But if you've been waiting patiently for your chance, it's here: today, it's actually possible for someone with a middle-class income to own a Tesla.

If you want to take advantage of the newest $35,000 Tesla Model 3, all you need is to make a $1,000 down payment on the company’s reservation page and you’re good to go. However, putting down that $1,000 does not set up a payment plan, or even a proper agreement to buy a car. It’s just saving you a place in line, and there is no telling exactly when your car will be available. This is because they’re still making them.

What this means is you have plenty of time to save up the rest of the money before you actually begin the monthly payments. Still, before you rush off to buy the Tesla Model 3, here are a few things you should take into consideration.

Credits, Discounts, and Expenses

Tesla Model S
Courtesy of Tesla
Tesla Model S

I have some good news and some bad news.

First, the good news: owning an electric car means you get cash back from the government for making an environmentally-friendly vehicle choice! In the U.S., you can get a whopping $7,500 back from the IRS on your taxes if you buy a Tesla Model 3. Since the new car costs $35,000, that price will immediately will go down to $27,500.

On the other hand, the bad news is that you had to be within the first 200,000 cars in order to get this credit, and all of the spots are already taken. If this tax credit makes a huge difference to your budget, you may want to sit back and wait until Tesla comes out with another vehicle so you can be one of the first people in line to get that tax credit.

If you still want the Tesla Model 3, you may or may not need a payment plan. Tesla has an Affordability Calculator to help you figure out what your monthly bill would be, depending on your down payment, the cost of your current car’s trade-in-value (if you want to trade it in), and the length of time you it will take to pay off the new car. Currently, Tesla’s calculator only supports the Model S and Model X. The actual percentages and payment plans that are going to be available for the Model 3 are currently unknown.

However, for the sake of this article I’ll try to speculate on the cost. Let’s pretend you buy the car without any bells and whistles. Black paint, standard battery, and no upgrades whatsoever. That’s $35,000...Plus tax. (Unless you’re buying it in Delaware.) Plus the cost of registering your title.

Let’s also pretend that you saved up $5,000 in cash while you were eagerly waiting for your brand new car to be born. That means you will owe $30,000, plus interest.

I have no idea what type of financing you’re going to use. Will you go directly through Tesla, or will you put this on a credit card, so you can earn some killer frequent flyer miles? I don’t know your life. However, let’s assume you want to pay off the car in 5 years. That’s 60 months, or $500 per month...BEFORE the interest, which will likely make it as much as $100 or more extra per month.

Keep in mind that your monthly car insurance will most likely go up. Geico has a coverage calculator to help you figure out your budget. If you have a different insurance company, they probably have a similar calculator online. If not, give them a call. If you want to get a good idea of what the month-to-month cost of owning a Tesla would be, check out this video by Ben Sullins from Teslanomics.

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Buying A Used Tesla

Tesla Model S
Teddy Leung/Shutterstock
Tesla Model S

When you buy a brand new car, it loses 20% of its value in the first year. This is why in many cases it may actually be wiser to purchase a used car. The great thing about Tesla is that their batteries are made to last, and many of them have warranties that guarantee you can get anything fixed within the first 4 years. If you’re willing to wait even one year after the Model 3 comes out, you would almost make up for the fact that you missed out on the tax credit. However, the odds of finding a used Model 3 any time soon are probably slim to none considering how many people want this car.

If you are willing to buy the more expensive Model S or Model X, Tesla offers their formerly leased vehicles as certified pre-owned cars on their website. The average cost is around $50,000 to $60,000. It’s still a lot more expensive than the Model 3, but keep in mind that with the Model 3, you’re going to pay for most of the electricity you put into the car. (I’ll get more into that later.)

One option to get a discounted Tesla would be buying from a car auction site like Copart. Keep in mind that these cars have all been in accidents and will need to be repaired, in exchange for a steep discount. When you buy from an auto auction, you usually don’t get to test-drive the car, especially if you’re out of state. It is possible to bid online or over the phone, if you hire a broker to go in your place.

Another thing to note is that car auctions require you to pay for vehicles in cold, hard cash. There is no financing available. Then, there are fees, such as broker fees and employee labour fees to get the car onto the tow truck. And finally, there is the cost of shipment. Check out the fee breakdown page of Copart’s website, and consider calling your local auction house with any additional questions you can think of.

There is another option - Carvana, a completely online car buying experience. Carvana has an inventory of over 20,000 used cars available for purchase, including Teslas. With Carvana you're able to pre-qualify for financing and see personalized terms on their inventory. They're also able to deliver the Tesla straight to your door and allow a 7 day test to own period.

Keep in mind that for the moment, Teslas are expensive to repair because there are very few service centers that exist. You won’t be able to take this car to your local mechanic. Instead, you may have to get it shipped to a service center that’s hundreds or thousands of miles away. If you buy a used Tesla, pay attention to how many miles the car has, because the factory warranty only lasts for 4 years or 50,000 miles. Any issues with the car after that point are 100% your responsibility to pay for.

Fuel Economy

Tesla Model 3
Courtesy of Tesla
Tesla Model 3

In the United States, the average car has a fuel economy of 24.8 miles per gallon (MPG). To make the math easier to understand, let’s round that up to 25. According to the Federal Highway Administration, people drive different amounts at different ages in their lives, but it’s a safe estimate that if the age group that can afford a Tesla is driving around 15,000 miles per year, on average. (There are multiple mile-tracking apps you can download on your phone if you need help tracking your own miles.)

