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Comment by toomuchtodo | Hacker News Reader

Tesla's hold their value at a higher rate than internal combustion vehicles [1]. They're also orders of magnitude cheaper to operate per mile [2] (electricity as fuel gets you down to ~3-7 cents/mile, not including maintenance which is limited in a powertrain with only a handful of moving parts).

> Not to mention the fact that it is being used as a rental requires disclosure upon sale

Only in some states is this disclosure required.

[1] https://electrek.co/2016/09/13/tesla-model-s-value-retention...

[2] https://avt.inl.gov/sites/default/files/pdf/fsev/costs.pdf

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3-7 cents per mile is not "orders of magnitude" cheaper. Total burdened cost per mile (including insurance, maintenance, fuel, etc.) for cars today is about 55 cents per mile these days per the IRS.

The fuel only cost for a car that gets 25 mpg (which is not great fuel efficiency) is currently at around 12 cents per mile assuming $3/gal gas. Maintenance may be lower with an electric car but, in the case of Tesla, it's a luxury car brand with expensive sole-source parts and there's the big question about battery costs over time.

This is awful logic. What happens if there's another financial downturn, causing you to not be able to sell your car? What happens if the price of oil goes way down, causing the value of Teslas to drop dramatically?

If you can't afford the car without others paying for it, you probably shouldn't sign for the loan. Hell, you shouldn't be able to get one in the first place.

Shouldn't? Forgive me, but it sounds like you're making a moral judgement here.

If there's a downturn and a loaned car can't be sold privately, then the car is simply repossessed and auctioned off. These things are all contractual, and in a properly setup system the company shouldn't make any losses over all their loans, regardless of a few pettering out.

If you buy a car and rent it, that's suspiciously like simply running a business and many businesses run using loans both short term and long.

  > What happens if the price of oil goes way down, causing the
  > value of Teslas to drop dramatically?

It is generally considered far more likely for the price of oil to go dramatically up, not down. Saudi Arabia is currently pumping at razor-thin margins. In the words of their oil minister (yes, they have one): "The stone age came to an end not due to lack of stones"

Not the current one, that was Yamani, https://en.wikipedia.org/wiki/Ahmed_Zaki_Yamani

I agree that the the price of oil is more likely to increase. It's common sense: The oil companies prefer to develop the cheapest (simplest, most accessible) fields first, so every time a field empties they replace its output with oil from a more expensive field, or not if the new field seems too expensive at the current price level.

But that doesn't that indebted car owners are safe. Oil producers can't cut production all that much (geology doesn't work that way) so the price can certainly drop in the short term. A few years later it'll have increased again, but in the meantime the bank might have impounded the car.

On the other hand there is a limit on the amount of Oil we can take up per the not-doom-the-world requirement, and current known reserves surpass this limit meaning that its better to sell now before you don't get to sell at all.

Why would gas prices dropping mean you can't afford your car payments all the sudden?

A parent comment asked "what happens if the price of oil goes way down, causing the value of Teslas to drop dramatically?" implying "so people won't rent your Tesla, which you expected to pay with the rental fees".

I can think of bigger risks. But anyway, that's the connection, tenuous as it may be.

Reread, the commenter was referring to when prices were up in respect to missed payments.

"The stone age came to an end not due to lack of stones"

what does that even mean?!? It implies that there is not a lack of oil but the oil age will be coming to an end anyway. I think what he's actually trying to say is "we're running out of oil, but I can't say that".

The actual quote is roughly "the stone age didn't end for lack of stones, the oil age won't end for lack of oil", and he was saying that the oil age would end when the price of newly developed oil fields rose above the level where consumers would choose to spend their money in other ways.

I think he also said that "there'll always be a trickle of oil being produced at $1000/barrel" but maybe that was at another time.

As in better technology than fossil fuels is now available which will cause less oil demand over time. I have seen a lot of articles recently mentioning how several countries have a significant portion of their energy needs met by renewables. IIRC Costa Rica was one...

>what does that even mean?

It's precisely analogous: the age of oil will be "over" long before we run out of oil. That's how resource economics work.

It's not. The stone age ended because we invented better tech, without raising stone prices. Oil costs will rise.

