I was interested in buying a Tesla Model 3 but I didn’t want a major liability on my balance sheet. After doing a lot of research and calculations, I figured out how to turn it into an asset. Here’s how.
Note: this is not for everyone. It depends on where you live and your ability to stomach some risk. But dozens if not hundreds of people are doing this, so it’s proven to work.
How to buy a Tesla Model 3 for free
Go to Tesla.com and design your Model 3. You’ll notice the Standard Range $35,400 model is off-menu.
The long-range RWD Model 3 is also off-menu. This is the one I was interested in buying. My order agreement is below (more on this later).
If you take away the long-range RWD upgrade, you’re left with a base price of $35,400 for a black Tesla Model 3 with aero wheels and autopilot.
I wanted the long-range RWD upgrade because I didn’t want to have to charge as often. According to posts and conversations with owners, the long-range RWD Model 3 reaches 325 miles per single charge. The standard range plus Model 3 achieves 220-240 per charge.
For this guide, let’s stick with the Standard Range Plus Model 3 — the most affordable option on Tesla’s current menu. $39,400.
Choose “Loan” as your payment plan and put in $2,500.
This is the bare minimum. You must pay $2,500 to place your order. There’s no way around it. This goes towards your down payment on the car. (You can use a credit card and it’s fully refundable within seven days.)
Your monthly payment will be $608/month — built on a 4.25% interest rate for six years.
There are also other expenses to take into account. All of these will vary on your personal situation. These figures were mine. I live in the state of Virginia.
- Insurance: ~$80/month
- Charging: ~$30/month
- Taxes: ~$125
- Registration: ~$45
- Delivery fee: $1,200
Total upfront payment: $3,870
Total monthly payment: $718/month
There is a federal tax credit of $3,750 for vehicles delivered before July 1, 2019. After that, the tax credit goes down to $1,875.
Since delivery takes approximately two weeks, you would need to purchase your Model 3 very, very soon to receive it before July 1, 2019.
If you do qualify for the tax incentive, this means you’ll get nearly all of your upfront costs back when you file your 2019 taxes.
It gets better.
There are also state tax incentives.
If you happen to live in one of the following states you are eligible for even more tax breaks:
- Connecticut ($2k)
- Louisiana ($2.5k)
- Colorado ($5k)
- Pennsylvania ($1,750)
- California ($2.5k)
- New York ($2k)
- Massachusetts ($1.5k)
- Delaware ($3.5k)
- Maryland ($3k)
Finally, before we get to the monthly payments, let’s talk about the “gas savings.”
Tesla likes to position the money you’ll save on fuel as an incentive — as if it’s reducing the overall price of the vehicle.
For someone who is trading in a second car, it makes sense that there would be savings on gas down the road. But in no way is it reducing the sale price of the car at the time of purchase.
More importantly, for someone like me who lives in a one-vehicle household and a Tesla would be our second car, this is an added fuel expense, albeit smaller than if we were to get a gas-powered second car. But still, paying for electric charge is over-and-above what I would be paying with just one gas engine vehicle.
At this point, we’ve gotten our down payment money back, thanks to tax credits, but we still have a $718 monthly payment. That’s not free!
To cover the $718 monthly payment for a Tesla Model 3, you need to use the car to make that money back. You need to make your investment generate a return.
One of the ways to do that is with Turo, the ‘Airbnb’ for renting your vehicle. Car owners are able to list their vehicles on Turo’s app and website and charge a daily rental fee to renters.
It turns out Tesla has three of the top 11 most popular cars listed on Turo, based on how much they’re earning for their owners.
According to data from Electrek, the Tesla Model 3’s average daily price on Turo is $156.
The M3 gets booked on an average of 10.1 days per month, earning an average of $1,083 per month.
$1,083 minus $718 equals $365 of net profit. In other words, renting your Tesla Model 3 on Turo is actually making you money.
One Tesla-Turo host made a YouTube video about her experience renting her Model 3 on Turo. I’ve embedded it below. But you don’t need to watch it.
