Do You Save Money With a Tesla? A Deep Dive

Tesla is one of the most often-discussed car companies right now. They are well known for being electric, their controversial CEO, and impressive software. Many people are thinking of switching to a Tesla. Many owners want to know, “Do you save money with a Tesla?” 

For most people, the answer to this will be yes. Let’s cover why.

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do you save money with a tesla graphic

What is a Tesla?

I’m sure that most people are well aware of Teslas at this point. So let’s cover the basics.

Tesla is an electric car manufacturer with a luxury sedan (Model S), sedan (Model 3), SUV (Model X), and crossover (Model Y). Yes, if you put those all back-to-back, they spell S3XY. Yes, that was done on purpose.

Each of these models has drastically different price points and feature sets, all intended to cover a different demographic to encompass the car market.

Every Tesla is fully electric, coming in different ranges to fit your use case.

Perhaps the most famous aspect of Tesla is its software. The software is mostly cohesive between the models and is focused on having a clean look and deep functionality. On most models, everything from A/C to locking the doors to setting off a whoopie cushion is done through their large touch screen.

The software and its integration with the vehicle is the primary selling point of a Tesla. Without its software, a Tesla isn’t a Tesla.

Why Do People Buy Teslas?

The Name

Tesla has become a well-known manufacturer, which comes with respect for the brand. People respect the status that comes along with the Tesla brand.

Especially in social media, there has been massive hype surrounding Tesla. Many people are excited about the future of the brand. Others speak negatively about the brand, but even negative publicity is good publicity. It all brings recognition to the brand.

Go Electric

Whether for the planet or plain fun, an electric vehicle is incredibly fun. If you’ve never driven an electric car, even a test drive is a fantastic experience. Instant torque with a silent motor is an outrageous combination.

An electric vehicle has many other perks, like charging at home and always-on capabilities. These capabilities include things like remote monitoring and 24/7 security monitoring. Features like these aren’t available when they would drain a gas car battery quickly without the motor running.

Of course, electric vehicles generally have noticeably less range than standard gas cars. Plus, charging up is far slower than a 2-minute pit stop to fuel a gas car.

Though people argue that an electric car isn’t any better for the environment now, we have to consider the future. We are heading towards a world of sustainable energy. Means of electric generation like wind, solar, hydroelectric, and even nuclear are becoming increasingly popular.

Having an electric car means you can accept these new sustainable methods. In contrast, a gas car is stuck using old-fashioned gas.


The software in a Tesla is both fun and functional. You can play silly games and interact with the car in ways you never thought possible.

Actions like opening doors and diving deep into settings can all be done through their massive center-mounted touch screens. 

This software is well integrated into the hardware of the vehicle. The two speak seamlessly. Plus, the software constantly evolves and gets over-the-air updates when you are asleep, just like your phone. Owners often wake up to new features they didn’t know were coming.

These updates easily beat other brands requiring you to have an appointment at the dealership for a software update. Some brands even charge for software updates! You can’t beat free, accessible, and powerful software updates by Tesla.

Autonomous Driving

A marquee feature of the software in a Tesla is autonomous driving. Whether you want to call it “autonomous” or just “assistive,” it is undeniably impressive. Things like lane changes and following a predetermined route are currently available.

There are many doubts about how much these systems should be trusted on the road. People are concerned that Tesla has pushed the features through more quickly than is safe. There is likely merit to these arguments, but only time will tell.

In the meantime, the assistive driving in Teslas is better than nearly every other manufacturer. Combine that with its impressive and constantly evolving software, and you have a great user experience. It makes you realize that the future of getting in your car and it driving you to work with no input isn’t all that far away.

electric car vs other cars

Do You Save Money with a Tesla?

This is a very complicated question whose answer differs based on your situation. Let’s go over the three main factors that affect whether a Tesla saves you money, as well as the tax incentive:

  • Upfront Cost
  • Cost of Electricity
  • Cost of Maintenance
  • Tax Incentives

Upfront Cost

When people discuss how much you save with a Tesla, they often forget the upfront cost. It’s all about electricity vs. gas. 

But upfront cost is a massive conversation factor, especially now. In the future, as electric cars become even more common, they will become cheaper. Any product becomes cheaper as its supply increases with relatively steady demand and production becomes more efficient.

For the time being, electric cars are noticeably more expensive. Comparing vehicles is difficult since there are so many factors, but let’s do our best.

Taking the Tesla Model 3, we can compare it to the BMW 3 series. This is one of BMW’s smaller vehicles, getting it close to the size of a Model 3.

BMW is also a luxury brand focused on fit-and-finish, reliability, and excellent service. Plus, it is a foreign brand to the U.S., incurring additional shipping charges.

The BMW 3 series starts at around $45,000 for the base model. Compare this to the starting price of $43,000 for the Model 3. This makes this comparison nearly a draw.

When you consider dealership and miscellaneous fees, this could tip in either direction.

You may think that a BMW is an extreme comparison to a Tesla. But the truth is that both vehicles target very similar audiences as luxury brands. 

