Tesla CEO says Model S isn't really expensive, when you think about it
By Donald Melanson 
posted Mar 27th 2009 2:28PM
posted Mar 27th 2009 2:28PM
With a promised price tag of less than $50,000 (after a $7,500 federal tax credit), the new Tesla Model S sedan is certainly a good deal cheaper than Tesla's pricey roadster, not to mention its competitors, but according to Tesla CEO Elon Musk, it's actually quite a bargain compared to your run-of-the-mill sedan as well. As Musk tells it, "the ownership cost of Model S, if you were to lease and then account for the much lower cost of electricity versus gasoline at a likely future cost of $4 per gallon, is similar to a gasoline car with a sticker price of about $35,000." Musk further adds that the Model S would still be a bargain "even if gasoline were $1 per gallon," saying that it costs just $5 to drive 230 miles. Of course, all of that assumes that you'll actually be able to get your hands on the car one of these days, but Musk seems confident that'll happen as well, saying that the company is "close" to receiving $350 million in loans from the U.S. Department of Energy, which would be used to build the plant in California that would manufacture the Model S.
I thought I read that this was a 7 seater? Where they sit? the trunk?
there's two child size seats that fold up in the hatch
GM should be quaking in their shoes.
The VOLT is a POS compared to this car. Why can't FORD, Chrysler and GM make cars that look like this and run on batteries.
Oh, I forgot, OPEC pays them not to!
I am so fucking getting that car!
hurry, please.
umm I agree with it being on the cheaper side, but lets face it, What the hell are you going to do when it breaks down??
Even if its under warranty, I haven't seen too much shops that carry tesla parts in stock!
Plus what are they going to do, give you a replacement while your car is being fixed? Wonder what kind of car THATS going to be lol
That makes me wonder why they don't "standardize" motors for these so that any electrician/electric repair shop can replace the motor. It would also provide a nice "plug in" aftermarket and competition for greater efficiency and power.
too expensive for me! but if he wants to buy me one, it's cool.
GM doesn't have to worry as long as they keep advertising this with ugly flat grey models.
not expensive?????
in this economy even $5,000 is expensive!
I suspect this price to be a lie just like the 2-seater. The number don't add up at all. They are saying they have a car the weighs more than the 2-seater(2nd smallest car in America), had a 50% better range, charges much faster and cost's half as much ????? Is this using some magical batteries that cost $0 and out perform today's Li-ion?
I call shenanigans!!!!
@ fastm3driver,
How is the Tesla Roadster a lie?? It started at $99,000, and has had to be raised to $109,000, which is not a huge increase in cost when compared to the new technology that is in the car. Also, with new battery technology, as well as larger batteries, this is certianly possible!
I am going to buy shares in Electricity companies... for I see the prices per kilowatt-hour is going to triple because of "demand"
No not really, solar panels will become more prevalent and will definitely help reduce the load on electric companies. Solar panels are becoming cheaper by the months.
Tesla is based in San Carlos. Here on the Peninsula, EVERYONE drives absurdly overpriced cars. The average soccer mom is driving an at-least-$50k E class or 5 series or Lexus of some sort.. not to mention the god-awful R350/R500, and all manner of enormous SUVs. Of course, they don't know anything about their car, they just assume their neighbors would make fun of them if they didn't have a huge car... when a Jetta would be a plenty big car for them and their snot-nosed kids.
So yeah, it doesn't even seem that expensive to me, even though I'd never take the depreciation hit on a new car. Then again, maybe once this car comes out you'll be able to pick one up on the used market for $20-$30k after a few years.
Expensive? Please! You're paying billions in a Detroit bailout.
The bottom line is that these guys would have never had a chance under any other administration for even a $1 loan.
BTW the Chevy Volt has been around since the 70s and it gets touted every election year and *poof* becomes vapor, only this time Washington doesn't give a shit. Woooooot!
$50,000 isn't such a bad deal, BMW's are about the same price but that's not considering the cost of maintenance for such a unique car and there aren't many car dealerships that are to familiar with electric cars. For me it's very expensive I can't even afford a Toyota right now. I'll be waiting until the economy gets better and until the price drops a little more.
Expensive or not it does look really cool.
Looks great like a Maserati GT S meets Aston Martin Rapide, 2 cars well over the price of this car so I think it's a possible great value for around 40k. I would prefer a starting tag of around 33k the would put it in aggressive position to scare GM, BMW, Lexus..... etc....
@Michael - try READING what I posted.
I was commenting on someone else's comment that the savings would pay for the car itself.
