We Bought a $40k (net) Tesla Model Y LR

*** Edit 10/6/2023 ****

Since publishing this post, Tesla has dropped the MSRP most trims of their Model 3 and Y by $2k. They also reduced the referral bonus from $500 to $250.

 

 

*** Original Post ***

I discovered my favorite musician, Ben Rector, a few years ago. My wife recently shared with me a few of his Instagram “Reels”:

• Philosophizing about head honchos (probably my favorite; link)
• What if sushi is a scam? And they act like it’s special, but they really just didn’t want to cook your food (link).
• Dear Apple Maps, I don’t know what a thousand feet is (link).
• Dog owners think I want to see their dog more than I actually do (link).

While the first three “Reels” are orthogonal to this post (but still worth of watching), I think the last one describes Tesla owners quite well:

<Tesla owners> think I want to <talk about> their <Tesla> more than I actually do.

For that, I apologize. I’ll try to get it out of my system with this single post.

We bought a new Tesla Model Y Long-Range earlier this month, and in the process we may have accidentally joined a cult. Cult members do not enjoy being told they are wrong, but instead become experts at rationalizing. Further, they often try to recruit others to join the cult. Therefore, take this post — with its rationalization and recruitment efforts — with a grain of salt. Lastly, my daily driver (when I wasn’t riding my bike) before this was a 2010 Corolla, so surely some of my elation with the car is simply a result of buying any modern car and is not unique to Tesla or EVs.

 

Here’s how the math worked out:

• MSRP: $50,490
• Destination Fee: $1,390
• Order Fee: $250
• Tire Fee: $2.50
• Price Adjustment for Buying in Inventory: ($4,040)
• Referral Credit: ($500 here’s mine)
• Pre-Subsidy Total: $47,592.50
• – Federal EV Tax Credit: ($7,500)
• Net Total: $40,092.50

 

Registration costs:

• Sales tax: $3,450 (=$47,592.50*7.25%)
  • Ouch!
• Other registration fees (annual vehicle tax, plates, registration, special EV tax, wheel tax, etc) : $1,123
  • When calculating my state’s annual vehicle tax (based on MSRP + VIN), my state’s system inflated the MSRP by about $15k, which would have translated into thousands of dollars of excessive annual registration fees/taxes over the coming years. Luckily my appeal was successful, though somewhat of a pain. For those in a similar situation, my state acquiesced after providing both the “window sticker” + purchase agreement, both of which clearly proved the MSRP was off in their system.

 

Ancillary costs:

• Tesla charger: $475
• Tesla charger installation: $1,000
  • $700 materials
  • $300 labor (well worth it for the professional install going up into the attic of my garage).
• Floor mats: $145
  • 10% off w/ promo codes found on YouTube (EVERYDAYCHRIS627).
  • Seem decent quality. Will come in handy during winter months.
• Center console tray: $20 (through Amazon Warehouse)
• Liability-only insurance: $580/yr.
  • Self-insuring is one of my guiding principals.
  • That said, am I an (ex-ante) idiot for not carrying collision?
    • Adding collision coverage with a $2.5k deductible would cost me an extra $660/yr (with zero theft/flood/vandalism coverage), which strikes me as more than I want to pay. Having a teen driver (soon to be multiple) in the house certainly doesn’t help our actuarial risk profile. But Geico doesn’t realize that we reside in Lake Wobegon where our teen driver is much more responsible than average.
    • Even in a worst-case scenario where the car is totaled, it seems that the salvage value of EVs is relatively high due to the residual value of the battery (link). If a totaled car can command $10k-$20k at auction, this certainly limits the downside risk to something reasonable. That said, I suppose I would have to orchestrate that fiasco, which sounds like a pain.
  • I priced out a handful of different insurers, but Geico remained cheapest for us. Tesla insurance is not an option in my state; I remain curious what their rate would have been.
    • Further, we’ve earned “accident forgiveness” at Geico that would be a bummer to give up.
      • About ten years ago, we redeemed this in a small at-fault fender-bender about 10 years ago. It’s a nice policy feature.
  • I also think our umbrella insurance also went up a small amount with the addition of the third car.