So, the next thing we need to take into consideration is the price of gas. We all know that gas prices go up and down in step with natural disasters and political events around the world. As of right now, it’s safe to estimate that gas is $2.50 per gallon. (Note: using round numbers makes the math a heck of a lot easier to understand.)

So, let’s break it down: if you drove 15,000 miles in one year, you can drive 25 miles with one gallon of gas. That means you’re going to have to buy 600 gallons over the course of one year (15,000 / 25 = 600).

If you’re paying $2.50 for each gallon, that’s 600 x $2.50 = $1,500.00. Since there are 12 months in a year, you’re probably paying somewhere in the ballpark of $125 per month for gas.

So, what’s Tesla’s fuel economy? It’s more like 100 miles per gallon. However, it’s possible to never have to pay for gas again! Hold on, though...That doesn’t mean it’s free. You still need to worry about the cost of electricity, “supercharging,” and a few other things.

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Cost of Electricity

Tesla Model X with rear spoiler
Courtesy of Tesla
Tesla Model X with rear spoiler

The cheapest way to charge your Tesla (or any electric car) is to find a free charging station. If you’re not sure where to go, check out the map of your local area on Plug Share. In my area, the only available stations are at local colleges. As time goes on and electric cars become more common, you will probably see more of these stations popping up around your area. The only downside to using a free public charging station is that it can take a while for your battery to fill up. Expect to sit there for as long as an hour to get free electricity for your car. If you’ve got a good book to read, that’s great, but many people simply don’t have that much time to wait around for fuel.

Tesla also has its own “Supercharging Stations” around the country that allow you to charge your battery in just 30 minutes. The earliest models of Tesla made in 2013 and 2014 have free unlimited supercharging for life. The newer, cheaper Tesla Model 3, however, is going to cost you a few cents per Kilowatt Hour (KwH). In 2017, Tesla announced that anyone who buys one of their newer cars will get 1,000 miles of free “Supercharging” per year, after which point buyers will need to pay for supercharging.

If you don’t have any charging stations in your local area, the only option will be to charge your car at home. Most people plug their electric cars into an outlet in their garage and just forget about them and go about their nightly business. If you choose to charge your car this way, your best option would be to plug it in at any time other than the “peak time” of the day, when electricity is most expensive. Peak hours and rates depend on where you live, so you’re going to want to ask your own electricity company what their policies are.

One loophole to having to pay for charging is to buy a pre-owned Tesla that is grandfathered in to the “unlimited free supercharging.” This way, you can take advantage of the original deal on older Model S and Model X cars, where you can charge your vehicle at a Tesla station in 30 minutes for free. Here is a map of every electric car filling station in the United States to make your gas-free cross-country road trip dream a reality!

Cost of Maintenance and Repairs

Tesla Model S
Courtesy of Tesla
Tesla Model S

One of the potential issues to keep in mind when buying a Tesla is the fact that they have not existed for very long. There are not many car mechanics who actually know how to fix these cars’ unique features, like the wing doors and the complicated computer system. This means that every time something goes wrong, your car will need to be shipped to a Tesla service center. Depending on where you live, that can be a very long journey.

Prominent tech reviewer Marques Brownlee offers valuable in-depth analysis of each Tesla model on his YouTube channel. He explains that only a few thousand miles into owning the Tesla Model S, the car began having very serious steering issues that could have potentially caused an accident. The bright side is that car was still under warranty. Tesla takes these issues very seriously and will even give you a rental Tesla to drive while they take care of the problems. Sometimes, a Tesla-certified mechanic will even drive to your house to help you, free of charge.

The bright side to all of this is that for the newest Tesla Model 3, the company will give the first round of cars to its employees. This was a very smart move, because they will be able to identify and fix any issues that came up before the cars are sold to the public.

Unfortunately, if you buy a used Tesla from an auto auction or somewhere like Craigslist that is outside of the warranty, you may not get the VIP treatment every time something goes wrong. You have to remember that Tesla is a luxury car. Just like owning a BMW or Mercedes, parts are expensive. As I mentioned earlier, the car is under warranty for the first few years. If you never want to deal with the headache of paying for expensive repairs, you may want to consider selling it once the warranty is up.

The Final Verdict

The amount of money you’re going to save or spend by switching over to a Tesla is going to change dramatically depending on your individual situation. For many people, you won’t be saving money. You’d be paying more.

I own my car out-right, because my family always saves up our money, and buys cars in cash. So I have no monthly payment. I pay on average maybe $1,500 a year on repairs on my used car and $1,500 a year on gas. That’s a total of $3,000.

If we assume that my monthly payment is $600 for the Tesla Model 3, that’s $7,200 per year... and we haven’t even added on the extra insurance cost or the cost of electricity to charge it at my house. As I mentioned earlier, the cost of gasoline for the average American is $125 per month. The savings I would get on gas are not enough to make up for the increase in my monthly expenses.

However, you are most likely in a different situation than I am. In fact, only 36% of Americans pay for their cars in cash. If you are already paying in the ballpark of $600 per month for the vehicle you are currently driving, then yes: you should seriously consider getting your place in line for the Tesla Model 3.

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About the Author

Rona Richardson

Rona Richardson

Freelance Contributor

Rona was formerly a freelance contributor to MoneyWise.

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