawmakers have proposed a bill, the Driving America Forward Act, to extend those tax credits for an additional 400,000 vehicles for each automaker.
But for now, Tesla’s tax credits are slated to get further reduced in July to $1,875.
Your driving experience could change
In order to bring the costs down for the Model 3, Tesla had to put as many features as it could into one screen, according to Montoya, who has driven most of the electric vehicles on the road, including Tesla’s models, as part of his job.
“To me, you lose that tactile feeling of driving a car with traditional controls,” Montoya said.
If you want to turn on the windshield wipers in a traditional car, for example, you just turn the stalk. In a Model 3, you have to look down and find the right button.
Of course, reviews of the car vary based on personal preferences.
The best source for information if you’re thinking about leasing or buying one of Tesla’s cars? Consumers who are already driving them, Jaffe said.
“My discussions with owners tend to be very open and honest,” Jaffe said. “They will talk about what’s wrong with the car, and what’s right about it, and their experience.”