If you’re looking to minimize your environmental impact on the road with an electric car, there’s
probably one name on your mind - Tesla.
This powerhouse electric car and clean energy company is the biggest name in gas-free vehicles,
and its offbeat owner Elon Musk has made it a social media sensation.
It’s no wonder the Tesla stock - or stonks, if you prefer - keep rising on every index.
Everyone wants a Tesla, but there’s just one thing standing in their way - virtually
every model is very expensive to own, pricing many people out of the market.
So why are Tesla cars so expensive?
Ever since the first Tesla, the Roadster, was sold in 2008, these cars have been a luxury
item.
As one of the first fully electric car models to cater to the need for speed - with the
Roadster being able to reach a very illegal 125 miles per hour - it became a status symbol
among the wealthy and environmentally conscious.
The Roadster is being reissued in a new model soon, and will top out at a shocking $200,000
for those looking for the finest, fastest car Tesla has to offer.
So is the Tesla off-limits to anyone who doesn’t have a reservation at Elon Musk’s favorite
golf club?
There are a number of more affordable Tesla models, with the Model X Performance retailing
for around $100,000 - but that’s still more than many people are willing to pay for a
car.
In 2012, Tesla started releasing cars that were less geared towards the luxury market
and more towards the average driver, and their Model S cars resemble standard liftback sedans.
These can be had for as little as $69,000 - but good luck selling a budget-conscious
parent on that price point, no matter how much their kid wants to drive an electric
car.
Musk wouldn’t be satisfied until he conquered all sectors of the car world, and in 2017
Tesla fans with less money in their bank accounts saw their prayers answered.
The Tesla Model 3 was here to change the car world.
This fastback sedan quickly became the fastest-selling electric car in history, selling 800,000 models
by the end of 2020.
Like the more expensive models, it has full self-driving hardware that can be updated
regularly, and it works as a plug-in electric car like other Tesla models.
It comes in two models, a standard-range model offering 263 miles per charge and a long-range
model offering 353 miles per charge.
While the car delivers the same power and reliability of other Teslas, where it differs
is the price.
This Tesla finally brings the price down to a relatively modest $37,000 for the standard
model.
A far cry from the high-end early models, but still a good deal above what a similar
car might cost.
It seems like no matter what, Tesla products are never going to be fully affordable.
The reason why is complicated, and it might be the only Achilles’ heel in Musk’s business
plan.
While the company has a near-monopoly in the electric car market, Musk has bigger ambitions.
He doesn’t want to compete against a small sector of the market - he wants to fill the
road with electric cars and provide stiff competition for the classic internal combustion
engine-driven cars.
While his company keeps getting bigger and Musk is currently the richest man in the world
- unless he and Bezos have traded places in the last fifteen minutes - his monopoly essentially
makes him the biggest fish in a small pond unless Teslas start getting more affordable.
So why doesn’t he just lower the price?
The main reason is because Tesla cars aren’t just more expensive to buy - they’re more
experienced to make.
Standard cars are mass-produced in factories around the world, using technology that has
been perfected over the better part of a century.
Tesla’s “green cars” are driven by a modern, constantly evolving design and fast-changing
technology, and only a small percentage of the factories can make them.
That’s why while demand for Tesla cars is always high, supply doesn’t always match
that - it’s very common to see a long waitlist for popular Tesla products, especially after
a new model has been released.
Is there any way to speed up the production process?
Ending the bottleneck for Tesla projects that can lead loyal fans to wait months for the
new product - similar to the crush that made it nearly impossible for video game fans to
get their hands on a Playstation 5 - has been a priority for Musk.
He’s limited by physical space, as most of his factories are working at capacity.
But like with most challenges that face Musk, he’s thinking outside the box to solve it.
Get ready to meet the Gigafactory.
Tesla Giga Nevada, also known as Gigafactory 1, is currently under construction in Storey
County, Nevada and has completed phase one.
It produces Tesla vehicles and the batteries needed to power them, and employs over 6,000
people currently.
But that’s just the beginning of Musk’s plans - he estimates that to produce the number
of cars he envisions to make electric vehicles the dominant force on the market, Tesla would
need over one hundred similar Gigafactory facilities worldwide.
But that’s not the only reason these cars have a high price tag.
Tesla cars run on one powerhouse component at their core - the lithium-ion battery.
This rechargeable battery is just about everywhere these days, being found in many portable electronic
devices that can be charged by plugging them into a wall.
But those batteries are tiny compared to the batteries that power Tesla cars and can send
them racing at top speed.
They’re considered some of the best rechargeable battery models out there because of their
high energy density and low self-discharge.
But that power comes with a downside.
Lithium-ion batteries aren’t easy to manufacture.
The electrolytes in the material are flammable and can explode if damaged, causing damage
to the vehicle.
They also have voltage limits that need to be kept in mind during construction and use.
That means that the factories making them have to be careful during construction, and
Tesla makes some of their own custom lithium-ion batteries in their factories - slowing down
the process of building Teslas compared to other cars, which can plunk down a mass-produced
internal combustion engine in the chassis and call it a day.
But that’s not the only challenge in making lithium-ion batteries.