He never said it would cover the DIFFERENCE between a normal car and the Model S.
He said "the money I will save on gasoline in the long run will outweigh the costs of the car itself."
I wo0uld think that having less moving parts would make the production cost a lot less, but apparently I have not taken into account the fat paychecks of the company's greedy senior administrators.
There is a TON of R&D cost in this. They are basically inventing the whole way that electric cars will be built going forward. The last major electric car the GM EV-1 was scrapped and all the technology locked up so that no one can use it meaning Tesla has to basically reinvent it.
The Tesla business model from day one has been: Build a hot electric roadster that would be too expensive for the average person but fairly rich people could buy it, get them excited about the company and use that to finance the S. The S would be targeted at the moderately wealthy who would normally buy a Mercedes E, BMW 5 or similar car. Use that money to begin financing a sub 20k version for the average person. All of this combined will hopefully push other car manufactures to invest in electric car technology driving the cost of components down making them more affordable.
They are building a whole new industry, this won't happen overnight or be cheap.
@ Blake:
That's a rather interesting concept when you think about it, honestly.
Had GM considered going on that path: Expensive EV -> Moderately expensive EV -> Moderately affordable EV...
... GM would still be making an electric vehicle to this day. Unfortunately, it hasn't.
I would definitely get this car seeing that the range is 230 miles on a single charge, and the money I will save on gasoline in the long run will outweigh the costs of the car itself.
It's rather ingenious and creative way for Tesla consider that path. You take one expensive vehicle to fund the next vehicle down the lane. A nice progressive way forward-- thinking ahead. Does the Detroit Three do that other than worry about their pocketbooks?
Moving parts has nothing to do with the price tag. The electric engine in the Tesla is top of the line technology. On top of that they have a custom made lipo battery pack. Do you have any idea how expensive lithium is? A similar pack with off the shelft cells could cost close to $20k, and still not give you the range and performance that the tesla has. What the hell are you thinking? Less moving parts, less money? A solid state disk has no moving parts while a hard drive spins a few platters at 7200rpm. Yet a solid state disk costs a lot more to produce than a hard drive because it is NEW TECHNOLOGY. Yea, these guys probably still get a hefty paycheck when they sell a car, but for taking all the risks to put out the first real performance electric vehicles, don't you think they deserve to live comfortably?
@octoberasian
Yeah GM and the big car makers don't have incentive to follow a solid business model since they have the government to bail them out when they screw up.
As far as range goes I think a 150 mile range or there about is fine because the average person drives less than 25 miles per day according to a DOT study. This is where the rental car industry could benefit. We build efficient (plugin hybrid maybe) rugged cars that could be rented cheaply for long hauls. The key is a rethinking of that industry too. You can't price it to the point that no on will use it. If you play it right it will create jobs and would keep people from having to own and or maintain a car for their 1-2 vacations a year thereby saving consumers money and making the electric car even less expensive to own.
In the words of Michael Scott it's "Win-Win-Win"
Caramel:
Sure it does. Electric engines are FAR less complex in terms of construction than ICEs. Once the volume of production increases, the cost of making an electric engine should eventually be cheaper than making a fuel-burning engine.
@octoberasian - Where exactly did you get your numbers for this comment? "the money I will save on gasoline in the long run will outweigh the costs of the car itself."
Assuming 100 miles a day (way overkill) @ 25mpg means you need 4 gallons per day.
Assuming $4 per gallon thats $16 a day to drive your gas burning car.
40,000 (not even the full 50K) / $16 = 2500 days or 6.8 years if you drove 100 miles a day EVERY day of the year.
So realistically, its going to take 10+ years to get the savings you speak of.
Most people who buy a car like this (especially those that LEASE one like the spokesman says) will never see that recuperation of the initial investment.
Spend $40,000 on solar panels for your home however, and they will be paid off in 10 years and you could live off the grid the entire time.
@Sisyphus - While your right that an electric MOTOR costs less to produce than a gas ENGINE, you have to keep the fuel source in the picture. Batteries to hold the electricity to fuel that motor cost alot of money right now, whereas a gas tank and fuel pump are comparably dirt cheap.
I sure hope we get to a place where batteries are cheaper, longer lasting and non-toxic. But I have doubts we will see a huge breakthrough in the near future.
Having less moving parts will reduce the maintenance costs a lot however. Unless you get unlucky and the motor or entire battery package goes out on you.
@Casper42
A few problems with your calculations.
The article states that the Telsa S will travel 230 miles on $5 of electricity. That equals under 2.2 cents per mile. This means a daily journey of 100 miles would cost you $2 and 20 cents. That equates to $13 and 80 cents saving every day. That's a saving of over $3500 a year.
