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Tesla's Are Now Cheaper Than Toyota's - Why They Are Cheaper

Tesla vehicles are drastically cheaper and now are cheaper than a Toyota. Here's why.

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Tesla Vehicles are Cheaper Than Toyota Vehicles

As of January 12th, 2023, Tesla has drastically cut prices with some prices cut up to 20%. A Model 3 is just as affordable to own and operate as a Toyota vehicle.

Toyota is generally associated with cost effective and efficient vehicles that are reliable and easy to own. Let's do a comparison between a Model 3 RWD and a Toyota Camry, LE. The comparison will be 8 years of ownership, which is the average length of ownership for a vehicle in the U.S.

The Toyota Camry has the following:

* An MSRP of $29,595
* Front-wheel drive with a 0-60 mph of 7.3 seconds
* A fuel economy of 32 miles per gallon

The Model 3 RWD has the following:

* An MSRP of $43,990
* Rear-wheel drive with a 0-60 mph of 5.9 seconds
* It has 272 miles of range and about 132 miles per gallon as an equivalent

Tesla's have an all-electric drive train which is much more efficient than gas engines. At first glance, it looks like the Model 3 RWD is more expensive.

However, you will receive a $7,500 tax credit for the Model 3, which will lower the price to $36,490. That puts it half-way closer to the Toyota Camry.

The average fuel expense for the Toyota Camry is 32 mpg for city and highway driving. The cost per gallon of fuel is $3.30. With an average of 14,000 miles per year and about 114,000 miles per length of ownership, this equals about 3,565 gallons of gas, which is $11,766 for fuel.

For the Tesla Model 3 RWD, you analyze the electricity costs and efficiency of the vehicle. Average electricity cost is $0.16 per kWh. Per the EPA, it is 25 kWh per 100 miles or .25 kWh per mile. With the same average distance for 8 years times the .25 kWh per mile, you get about 28,526 kWh used. The cost is multiplied by $0.16 per kWh, which is $4,564 spent in 8 years.

Now we compare with fuel costs

Toyota Camry:

* $29,595 cost to buy
* $11,766 fuel cost
* $41,361 8 year ownership cost with just fuel added

Model 3 RWD

* $36,490 cost to buy
* $4,564 fuel cost
* 41,054 8 year ownership cost with just fuel added

It's about the same with the Model 3 being about $300 cheaper when you look at the price to buy and fuel over 8 years of time. But wait... There's more.

According to Car Edge, for Maintenance and Repairs, a Toyota Camry will cost about $4,203 for maintenance and repairs during its first 10 years of service. A Model 3 will cost $3,587 for its first 10 years. Over 8 years, the Model 3 gains another $492 savings.

We're at an $800 savings over 8 years with a Model 3. There are other variables that are harder to calculate - insurance and depreciation.

Insurance and Depreciation

The cost difference between insuring a Tesla Model 3 and a Camry LE is less than you might think. The average cost per year of insuring a Tesla Model 3 is $1,28 today, while the average cost to insure a Camry LE is $1,212. I insure my Model 3 RWD with Tesla and it's about $69 per month because I drive relatively safe and Tesla uses my safety score for insurance. My cost is about $828 per year. I love Tesla Insurance - it's saving me about $300 to $400 a year.

How much does a car's value drop over time? A Model 3 after 8 years should depreciate about 45% and the Camry about 41%. The Tesla Model 3 would have $16,420 and the Toyota Camry, $13,317. That gives the Toyota Camry a $3,000 edge in this area.

There are other variables, however - and that is the shift to electric vehicles and Autonomy.

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Electric Vehicles and Autonomy

The shift to electric vehicles is expected to reach about 40% to 50% by 2030 and by 2040, 65% to 75%. This is due to consumer demand and government incentives. There are more EV commercials being shown on TV now.

As we near 2030, the comparable value of a gas car to an EV will be significantly lower. It will be similar as cassette's being phased out by CD's. Gas car values are going to go down.

Autonomy is a huge wild card. Tesla is working on FSD and every Tesla vehicle sold today will have the hardware and software to drive itself when the software is ready.

This means a Tesla vehicle could drive you from Point A to Point B without intervention from you - at some point in the future. This is a potentially game changing technology. This would greatly increase demand for Tesla vehicles and greatly raise the Tesla's vehicle value.

A Tesla Model 3 RWD with tax credits, fuel costs, and maintenance costs is about $800 cheaper to operate. With Tesla Insurance and my safer driving habits, I will end up saving about $1,200.

If autonomy does indeed happen, then vehicles that aren't capable of autonomy will be worth much less.

What do you think of the Model 3 and Toyota Camry? Which car would you choose?

For more information, see this video from Farzad Mesbahi:

In Related News: Tesla Model Y to Lead European Car Market

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Farzad Mesbahi, Screenshot

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Comments

Ed Gildernew (not verified)    January 17, 2023 - 10:48AM

I am wheelchair bound and retired. I bought my 2014 Toyota RAV4 to be able to have a bullet proof vehicle in retirement. The vehicle had only 65000 miles on it when in December, the maintenance light came on and not soon after the radio/GPS stopped working! Toyota said they will replace it for only $2000! Also My hatch back door electrically has a mind of its own, works when it feel like it! Mechanically the SUV runs fine but electrically the vehicle sucks!!! Wanted to let you know that maybe the Tesla is your Best Buy for reasons that don’t always float to the surface! Many others are experiencing the same or more electrical issues, check out YouTube before you make your decision to buy !!!

Phil Bickel (not verified)    April 1, 2023 - 3:06PM

Where does resale come into play. I got to think a 10 year-old Tesla with batteries at 60% efficiency isn’t worth very much, whereas the Camry, about $10,000. Also your fuel efficiency numbers assume a warm climate, and good battery health for the full eight years. That simply isn’t realistic.