Lithium-ion batteries have advantages over other batteries, including containing less
toxic metals like lead and cadmium.
They mainly use recyclable metals like iron, copper, cobalt, and nickel, which cuts down
on their carbon footprint.
But the mining of these materials is a challenge in itself, and getting a sufficient supply
of lithium and cobalt means Tesla needs mining operations around the world.
Most of the cobalt supply is found in the Democratic Republic of the Congo in Africa,
while lithium is found in North and South America, China, and South Africa.
The hunt for these rare earth minerals has had geopolitical implications.
Every country sets their own standards for mining, with China and Europe having strict
regulations.
The volatile political situation in other countries means that a big mining investment
could go up in smoke if an unfriendly government takes power.
While Musk was never charged or directly accused of anything, many people speculated if his
lithium-mining operations might have been a factor in the conflict between Bolivia’s
left-wing government and the military that took power after the President tried to change
the constitution.
But surely there are other ways to cut the cost of a Tesla down, right?
While top-of-the-line new Teslas are expensive, many people turn to that time-honored way
of getting a car cheap - the used-car market.
It’s almost a rite of passage for new drivers to pick out a beater at the used car lot and
take it home to slowly fix up.
But with Teslas, it’s more complicated - and many eager buyers find that used-Tesla prices
are well above the average too.
Some old models are available at a deep discount, but if you want a Model 3, you can expect
to pay for it.
So how does the Tesla keep its value on the used market?
Used Teslas have the same problem as new ones - there aren’t that many.
These cars are built to last, but it’s rare for people to trade them in too quickly.
Combine that with the limited availability, and most of these cars are relatively new
and still on the road.
Tesla cars are also less likely to be discounted at the original sale point due to the high
demand and limited supply, so they’ll start at a higher price point.
Because Tesla cars are frequently updated with new software, used cars keep pace with
new ones, so owners are getting a great deal - and retailers know to charge accordingly.
The Tesla Model 3 has one of the highest satisfaction ratings of any car, so no one is looking to
sell it for a song.
But is there anything coming that might drive the price down?
Well, with new and hot products you can usually be assured of one thing - something newer
and hotter is coming along soon enough.
And Elon Musk was never one to rest on his laurels, so he’s already announced the next
big project from Tesla - the Model Y.
This is one of the first fully electric SUVs and seats up to seven, making it a popular
choice for families.
Retailing at around $41,000 for the basic model, it’s a good buy compared to the smaller
Model S, and demand is expected to be high as the new model rolls out in larger numbers.
That means there may be a lot of trade-ins, and anyone looking for a smaller model will
probably see prices decrease due to the new shiny model.
But the initial purchase isn’t the only place where owning a Tesla will rack up costs.
Teslas are considered among the safest and most secure cars on the market, but you wouldn’t
know it if you looked at the insurance prices.
Insuring a Tesla is more expensive than the average car, and the exact price will vary
based on other factors.
But the main reason Tesla insurance is so high is because these cars have high repair
and maintenance costs.
Because they’re made from expensive, proprietary technology, insurers know they’ll have to
go directly through Tesla to get them repaired - and the company has their own specialized
Tesla-approved body repair shops to make sure their cars get the special treatment they
need.
It seems like no matter what you do, you’re going to be paying a lot for a Tesla.
So why do people want them so much?
Many people want a more environmentally-conscious car.
Others want the status symbol of the coolest modern car on the market.
But there’s another financial reason that many people are willing to pay whatever it
takes to get ahold of a Tesla.
Unlike hybrid cars, which use gasoline in addition to electric powers, Teslas are fully
electric.
That means one major cost of owning a car - filling up at the gas station - is out the
window.
The cost of gas fluctuates all the time, but filling up the car can cost up to $50 dollars
regularly when gas is in the middle of its price range.
So how much does it cost to fill up a Tesla?
That depends!
Electric car charging stations are becoming more and more common, and it’s often possible
to charge Teslas at them for a modest fee - usually up to $25 for a full charge.
But Tesla also operates its own line of charging stations, and new Tesla models come with a
very valuable perk - unlimited free charging whenever you see one.
That means your cost for keeping your Tesla’s electric equivalent of a gas tank full can
be a whopping zero if you’re lucky enough to have stations in a convenient place.
So how much will you save overall?
If you don’t have Tesla charging stations nearby and need to use your home to charge
it, you can expect your electric bill to go up a good deal.
But even if you’re paying for charging because you don’t qualify for free charging or Tesla
ended the program, Tesla owners save more than 80% overall compared to gas prices in
most areas.
But that doesn’t solve one problem - the sticker shock when you pay for your Tesla.
The good news is, Tesla cars have declined in price significantly since they started
rolling out, as production ramped up and the technology advanced.
Will this continue?
It depends on the supply of the components, but Elon Musk is certainly acting as if he
believes his empire will continue growing.
After all, you can’t beat the traditional car if the average driver can’t even get
on the road.
For more on the Tesla founder, check out “How Protected Is Elon Musk”, or watch “Is
SpaceX Creating a World For Only the Richest People” for a look at Musk’s other big
project.