You suggest a break even point of 6.8 years. But you don't say what you base that on. Are you're comparing the Tesla S to a BMW 5 Series (base model). The initial purchase price is similar, so you'll start benefiting from the fuel savings from the first mile you drive. You won't have to wait 6.8 years. If you're comparing this car to a Ford Focus, then yes, because of the higher price, it will take a while for the Tesla S to pay for itself. But you have to ask yourself a simple question. Are the specifications of the Tesla S comparable to a Ford Focus? Is the 0-60mph speed the same? Do leather seats come as standard in the Focus? etc etc. Are you comparing like for like?
You also forgot to include maintenance costs. ICE engines need regular maintenance. Oil changes, filter changes, parts fail all the time. It is a well known fact that car manufacturers make a considerable amount of money from spare parts.
GM's EV1 on the other hand was notorious for requiring very little with regards to maintenance. One clear reason it was discontinued was the fact that GM realised they couldn't make any money on spare parts.
When you add the savings you make on maintenance, and compare the Tesla S to a similar specced car, you see the car pays for itself a lot sooner than you suggest.
darkmax
No one's forcing you to buy this. If you have an issue of where you think the money is going, build one yourself.
Well, nobody's forcing him yet, but with the way all the government 'green' initiatives are going electric might soon be mandatory (western-)world-wide.
Wow, for the price of a well equipped 5 series BMW you could get this! Tempting!
I hope you mean used, because to me a well equipped 5 Series is much more than 50k. Base 528i's start at like 47k?? Or somewhere around there.
Other than that, it truly IS a hard decision. And I LOVE the 5-Series.
This thing looks way better than the BMW 5series and similarly to the Jaguar XF, but even better. I dunno about the comfort or the performances comparison, but the exterior design is better imo.
Except if the Roadster is any indication, this too will be a vapor-car. I had huge hope for Tesla, but not sure that anyone can trust Elon.
The interior features two touch-screen control interfaces. The Model S will be fitted with wireless Internet capability, and Tesla claims it will be able to remotely diagnose and even fix any problems that might arise with the car.
@g00fba11
Just because you can't afford one, doesn't mean it's vapor. I've seen several of the roadsters around the bay area. They shipped more than 100 of them last year, and last I read they plan to do 2-3 times that this year. It's not a lot when you consider the thousands that big auto companies make, but the demand for them is still more than they can make.
@g00fba11
Vapor-car ? What the hell are you smoking over there ? They've delivered close to 300 Roadsters so far and production is ramping up everyday... How is that vapor ? What the hell. Please do at least a little bit of research before passing BS as absolute facts...
it's really beautiful - but we should wait until we see one of these on the streets
It looks a whole lot like a Buick LaCrosse (2009, not 2010)
Except that, $35,000 is still really expensive, when you think about it.
no to mention - the thought process that money talks. People didnt start buying hybrids until gas was 4-5/gallon. That being said, if there is no savings over a gas powered car at $35,000 then these will be few and far between for the eco--minded (eco=short for economy).
however, anyone that realizes how fast an electric car is will buy one to be fast and quiet.
Im thinking these will be targeted at the Mercedes/BMW crowds.
@Joseph
Exactly. They started with the roadster, targeted at a very small amount of people.
Now that they've made a name for themselves, they're targeting the still-small but MUCH larger Mercedez/BMW crowd.
Then, once they prove themselves there, they'll keep working their way down; Acura/Audi; then VW-ish. Maybe lower, but I kind of hope they don't.
I just love that the company is called Tesla, making electric vehicles. People should know who Nikola Tesla was, the genius he was. The average person probably knows who Thomas Edison was, but I don't think Tesla gets the recognition he deserves. A genius in the truest sense, he was a genius' genius.
Agreed. I thought what they did in The Prestige was interesting with Tesla though...
Agreed. Everyone should look him up and read a least a little bit about him.
...freaking Edison. Grrr.
Who doesn't know about Tesla!? Come on, Tesla RAWKS so hard dude! Now where did I leave my copy of "Mechanical Resonance"? Most likely right beside my copy of "The Great Radio Controversy"
I have a man crush on Elon Musk, what with Tesla plus his SpaceX operation to boot.
Hopefully we will never meet in real life, that would be awkward for everyone involved.
I can get a Prius for $24,000 and it will cost about $10 to drive 230 miles in that.
So, saving $20 per 1,000 miles, I only need to drive about 1.5 million miles to break even.