Not all stones are equally useful for tools. For example, your tribe may run out of easily accessible obsidian, which is essentially a cost increase.

> It is generally considered far more likely for the price of oil to go dramatically up, not down

When everybody agrees, someone is not thinking. So it was in 2014. And with houses in 2008. And .com stock in 1999.

There are any number of low-but-not-zero-probability events that can cause the price of oil to start rising very quickly. Including the collapse of the House of Saud.

And here's another quote: (oil) markets can stay irrational longer than (Tesla) can stay solvent.

True, but it is a good sign that people are willing to do that to drive a good electric car. Tesla is going to make a killing whenever the Model 3 happens. I'm especially excited to see the other auto manufacturers responses. I'd like to have a variety of electric car options.

Teslas hold their value because the supply is low and the waiting list is very long.

A lot of the cars are resold at prices that are very close to a new listing, this isn't that different than many other high end cars with limited production (although these tend to be at higher price brackets than the model S).

As far as the cost per mile goes the fuel costs are not the biggest factor.

Insurance cost, cost of financing/ROI loss and the devaluation of the vehicle are considerably more important when calculating the per mile costs of owning a car.

It doesn't matter that they hold their value at a higher rate than ICVs. When you go to sell it, you're comparing it to other Teslas.

A 30 mpg car with $3 gas costs $10k per 100k miles to fuel.

In other words, the operating costs for a Tesla do not make up for the premium price of the vehicle. You're buying a luxury car, not paying upfront for operational expense. When they release the 3, things will be different.

Slightly off topic, but does know if you can claim the same mileage deductions on your tax return for an electric vehicle as you can for any other?

I'm not an accountant but I can't think why not. The IRS doesn't know or care if I'm driving a Prius or a Ford Econoline van today so I doubt if they treat EVs differently.

And, from the IRS site, see no indication that they do: https://www.irs.gov/credits-deductions/individuals/standard-...

I don't think the average Tesla owner cares about "cheaper to operate". I have a weird feeling the average Tesla owner has a classic, gas guzzling, vechicle/vechicles in their multi-unit garage.

Teslas are a rich man's car.

I'm waiting for the day it becomes a poor/middle class vechicle.

I know I won't buy a used one until they open up the parts supply, and open up the operating system. I don't see that day coming. I really wanted one a year ago. I figured they must have a few that have been wrecked. I wanted to put one back on the road, with a salvage title. I found it's practically impossible.

As to holding their value, yes--they are commanding high prices, even used. They are a rich man's novelty. If a rich man can get deal on a used car, why not pay bite. It's a small demographic sector of society. It's a niche market right now.

My hope is in the future all electric vechicle manufactures are required to open up their software, so guys like myself can buy in the secondary market, tweak, and get these used electric cars back on the road, in a cost effective way.

(Dissabled the AI if you think if the Tesla, or federal government fears guys, like myself, will tinkering with it. I can live without the AI. I do want a cheap, used, electric vechicle.)

I too am looking for a cheap used electric vehicle, and the Leaf is almost the right answer. But I very much doubt that the software will ever be open, as that's where the value-add and "secret sauce" is. It'll be interesting to see what if any legislative response happens as a result of the VW scandal, but too few people understand the implications.

(I have exactly the wrong use pattern for an electric car: my petrol car sits unused for most of the week, but every now and again I drive it several hundred miles.)

The leaf just seems to make too many compromises to reach low cost. The tiny size, the poor range, the ugly styling, the tiny wheels, etc.

The Chevy Bolt is no looker, but it seems to be less of a compromise than the Leaf. It look much more roomy inside and gets Tesla-like range at 240 miles per charge.

Obviously, everyone here is waiting on the Tesla 3, but the problem is that the federal $7,500 tax credit is limited by quantity by manufacturer. Tesla will most likely run out before Chevy does, which might give Chevy the advantage here. It does look like the 3 will come in around $3,000 less than the Bolt, which is going to be quite the advantage for Tesla's customers who have pre-ordered. Right now it looks like non-pre-orders will not be able to get the tax credit.

> The leaf just seems to make too many compromises to reach low cost. The tiny size, the poor range, the ugly styling, the tiny wheels, etc.