As the comments were quick to point out, the video is not the best.
Here’s a screenshot of her math:
The Model 3 owner was disappointed that she made a take-home of $71.10 from one booking on Turo — not as much money as she had hoped.
One commenter wrote about three steps she could have taken to increase her margin:
Don’t pay to wash it. Hose it down in the driveway only if it’s dirty.
Only rent to 3+ day drivers.
Do the 25% insurance cost instead of the 35%.
That last point is discussing Turo’s three-tier insurance coverage for hosts: Basic (15% of rent), Standard (25% of rent), and Premium (35% of rent). Turo’s insurance covers the car while renters are driving it. You don’t need to pay for commercial insurance.
Had she taken the commenters advice, she would have earned closer to $300 ($151*3=$453-25% insurance=$339.75-$20 charging=$319.75)
You can also use the “Turo Carculator.” Although, be aware that some have said it’s more of a marketing tool than a financial instrument.
According to Turo, the average Tesla Model 3 owner in the U.S. makes $823 per month.
In my market (Richmond, Virginia), there are only three Tesla Model 3 owners on Turo. Their prices are $165, $163, and $131. I have read in California, where Teslas are like belly buttons, the day price can hover around $75-$115.
So, depending on where you live, if you rent your Tesla Model 3 out on Turo an average of 5-7 days per month, your monthly payment will be covered ($823 minus $718 equals $105).
Wait. What about time? You don’t want this side venture to suck up all your time.
I talked to a local Tesla-Turo host and asked him how many hours per week he dedicates to Turo-related things. He said four hours.
Four hours is a good chunk of time. If you freelance, that’s a half day of work. Factor in your hourly rate, multiply it by four (four weeks in one month), and subtract that from the $105 every month. Depending on your hourly rate, it might not be free anymore.
However, that is only one person’s experience. The point is to be sure to think about the time it will require to manage your vehicle and renters.
Having a Tesla Model 3 that pays for itself is great, but if you have more cash to put down, you can turn it into a decent income stream.
A helpful tool to play with is Teslanomics’ Tesla auto loan calculator, which accounts for the additional line items like monthly charging costs, taxes, and insurance. For example, if you doubled the down payment to $5,000, your monthly payment would go down to $680/month (a $38 difference). Let’s say you’re able to make $1,100 per month with your Model 3 on Turo. That’s $420 in your pocket each month
Not bad for side hobby. But let’s ratchet it up a bit.
I bought a Tesla Model 3 with a sizeable down payment but canceled my order the next day. Here’s why.
What I bought
I bought the long-range RWD model to reduce “range anxiety” and better the longevity of the vehicle. The Standard Range Plus would have required more charging, i.e., more time. I don’t have a garage at my house, so I would have been relying on the supercharging station ten minutes away.
I was planning to put down a good chunk of cash ($26k) to get the monthly payments down to $309.64.
At an average monthly revenue of $1,000, I was hoping to earn $700+ per month in net income.
I would’ve been the closest Tesla rental to the international airport (10 minutes away), which is a major advantage for selling rental cars. I don’t believe I would’ve struggled to close over a grand in bookings each month.
Ultimately, I didn’t go through with it because of where I’m at in my life. I am already short on time, between my family and the business initiatives I currently have that would reap much better returns if I dedicated the same resources to them. In short, it would have been a distraction and not the most practical use of my time and capital. But these are just my personal reasons. You might have a completely different situation. If I had a full-time job, no side hobbies, and lived in a different house and neighborhood, I’d probably do it. Check back with me in a few years.
In the end, if you’re looking to purchase a Tesla Model 3 but the price tag is intimidating, leverage tax breaks and Turo to make it free or even cash flow. Consider it a business investment. Investments always entail risk. This investment vehicle 😉 might be more on the risky side, but maybe it fits your profile and lifestyle. It’s certainly a more thrilling investing experience than putting your money in the stock market.