Take into account that gas cars have many more options. You can get a used gas car for $3,000 or a new one for $20,000. This isn’t something you can do with a Tesla. If you are looking for a cheaper car, gas is your best option for the time being.

Based on this comparison, the upfront cost is a draw.

Cost of Electricity

Most people think about the cost of charging when figuring out how much you save with a Tesla. People hope that since electricity is so accessible, it will be much cheaper than gas.

The answer to how much you save on gas with a Tesla differs based on your charging situation.

  • Are you able to charge at home?
  • Do you have non-Superchargers near home and/or work?
  • The cost of electricity in your area

Let’s dive deep into the first and arguably most important factor.

Are You Able to Charge at Home?

The exact price per kWh differs significantly by location. Regardless, the cheapest electricity you have access to is electricity at home

If you live in a house and have access to an AC outlet in a garage, that is ideal. This is also the slowest method of charging, but it is more than enough for most people who charge overnight.

Charging at home can easily cost half as much as charging at something like a Tesla Supercharger. 

If we work with a standard Tesla Model 3 as an example, it has a 57.5 kWh battery. With $0.12/kWh charging at home, it would cost $6.90 to charge from zero to full. With a range of about 220 miles, that is around $0.03 per mile driven.

(57.5 kWh x $0.12/kWh) / 220 miles = $0.03/mile

If you don’t have access to charging at home, you are looking at nearly double the cost at closer to $0.20/kWh. This brings the cost per mile to $0.05.

These exact figures will differ by the model of Tesla. However, the change in efficiency isn’t enough to make much of a difference.

(57.5 kWh * $0.20/kWh) / 220 miles = $0.05/mile

How Does Charging a Tesla Compare to Filling a Gas Car?

Now let’s take those figures and compare them to a gas car. We can be generous and use a 30 mpg car in this example. At 30 mpg and $3/gallon, that works out to $0.10 per mile driven.

$3/gallon / (30 miles/gallon) = $0.10 per mile

Even with generous assumptions of mpg and fuel cost, that’s over three times the cost of charging at home and twice the cost if you charge elsewhere.

To equal the same cost per mile of a Tesla, you would need a 60mpg car. Unless you’re driving an efficient motorcycle, you’re out of luck. 

If we are talking about the cost per mile for the energy to drive your car, an electric vehicle is the way to go.

Assuming that the average American drives 115,000 miles in 8 years of car ownership, that is $5,750 in electricity for the entire ownership. Compare this to $11,500 for a gas car, and you have $5,750 in savings.

Cost of Maintenance

The other cost of keeping a car, other than fueling it, is maintenance. We all know about oil changes, tire rotations, and other miscellaneous things that fall off, get dented, or need refilling.

Much of the maintenance that you do on your car is likely related to its engine. Spark plug replacement, oil changes, oil filter replacement, and coolant replacement all relate to your car’s engine.

When we combine all of this maintenance with non-engine maintenance, such as tires, air filters, and suspension, we get an average of around $1,000/year in maintenance. This differs significantly based on the age and condition of your vehicle. We will stick with $1,000 to focus on a newer car.

On the other hand, an electric vehicle doesn’t need any engine maintenance. That only leaves us with non-engine maintenance. We can safely assume this would cost no more than $500 annually, which may be an overestimation.

The massive caveat to this argument is a repair that may never have to happen to a Tesla: battery replacement. Depending on the use of the vehicle, its battery may need to be replaced in its lifetime. This kind of repair can easily cost upwards of $20,000.

If we factor this into the maintenance cost, we are closer to $2,500/year for maintenance.

However, this repair is so rare that it isn’t worth considering. The battery is covered under warranty for seven years, and as battery technology improves, this will become even less common.

Assuming no battery replacement, this brings us to a win for electric vehicles in maintenance costs.

Tax Credit

When discussing EVs vs. gas cars, you can’t forget tax incentives. Though this may not be a cost to compare, it significantly impacts how much you pay for a vehicle.

Telsa tax credits
Thresholds for Tesla Tax Credit | Source:

The standard tax credit is $7,500. The vehicle needs to fit into the above table to qualify for this incentive. The Model 3 we have used in examples is the Model 3 Rear Wheel Drive. You qualify if your trim costs less than $55,000 MSRP.

Assuming the Tesla you choose qualifies for this tax credit, we can take $7,500 off the upfront cost. That’s a $7,500 win for Tesla in tax credits.

How Much You Save with a Tesla – Summary

We have covered all the factors that affect how much money you save with a Tesla. Now we can total them all up assuming eight years of ownership.

  • Upfront Cost: Draw
  • Cost of Electricity vs. Gas: -$5,750
  • Cost of Maintenance: -$4,000
  • Tax credits: $-7,500
  • Total: $-17,250

That is $17,250 in savings over the ownership of a Tesla vs. a comparable gas car.

Remember, this figure can differ significantly based on the above factors. Work out these factors for your situation, and the argument may shift. However, as long as the EV tax credit exists, it will be hard to beat the cost of a Tesla.

Evan from My Money Marathon

Evan Raidt

Evan is a personal finance blogger passionate about bringing beginner investors into the stock market world.

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