The One In Which I Buy A Second Tesla

In August of last year, I gave up on my dream of buying a Tesla using passive income and just bought one using a loan. I explained all the reasons why in this post, but to sum up, there were just too many negatives in waiting to get enough passive income.

Now it's time to replace my wife's car and we opted to get her a Model 3. With this purchase, I'm likely not going to post daily details of the buying process like I did the first time around. I expect the process will be fairly similar, so I'll only post when things are different than they were before.

We've decided on getting a red Model 3 with the dual motor long range battery option. That gives us the same range as the Performance version (310 miles), albeit with a slower 0 - 60 time. But my wife isn't going to be drag racing any time soon (I hope), so we're fine saving the $11,000 extra the Performance version costs. I did want the dual motor version. I've got dual motors in my Model S and it made a big difference in the recent snowy weather we had. I also think it makes sense to buy the biggest battery you can. You never know when that extra capacity will come in handy. Look at it this way: if a gas car came with a 5 gallon gas tank or a 12 gallon tank, would you ever opt for the smaller one?

We did get the Enhanced Autopilot, which is a $5,000 option. After using it during my daily commute and during our cross-country road trip, I can't imagine owning a Tesla without this.

My wife also opted for the black interior, which is standard, and the red paint, a $2,500 option.

Funny story about the color. The Model 3 comes in five colors: black, silver, blue, white, and red. Black is standard and no additional charge. Silver and blue are an extra $1,500. White is $2,000 and red is $2,500. My wife doesn't like white or blue, so those were out. (Sadly. I really like the blue and wanted my car to be that color. Alas, she liked the silver and she won on that decision, but it was ultimately the catalyst for buying the car at the time, so I can't complain.) She didn't want silver for her car because that would be the same color as mine. That left black or red.

Black tends to show dirt really bad. My mom had a black car when I was growing up and I remember having to wash it all the time. On the other hand, we were worried about red attracting police and generating more tickets. That, it turns out, is an urban myth.

My wife couldn't decide between the two colors, so on our recent trip to Las Vegas she decided to let random chance determine her choice. She played roulette. If black came up, she'd get black. If red, she'd get red. Well, she played two spins and black came up both times. However, she ended up not sticking to her rules and decided to get red after all.

Things Are Different From Last Time

Right off the bat, there are two things that are different in the buying process this time around: The federal income tax credit has been cut in half to $3,750 and the loan interest rate has gone up to 3.75%.

When I purchased my Model S, the income tax credit was more than the total interest I would pay over the life of my loan, meaning I was borrowing money for free. Things aren't quite so rosy this time around. I'm putting down about 25%, so my loan amount will be roughly $44,100. On a 72 month loan at 3.75%, I'll pay $5,216 in interest charges over the life of the loan. Subtracting the $3,750 tax credit means the true cost to me of borrowing money is $1,466.

The good news is I can still get my total interest cost down to under the tax credit amount. The monthly payment for the above loan is $685. I am currently saving $967 each month towards this car. If I apply that entire amount to my loan, which I will, my total interest paid drops to $3,552 and my loan will be paid off in four years instead of six. If I do this, the federal tax credit will more than cover my interest costs, just like it did with my car.

So, just like with my Model S, even though I am taking out a loan, the cost of borrowing money for me will be zero.

I may be able to eke some more savings out of this. I am currently paying extra on my Model S loan. That loan has a current balance of $95,365 and I'm paying 1.74% interest. The loan for the Model 3 will be $44,100 at 3.75%. I'll need to run the numbers to determine where I save the most money by making extra payments - the higher balance, lower interest loan or the lower balance, higher interest one. I'll wait until we've actually taken possession of the car and everything is finalized before making that calculation.

I did notice what appeared to be a price discrepancy on the website. The price was shown in two different locations and they were not the same:

I downloaded the actual purchase agreement and it turns out the difference is due to destination and documentation fees.

I Didn't Forget The Tax This Time

This time around, I also remembered to reserve enough cash to pay sales tax on the purchase. When I bought the Model S, I assumed the tax would be included in the loan, but it was not. This left me scrambling for some extra funds.

Another change in the buying process is you can now enter a dollar amount for your down payment. Back when I bought the Model S, you could only enter a percentage of the purchase price. This is a welcome change.

Home Prep

I will be purchasing a second high powered wall charger. I could probably get by with the one I have, as I got the longer cord and it will easily reach both cars in the garage. However, that will make charging a pain in the ass because we'd have to remember to move the plug from one car to the other. I suppose we could charge one car one day and the other the next, which might not be too bad, but still.

I already had the major electrical work of getting a new electrical panel and 100 amp circuit installed done, so I won't need to pay those costs again. I will need to spend about $500 on a second wall charger plus whatever the electrician charges to hook it up. This nice thing about the wall chargers is they can be connected together in a load balancing configuration. This allows two chargers to share the same 100 amp circuit.

One thing I am completely ignoring in these calculations is the trade-in value of my wife's car. She has a 2010 Prius with 138,000 miles on it. Honestly, it has several scratches in the paint and it's not in the best of condition. I'm planning on getting about $1,000 for it, but I'm doing my calculations assuming I get nothing. I checked the Kelly Blue Book value and, even for a car in fair condition (their lowest rating), they say it's still worth between $3,500 and $5,300. Whatever I get for it will just be icing on the cake.

Wow! While in the process of writing this post, Tesla came back with a trade-in offer of $4,750! That's kinda crazy (but I'll take it). When I traded in my old car for the Model S, I had to take at least 10 photos of the outside and inside of the car, tire treads, etc. before they valued it. I had to do none of that this time around.

I called Tesla and asked about this. I was told if the value of the purchased car is under $60,000, they don't make you do all the photos on the trade in. When you pick up your car, they just do a cursory check to make sure the car functions. Either way, I think their offers on trade-ins are really fair.

One thing I am really surprised at: we placed our order on February 19 and Tesla said we could expect the car to be delivered in February! That's only 9 days max! We'll see if that holds true.

My wife has yet to decide on a name for her car... Any suggestions?