 

Things I LIKE about the car:

• I’m having the most fun driving since I turned 16. Mrs FP is similarly in love with the car.
  • It is by far my favorite car I’ve ever driven (including a bunch of fancy cars that I didn’t personally own). I think it is more fun to drive than any BMW, or Audi I’ve driven. I even think it’s more fun to drive than the Model S Plaid that I’ve driven a handful of times (which just seemed too large/long to be practical around town and too fast to be safe/comfortable/practical). Technically, I think the Model 3 is a more fun car to drive than the Y since it is smaller, lighter, maneuverable, and lower. If we didn’t have a bunch of kids, I probably would have considered this car instead.
• The electric powertrain is amazing.
  • Great acceleration at any starting speed.
  • I spent the first day or two of ownership marveling at the fast acceleration. Having owned the car for three weeks now, I largely have reverted to driving like an overly cautious old man. That said, it’s nice having the option of accelerating quickly on the rate occasion I need it (e.g. merging, etc).
    • In fact, I’ve recently experimented with the “chill mode” setting and am pleased with the increase in riding comfort (no inadvertent lurching with inadvertent small foot movements).
  • Given its simple and reliable design, it should theoretically be maintenance-free for the life of the car.
  • The powertrain is quiet.
• The ease of home charging is fantastic.
  • With the 48A charger, I get 44 miles/hr of charging.
  • It is literally as easy to charge my car as my phone.
    • Having a well-positioned home charger helps with this.
  • We pay about $0.06 per kWh, which means that it is really cheap to charge. Google tells me that the national average is about 4x that.
• Waking up every morning “with a full tank.”
  • The stated range of the car is 330 miles, but I’ve read that this is overstated by 10% in real-world conditions (e.g. hot/cold weather, driving > 50mph, etc).
  • Relatedly, the optimal usable daily range is in the neighborhood of 60% of the stated range of the car, since the best practice is to operate the vehicle from 20% to 80% of capacity on a regular basis.
• It’s the safest car on the planet.
• For hauling kids, it is a lot roomier than my prior car (a 2010 Corolla).
  • No more hump on the floor of the back middle seat!
    • Obligatory Brian Regan reference (link).
• I love the simplicity of one-pedal driving way more than I thought I would.
  • I love that regenerative braking is saving wear-and-tear on the brakes while recharging the battery at the same time.
• The trunk (including sub-trunk and frunk) is cavernous and really versatile.
• It is pretty slick having your phone seamlessly be your key (via Bluetooth; no data/signal required). Up to 5 authorized drivers per car.
  • I had no idea how much I would like this feature. I thought it was a gimmick, but it is surprisingly practical. When I needed to unexpectedly swap cars with my daughter at her high school, I dropped off the Tesla, took the other car, and she drove the Tesla home without any formal key swap.
• I’ve found supercharging to be pretty convenient, although we’ve only done it once. Fortunately, >95% of our intended driving with this car will be around town, enabling us to charge at home for cheaper (~1/6 the cost of supercharging).
• I loved avoiding the dealer markups/nonsense by buying directly from Tesla.
• I enjoy being reasonably hedged against increases in gas prices (excluding implicit gas prices paid through flying, buying groceries, etc).
• I like the green light notification. I’ve configured the car to ding whenever the light turns green at an intersection. A useful feature I never would have imagined liking so much.
• I really like the speed warning chime. Given how easy it is to speed in the car, I have it configured to chime whenever I exceed a certain threshold.
• Driver profiles. The car identifies the driver by the phone used to operate the car. It automatically adjusts all settings (seat, mirrors, HVAC, music, etc.) to match those of the active driver.
• Collision warning/avoidance. Fortunately I haven’t used the avoidance feature yet, but the system has given me several timely warnings. It is not unrealistic to think that this system will prevent at least one accident over the life of the car.

 

Things I DISLIKE about the car:

• As with many crossovers, the visibility out the rear of the vehicle is abysmal. It seems particularly bad in the model Y.
• No sunshade provided for glass roof, though I’ll probably buy a third-party one next spring when the heat comes.
• Thanks to the glass roof and the cavernous trunk, I find the interior acoustics to be less than ideal.
• Lack of conventional modern blind-spot monitoring (e.g. indicators on side-view mirrors).
  • I find Tesla’s solution of the live video feed on the main display to be inadequate for blind-spot monitoring. Who wants to look at the center display when changing lanes to the left?
• While the car should be largely maintenance free, scheduling a service appointment can be a disaster.
  • Several-week long wait times, and in our case, a 75-minute drive across state lines.
  • We had a small issue at delivery that was fixed at a service center.
• I could do without the childish easter eggs (e.g. fart sounds, more cowbell, light show, etc).
• I’d have to pay a $45/yr subscription to integrate my garage door opener into the car. Solution: continue to use the physical remote. Frustrating given that most cars have offered this feature for free for well over a decade (like our 2012 minivan).
• I wish the front trunk (frunk) was powered. I’m afraid of denting the hood each time I manually close it (even after googling how to do it properly).
• I am expecting significantly reduced range in the winter, but the relatively new heat pump should help with cold-weather efficiency.
• The “fit and finish” of Tesla’s is notoriously bad, though improving over time. The rule of thumb is to simply “reject” a delivery if things look off. Better that than hope that they will follow through on their promise of fixing things after taking delivery.
  • This advice is more practical the closer you live to a delivery center. In our case, the 7-hour round trip drive was a bit of a deterrent to rejecting delivery.
  • It’s weird, but you can’t inspect the interior of the car (or test drive it) prior to accepting delivery. You must accept delivery before ever opening the door.
• Tesla has removed parking sensors from their fleet, replacing them with a camera-dependent system. But it isn’t terribly accurate nor do they provide a front camera. No birds-eye view either like many cars have.
• It didn’t come with mud flaps and kicks debris up on the car in wet weather. I should invest in some mud flaps, particularly with a midwest winter approaching.

 

Neutral observations about the car:

• EVs really thrive in around-town efficiency. Regenerative braking. No idling of engines at stoplights. That said, they are less efficient at highway speeds.
• The battery/range will likely degrade by about 10% over the first year, then hopefully remain relatively stable after that. Given this, I think a long-range variant makes a lot of sense, particularly if the upgrade price is relatively small.
  • In our case, we paid about $3k more for LR variant for 50 miles more range; a relatively cheap hedge against the inevitable battery degradation.
• It takes some adjusting getting used to the controls of the car being centralized on the main display (e.g. wipers, mirrors, air conditioning, etc), but voice commands help with that. And we’ve gotten the hang of it quickly.
  • When we first picked up the car at the delivery center, the interior was hotter than the surface of the sun. It took us a good ten minutes baking in the burning hot car to figure out how to turn on the AC. I had never felt dumber in my life.
• Due to their weight, EVs are notorious for eating up tires. Presumably, this is exasperated by aggressive driving. Time will tell if my grandfatherly driving habits will help mitigate this.
• Autopilot is nice until it tries to kill you. On net, I’m still undecided how I feel about it. I have a 90-day trial of full self driving because I used a referral link when ordering my car. I surely wouldn’t pay for it in its current form. The free autopilot/cruise control seems pretty practical on highways and surely sufficient for most people. I don’t really understand the appeal of self-driving in the city. Even with it enabled, I’m not going to trust my life to a system without paying attention. Therefore, if I’m paying attention anyway, why not drive?
  • That said, it’s not hard to imagine a future world in which insurance companies penalize human driving versus autopilot driving. That will certainly be a paradigm shift.
• Having a new car is always a bummer. You get paranoid about scratches/dings/dirt. It is so much more liberating driving a beater.

 

Tips on buying a Tesla:

• Recently, if you buy from Tesla’s inventory, you can save anywhere from $0-5k off MSRP (link).
• With the tax credit, a Model 3 RWD is in the ballpark of a Toyota Camry these days (e.g. $30k after federal tax credits for their base RWD model).
  • My state didn’t offer any EV tax incentives, but many do (link). They can be non-trivial in size.
• Test driving a Tesla is really easy. You can either ask a Tesla owner, who like Ben Rector’s dog owners, will probably be overjoyed to take you for a drive and talk incessantly about their vehicle. Alternatively, you can visit a Tesla delivery center in any respectably-sized city. They let you test drive it without a salesperson in the car. There is zero sales pressure upon returning the car. I’ve done this in multiple states (CA, UT, CO) and it has always been an enjoyable experience. It would make for a cheap and fun date night. I’ve test driven multiple cars (e.g. Model 3, Y, S) at each location.
  • I also test drove an F150 lightning (with a salesperson in the car) a month back. It was a pretty fun car to test drive. My buddy, who I did the test drive with, ended up buying one.
• You’ll want to snag a referral code from me or from somewhere on the internet to save yourself $250 (here’s mine).
  • Who knows how long this referral nonsense will last. It seems that they are always changing their policies.

A few days after I got mine, I saw one for a $290 cheaper in inventory. Prices fluctuate daily/hourly.

