If Maison Lannister is a model 3 lease and has a model 3, will Targaryen House be present?

April 25, 2019 by Vijay Govindan

I just did season 2 of Game of thrones. If you're not a fan, do not worry, there's only one small reference to GoT at the very end.

In previous articles, I had discussed the choice of a 3 model versus a Y model. Another addressed the differences between the standard range (SR) and the long range (LR) range. I even went so far as to compare the finances of a 3 LR model with the maintenance of our Odyssey mini-van.

However, a new wrinkle has been introduced. Tesla now lets you rent your model 3. Is it more logical to own or rent your Tesla? It's always an individual issue. I will make arguments for and against.

Arguments for and against the possession of a model 3:

• Drive it as far as you want. Who wants to be limited to 10,000-15,000 km a year?
• If you own the car for more than 5 or 6 years, it is more cost-effective in terms of total cost of ownership (TCO) or annual cost.
• Keep the car as many years as you want.
• The future potential of Tesla Network allows you to rent your car as a robotaxi when you are not there.
• Driving for Uber or Lyft is an option.
• Renting your car on Turo is an option.
• The car will depreciate (ie, lose value) every year you own it.
• It is more expensive initially, with higher down payments and higher monthly payments.
• The maintenance will be over.
• The insurance will be less with time.

Arguments for and against renting a model 3:

• Get the latest and the best model 3 every few years.
• This allows you to test an EV and see if you like it.
• Get a better model 3 for less money if you do not plan to keep it under six years anyway.
• Down payments are less for a lease.
• If you drive less than 10,000 km a year, it's cheaper.
• You do not have to worry about the depreciation of your car.
• Zero at very low maintenance costs.
• You can save the difference by owning it and investing it.
• You can use Tesla Network, Uber, Lyft or Turo, but this is more risky.
• The new terms mean that you must return the car to Tesla at the end of the lease. There is no option to buy it at the end of the lease.
• Model 3 must be returned to Tesla in excellent condition.
• It will be difficult to take advantage of the Tesla network.

Of course, this adds to all the usual benefits of Model 3 (driving pleasure, lower total cost of ownership than a gas-powered car, zero emissions, super-security, support for Tesla's mission, opportunity to use the Tesla network, special events, sponsorships).

In the same vein as my previous article on minivans, I did an badysis of the net present value (NPV) of the SR +, it is better to own after 60 to 72 months or rent for 10,000 or 15 000 miles.

Some of my badumptions:

• Numbers of Tesla's US site as of 19/04/2019
• I compare the Model 3 SR + base
• Interest rate used: 4.25%, same amount as Tesla
• I updated all payments by 2.25%
• Sales tax for Texas is 6%
• All purchases benefit from US tax benefits next year
• SR + holds 70% of its value every 3 years
• 70% to Grade 3, 49% to Grade 6, 34.3% to Grade 9
• These are figures similar to those of Kelley Blue Book forecast for the depreciation of model 3
• Every 3 years, you rent a new model 3
• If you own model 3, you sell it after 9 years
• I have accounted for down payments, monthly payments, amortization, tax incentives, reduction of the difference and the sale of the car.
• The costs for adding a charging station were not included. (I've been getting quotes for a NEMA 14-50 charger ranging from $ 150 to $ 650. Asking friends who own an electric vehicle is profitable.)
• Fuel, maintenance and insurance costs are not included (insurance payments would further damage the lease, due to the higher costs of a new vehicle from the fourth to the ninth grade and lower value of insurance if you buy it).
• The graphics are similar for LR AWD and Performance, they are just bigger for each period.

The result of two days of computation and furious recalculations is presented in the following table.

What does this tell us?

First 3 years

• The rental costs less the first three years, due to lower payments and the absence of amortization
• Lease with 15,000 miles is more expensive than 10,000 but still very affordable
• A 72-month purchase costs less than a 60-month purchase, due to lower value payments.
• The amortization is highest during the first three years

Years 4 to 6

• Renting is always cheaper than owning
• The cost of the lease increases steadily due to a new down payment
• We see that buying 60 months is cheaper than buying 72 months
• It's the value of not making payments the 6th year and save the difference

Years 7 to 9

• These are the most surprising results
• Rental costs continue to increase, due to another down payment and ongoing monthly payments
• Buying costs are now cheaper than renting
• Because of the value of the savings saved and the sale of the car, the 60-month purchase has the lowest NPV in its history and a NPV lower than any other option.
• The purchase of 72 months now has a similar cost to that of years 1 to 3

conclusions

• If you really want a model 3, the choice to own or rent depends on how long you plan to hold the car.
• If you own the car for less than six years, leasing is the way to go (yes, Lannister!).
• If you plan to keep the car for nine years or more, it is best to own it after 60 months (Come on, Targaryen!).
• I am not a supporter of the 72-month option. You save about $ 100 a month compared to the 60-month option, but with a worse NPV after the third year.
• Payments related to the 72-month call option are very similar to those of the 15,000-mile lease.
• If you need more miles on your lease, the 15,000-mile lease is not much more expensive than the 10,000-mile lease.
• The 48-month purchase is not stated, but I'd expect it to be cheaper than the 60-month-old version in the 9th year, with higher up-front costs.
• If you hold Model 3 for more than 9 years, the NPV due to the saved payments will continue to bring your NPV down to zero, probably around grade 12.
• Owning the car means you do not have to worry about mileage limitations during rental, which can be very useful once the Tesla network is operational.
• We can not compare leases and purchase contracts with other electric vehicles because they will have different payment amounts and depreciation schedules.

International versions of the graph above will be created for the Netherlands, Norway, Sweden and China in my next articles. After that, I will connect the Tesla network and how it can reduce the cost of ownership. I have the opposite of writer's block – I have cascade of the writer, with six other ideas floating in my head.

For our needs, we opted for the 60-month purchase option on our 3 LR model with FSD. I have attached my calculations, found at this link.

Always buy what you can afford! There is no harm in waiting and saving.

If this article helps you decide to order a Tesla, take advantage of my Tesla referral link to get up to 1,000 miles of free Supercharging on an S model, an X model or a Model 3. Here is the code: ts .la / vijay59877

Or use someone else who helped you with your purchase.

Disclaimer: I currently own Tesla shares. I think that $ TSLAQQ's people and bots have a serious problem of facts and logic, not to mention antisocial attitudes, and they are usually people I actively seek to avoid. In my opinion, this article is not meant to be an investment, financial or car buying tip. Please consult a duly licensed financial advisor to discuss investments. Follow me on Twitter @ vijaygovindan17.

Keywords: Europe, EV Sales, Lannister House, Lyft, Tesla, Tesla Leasing, Tesla Model 3, Tesla Model 3 Standard, Tesla Model 3 Standard Range, Tesla Model 3 Standard Range Plus, Tesla Network, Turo, Uber, USA, USA

About the author

Vijay Govindan Vijay Govindan is interested in sustainable living, financial education and the intersection of astrophysics and climate change. Fan of Rick and Morty. Follow him on twitter @ vgovindan17