To regular readers of this column, it will be no surprise that Tesla’s Model 3 is cheaper on a total cost of ownership basis than competing luxury sedans from BMW and Mercedes, but a Toyota Camry? Model 3 is a state-of-the-art electric vehicle with a 5-star safety rating and a driving experience that’s gotten rave reviews from every auto mag under the sun. Is it possible that it’s even in the same price class as the entry-level, reliable-but-dull Camry?
That’s the surprising conclusion of Loup Ventures, a tech-oriented venture capital firm, which performed a 5-year comparative cost of ownership study. Loup first compared the two vehicles in 2017, and concluded that Model 3, which had a purchase price about 40% higher than that of the Toyota Camry LE, would end up costing 13% more to own and operate over 5 years. Considering that Model 3 includes Autopilot capability, over-the-air updates, and a host of other features that you won’t find on the Camry (or any other Toyota), the Tesla still sounded like a pretty good deal.
Now Loup has updated its comparison. Using 2019 figures, the new study reached the astonishing conclusion that, when all relevant factors are taken into account, Model 3, which is indisputably a superior car, is slightly cheaper to own and operate over a 5-year period than Toyota’s mass-market sedan.
When it comes to the purchase price (which, unfortunately, is the only number many car buyers will look at), the Camry still wins hands down. In fact, the price gap has widened to 59% since 2017 — the cheapest Model 3 you can order online is $38,990 (a $35,000 version is theoretically available by special order), whereas the Camry LE starts at $24,600.
Costs for fuel and maintenance are far lower for any EV, compared to a legacy vehicle — Loup projects that Model 3 owners will save almost six grand on fuel and $2,800 on maintenance over five years, compared to Camry drivers.
However, it’s the comparative resale values of the two cars that closes the deal for the Tesla. As even a brief perusal of the pre-owned vehicles on sale will show, Teslas retain their value extremely well. Loup estimates that, after five years, the Model 3 will still be worth almost $19,000, whereas the Camry will fetch only $9,000. When the resale values of the two vehicles are included in the calculation, the cost per mile for a Model 3 comes out to $0.46, compared to $0.49 for the Camry LE.
[Read more here]
The key reason the resale value of the Model 3 holds up so well these days is that it's obvious that Tesla's batteries will last longer than the car. Plus, people want EVs, and a second-hand Tesla allows you to buy a high-quality car for less than you'd pay for a new EV.
Oh, and comparing the Model 3 to its peers? The petrol-driven Audi A5 is nearly twice as expensive, per mile.
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