 

Some concluding remarks:

• On net, I think the purchase was a good one for our family. It has become our primary around-town kid hauler and is an absolute joy to drive. Despite having 5 kids, we chose the 5-seat over the 7-seat configuration because the third row is hilariously impractical for all but the smallest of children (e.g. smaller than our youngest kid is currently). 95% of the driving we do is with 5 or fewer people and I’d rather walk 100 miles in a blizzard than hear my kids bicker about the injustices of being crammed into the comically small third row.
• Given the efficiency of hybrid engines these days, I’d be lying if I told you that the Model Y was the most economical option for us. It would have been cheaper to not buy a third car. Alternatively, it would have been cheaper to buy a Hybrid Corolla, but I was willing to pay a relatively small premium for the added performance, features, safety, enjoyment, and reliability of an all-electric powertrain.
  • Of course, Tesla isn’t the only EV game in town. The Chevy Bolt seems like a worthy lower-cost competitor. Given the lower purchase price (e.g. $27k MSRP + dealer shenanigans), the $7,500 tax credit constitutes a significantly larger percentage subsidy for that vehicle. Although I do find it odd that Chevy cancelled the Bolt only to reinstate it a few months later.
• For some reason, EVs are incredibly polarizing. Perhaps Musk’s shenanigans are to blame for much of that. That said, EVs are unambiguously the future of driving. The simplicity, reliability, and performance of the powertrain are unparalleled.
• EV owners who pat themselves on their backs for saving the planet are clearly delusional. It is clearly more “green” to ride a 25lb bike across town than it is to drive a 4,555lb vehicle. It’s clearly more “green” to not drive than to drive. Further, our “green” EV is powered 1/3 by coal, 1/3 by natural gas, and 1/3 renewals according to my electrical provider’s website. Lastly, destroying the earth to mine Lithium strikes me as un-“green.”
• I think it is absurd to for the government to subsidize the purchase of EVs to millionaires who can clearly afford the vehicles without the credit.
  • The structure of the tax credit is pretty bizarre, eligible only for those in the goldilocks region of income — not too high (due to the phase-out) and not too little (due to the non-refundable nature of the credit).
  • If the objective is to reduce emissions, why not federally subsidize human-powered bikes? Electric bikes? Bus passes? Whole house fans? High-density housing near public transit? Plant-based diets?
• Owning an EV probably doesn’t make sense for apartment renters without access to cheap at-home overnight charging. Nor does it likely make sense for those with niche use cases (remote off-roading, constant road-tripping, etc.).
  • I like the fact that we still own a gas-powered minivan for road trips and hauling lots of stuff (5 kids + 75 lb dog + luggage).
• Regarding the Model Y specifically:
  • Current Fremont-built Ys have the fancy “matrix” headlights. Austin-built Ys do not.
  • The LR does not have the 4680 structural battery pack (only the newly-released 260-mile LFP RWD model Y has the 4680). All LRs are currently produced with the 2170 NMC batteries.
    • LFP advantages over NMC: Less battery degradation over time, ability to utilize full capacity of battery on a regular basis (no 20%-80% daily constraint), cheaper.
    • LFP disadvantages over NMC: Heavier, lower performance/acceleration, worse cold-weather performance.
  • All Ys currently for sale should have HW4, with the improved cameras (and thus, potentially better autopilot functionality down the road given that Tesla’s system is entirely reliant on cameras).
• We decided to pull the trigger on the car on a Thursday afternoon. I hit “sell” on our Vanguard mutual funds in our taxable brokerage account by market close on Thursday. The liquidated funds hit our Fidelity brokerage account (which we use as a checking account) on Friday afternoon. We made the ACH payment via the Tesla app on Friday afternoon and picked up the car on Saturday morning.
  • It is remarkable how liquid mutual funds are, particularly when paired with the excellent Fidelity brokerage account used as a checking account.
  • We realized about $1k of capital gains during the liquidation, but these small gains will be more than offset by the ~$3k of tax-loss-harvesting we did in January of this year.
    • I use the term “tax-loss-harvesting” liberally here. It was a taxable=>Roth/HSA/529 exchange we did in January, rather than a taxable=>taxable exchange that is almost always discussed with TLH.
• So long as the $7500 tax credit remains, I think there is an arbitrage here. If depreciation + incremental sales tax is in the ballpark of the $7500 tax credit, I can imagine a scenario where I could upgrade every few years for “free.”
  • This is obviously not my intent, but I’m going to pay attention over the years to see if the arbitrage holds up. It’s all dependent on new car prices + trade-in values.