Tiny size? Just the other day I fit a chest freezer I bought at CostCo inside it. That's not TINY. In fact, I was remarking that, while it does look small, it's just because the average US car is huge. In fact, it's likely to be bigger then what most people drive in Europe.

Agreed that the wheels are small. The car is heavy and tire lifetime is not the greatest as a result.

The Bolt is much smaller than the Leaf.

I'd get a Volt if I were worried about range today. It is an electric car, albeit one with a generator.

This month you can lease a Fiat 500e in CA for a total cost of under $3k after rebates (36mo, 10k mi/yr)

I would love to buy a 500e, but FCA has decided they are compliance cars and will only sell them in CARB states.

FCA = Fiat Chrysler ?

(I had read it like some sort of regulatory agency or independent association)

http://evwest.com/ do a conversion, that is the best bang for buck right now and you have control over surveillance

Are you aware of Musks overall goal of using economies of scale to get down to an affordable 'every mans' car model? Anyone that thinks they could have rolled the manufacturing to accomplish this out from day one (not having ever manufactured a car) doesn't know how much is involved in car manufacturing, or manufacturing just about anything for the mass market... I'm assuming you know all this though considering how much you've looked into acquiring a Model S and the fact that you are on HN.

I know of several people for whom it is their only car...

It is about $1100/month (can be less). Expensive, but not outrageously so, well within reach of, say, an experienced software engineer in SV, NYC or London. We are still considered middle class, right?

When you're already paying extreme housing costs? I really don't think most SWEs I know could afford this... Unless they wanted to give up saving for retirement, owning a house, etc.

You can have a model S in the UK for 395 pounds(¬500USD) /month. That's a 7-year contract, but given the 8 year warranty on the car, I don't really see a problem here. And 395/month is very affordable if you have a job in IT, even outside london(I make waaaaaay less than any of the figures in the article above and my monthly payments for the car are larger than this).

Where do you see a 7 year contract in the UK? The longest financing term offered by Tesla is 48 months, you can get a Tesla Model S 60D/70 for about 350-400 GBP a month (after a down payment (of about 20K + another similar payment at the end), but I haven't seen a 7 year contract any where.

NVM I found the 7 year leasing program.

After a down payment of ~16,000 pound, you get to a monthly payment of 622 GBP for 71 months for a Tesla Model S 60 (not D). http://imgur.com/a/1Asgz

This isn't "affordable" by any means, and this is the most basic Model S, without AWD, autopilot or any other upgrade package.

Yes, you're right, I mixed those two up - you can have the car for 395/month on a 4-year long Purchase Hire Contract, or for about 600 on a 7-year old lease. My mistake.

The autopilot option changes the monthly payments in almost negligible way though.

That's really stupid. If you need to pay for a car for 7 years, you can't afford the car. Buy a used Civic and save your money.

>That's a 7-year contract, but given the 8 year warranty on the car

How do you account for the implied risk that Tesla doesn't exist in 8 years? That's a long ways away, and there's no guarantee they make it.

You could buy additional insurance if you're actually worried about this.

Or you could short their stock as a hedge, and buy some options to cover the upside risk.

Or you could buy the car using a title-backed no-recourse loan, pushing this risk onto the lender.

Or you could lease the car rather than buy it.

If you lease the car, the monthly price doubles.

47,208 a year if you lease your car out 30 days a month on Turo.

There's got to be an arbitrage opportunity here.

7 or 8 years is an extremely long time to finance a car. Do we know how much battery life will be left after 8 years?

> Do we know how much battery life will be left after 8 years?

That is the warranty period so I don't think you'll have any trouble:

https://www.tesla.com/blog/infinite-mile-warranty

> the 85 kWh Model S, our most popular model by far, now has an 8 year, infinite mile warranty on both the battery pack and drive unit. There is also no limit on the number of owners during the warranty period.

There's a difference between having a warranty, and getting work paid for by a warranty.

I'm sure that in UK "warranty" means that all work and the unit itself is paid for by the manufacturer in case of a fault. If only parts were covered, but not labour, it would have to be described as such,

Tesla is really good about warranty work. You don't pay for a thing--labor and parts are included.

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