Sorry, Elon — I Overestimated The Costs Of The Tesla Model 3

Update: Our best, newest, freshest TCO report is here: Toyota Camry & Honda Accord Buyers, Don’t Assume Tesla Model 3 Is Beyond Your Budget.

For this article, I wanted to correct and update estimates of the maintenance and repair costs of the Model 3 based on some research I’ve done. Aside from updating those figures and the total cost of ownership (TCO) conclusions, I also wanted to compare the Model 3 to a couple more cars. Let’s start with my research on maintenance.

Here’s a description of maintenance costs from Edmunds:

“This is the estimated expense of the two types of maintenance: scheduled and unscheduled. Scheduled maintenance is the performance of factory-recommended items at periodic mileage and/or calendar intervals. Unscheduled maintenance includes wheel alignment and the replacement of items such as the battery, brakes, headlamps, hoses, exhaust system parts, taillight/turn signal bulbs, tires and wiper blades/inserts. Estimated tire replacement costs are supplied to Edmunds.com by The Tire Rack, Inc.”

In order to gather all of this information, I first called the Tesla Service Center. They told me that tire rotations are covered under warranty, but that the 2 year service is $307. They didn’t give me the price for the 4 year service, but I found the quote below for the Model S and noticed the only difference between the 2 year service and the 4 year service is battery coolant. Since the price difference is $125, I inferred that battery coolant replacement in the Model 3 would be $125. I realize this chart suggests that the Model 3 needs a Year 1, Year 3 and Year 5 service, but that is old information. The price for the 2 and 4 year service is also obsolete. I only used this information to infer the price of the battery coolant replacement.

Next, I used Tire Rack to recommend 4 tires and figured I would need those in year 2. Since these have excellent wear reviews, I assume I can get 3 years or 37,500 miles out of them.

I found a top rated installer in my local area and Tire Rack gave me installation prices.

Finally, I figured we needed new windshield wipers every year, so I checked Autozone:

Putting it all together, I came up with an estimate for 5 years of maintenance of $1,792.44, which is $2,000 to $3,000 less than my previous estimates for maintenance!

Updated Total Cost of Ownership Table:

Click to embiggen.

Does this change my previous conclusions?

I previously said that I was surprised that the Model 3 Standard Range isn’t competitive with the base Camry (since it was about $6,000 more over 5 years). I had a spreadsheet error that caused the original value for insurance to be about $1,800 too high (updated in the original article after publishing) and this maintenance research has now lowered those costs about $1,500.

I’ve decided to scale the repair costs with price instead of taking the conservative view that the repair costs would be between the Model S costs and a scaled value. That cut costs by about $600. That changes my conclusion.

According to these figures, the Base Model 3 costs only about $2,200 more over than the base Camry over 5 years, which I consider very competitive and will put a lot of pressure on the car.

In addition, I added the Prius and the Prius Prime to my workbook. How does it compare with those?

The cost of ownership of the traditional Prius is right between the cost of the two Model 3 trims, and considering how much more fun the Model 3 is, it is no surprise that Prius sales are down 22% year to date (and Toyota sales are down 10%). It just isn’t very competitive. The Prius Prime is a better deal (it costs about the same over 5 years as the standard range Model 3). Prius Prime sales are up 36% year to date, but when the standard range Model 3 becomes available next year, it will feel the competitive pressure.

Compare it to other cars by going to the Edmunds TCO calculator.

As you can see from my updated calculations, the Model 3 is set to apply significant competitive pressure on two areas of the auto market.

In the entry-level luxury market, it offers a better product at a lower cost of ownership.

In the mainstream sedan market, it offers a dramatically superior product at a similar cost of ownership.

Tesla is not going to have a demand problem with Model 3. It is going to continue to struggle to satisfy demand as more people learn how affordable the car really is!