Can your Tesla really pay for itself?
We’ve done the research and compiled an overview of every cost-saving opportunity and incentive available today to Tesla owners. Here’s what we found.
As a Tesla owner, you’ve certainly stumbled across information touting how your Tesla can save you money in the long run by curbing that gasoline dependency, or put more money back in your wallet by capitalizing on various Tesla-only tax incentives and other cash saving loopholes. However, like many others, are you still wondering if you're doing enough, by taking advantage of every applicable opportunity made available by your eco-friendly ride?
Well, you’ve come to the right place. We’ve done the research and compiled an overview of every cost-saving opportunity and incentive available today to Tesla owners. Here’s what we found.
Overview of Cost Savings
Charging Your Tesla vs. Spending at the Pump
First, it’s important to note that the cost to charge your Tesla will depend on a few factors such as the model of your Tesla, the size of your battery, the charger you are using, and your charging habits. So, for the means of this analysis, we’re going to make some assumptions and use the best national averages we can find.
Based on the above assumptions, our average gasoline bill totals $86.80 while our average monthly budget for electric charging totals $37.80. This equates to a $49 (or 56.4%) savings per month from charging a Tesla over a standard ICE vehicle. For the means of this article, we will sum up the associated savings after five years of ownership and then assess where the break-even point might be. So, after five year of Tesla ownership, you’d save somewhere around $3,000 from charging versus filling up at the pump.
Cash Incentives and Tax Credits
Now, another great way to make back some extra money after the purchase of your Tesla is through state and local cash incentives and tax credits. Cash incentives typically come in the form of a rebate based on EV ownership or solar panel ownership. At one time, EV owners even benefited from a federal cash incentive to purchase electric vehicles, but unfortunately this is no longer an option.
But, depending on where you live, you’ll still have access to some great cash incentives at the state level. California residents, for example, can benefit from the Clean Vehicle Rebate Project1 and receive up to $2,000 back after purchasing their electric vehicle. Further, based on income eligibility, California residents could receive a rebate of $4,500 or a $5,000 grant through this same program! If you’d like more information on rebates specific to your state, check out Tesla’s comprehensive guide to location-based incentives2.
Outside the state rebates and tax incentives, local utility companies may offer incentives as well. Electric companies want your business and they are often willing to give you a rebate to switch over from an ICE to an EV. These rebates vary from company to company, but we have seen power companies offer up to $800 in the form of a rebate to switch to an EV. For example, California owners can benefit from a PG&E rebate totaling $8003 for switching.
Based on the above calculations, we are up to a total initial savings of $4,000, however this could be greater depending on your qualification for income-based cash incentives/grants and electric utility rebates for moving from an ICE to an EV.
Tesla-Specific Insurance Discounts
Did you know that Tesla actually offers insurance? It’s true. Tesla is looking to lower the cost of ownership for new and existing customers through offering competitive insurance prices. As you may know, insuring an EV through a typical auto insurance company tends to cost more than insuring an ICE. So, to combat these higher rates, Tesla offers auto insurance that is 20-30% cheaper than the rate you’d receive through a typical auto insurance company. Keep in mind that this program is currently available to California residents only. So, if you’re paying more than you’d like to insure your Tesla, consider checking out Tesla’s insurance options4.
If you do opt for Tesla-specific insurance, you could save anwhere from $1,500 to $2,500 over a five-year period of ownership. Not too shabby, so let's add it to the list and keep on going.
Aside from these common avenues to rack up savings in Tesla ownership, there are many third-party services that can help bump up your cost savings even further. On average, California residents pay 18.31 cents/kWh for electricity, resulting in an average monthly electric bill of $101.495. However, time-of-use customers whose rates change throughout the day can reduce their costs from 48 cents/kWh to 17 cents/kWh by only charging during off-peak rates6.
The free app-based service Optiwatt will track your electricity rates and automatically schedule your Tesla to charge during the cheapest rates, saving users an average of 70% on their electricity bill.
For California residents, these savings add up to approximately $4,200 over a five-year period. Although gas savings are accounted for earlier in this article, those savings are calculated based on consumer averages, so third-party apps such as Optiwatt can reduce your electric bill significantly below that number.
What The Data Shows
For the means of this article, we’ve been making some pretty high-level assumptions around fuel savings predictions since we’re looking to prove or disprove if your Tesla can pay for itself. A deeper analysis of Tesla’s fuel savings can be found in this article: Tesla surpasses 2020 fuel savings predictions. Check it out, as you could save a lot more or a lot less than the national average depending on where you live.
Summing It Up
So, if we take a step back and look at the total cost savings, it's a bit of a stretch to get your Tesla to pay for itself. Let’s do the breakdown.
Through our estimation, we arrive at a total savings of around $13,700 over the course of five years of ownership. Don’t get us wrong, this is a great savings opportunity and makes the total cost of ownership of your Tesla much lower than one might have expected. But is it going to cover that MSRP price tag? Unfortunately not over five years. Even if you extend the ownership period to 15 years, the savings are only able to cover around 74% of the sticker price. However, there are some other considerations if you’re still looking to make your Tesla pay for itself.
How To Make Sure You're Getting The Best Savings
Cash Incentives and Credits: Remember that each state is going to have unique EV-specific cash and tax incentives that you can benefit from. To maximize your savings, make sure to do the research specific to your state and learn about all of the cash and tax incentives you have access to through ownership of your Tesla.
Tesla-Specific Auto Insurance: If you're a California resident, make sure to check out the insurance options directly through Tesla. This perk can potentially save you save thousands of dollars in the long run.
Do you actually save money with a Tesla?
At the end of the day, you will likely end up saving money by owning a Tesla. Fuel savings alone can be immense, especially if the price of gas exceeds $4 per gallon (talking to you, California). The average Tesla owner also spends only $282 per year on maintenance, which is significantly lower than most ICE vehicles due to less moving parts. Ultimately, while it may not pay for itself entirely, purchasing a Tesla is still one of the smartest financial decisions an automobile driver and environmental supporter can make.