Tesla Model S – Cost of Ownership vs. Honda Odyssey

The underlying idea is that a dollar today is worth more to you than a dollar tomorrow (all else equal).

The NPV is how much a thing is worth/costs now after taking that into account and discounting future cashflows appropriately.

The statement that electric motors have fewer moving parts so they last substantially longer is a fallacy that electric car proponents have been spreading for years. There are still many, moving parts which require servicing and can fail at a rate of similarly serviced gas engines. In fact servicing (rewinding) is quite a labor intensive and expensive operation, given the price of copper or other conductive material used in the construction of electric motor.

Should a motor fail. The cost is significant.

I like the idea of an electric car, but the truth is the motors do fail. They require maintenance in the static environment of a factory or they will fail, a car on the open road with harsh environmental factors it will be hard on them.

But the biggest lie about electric car maintenance is that is lower. Its not. 90% of a vehicle's maintenance has nothing to do with its motor. It's tires, brakes, lighting, lubricants(yes electric motors need oil changes too), and power systems. Which I suspect will be more extensive here since there will be countless OS upgrades to both the drive systems and the power control units.

Its not possible at this time to compare gas engine maintenance w/ electric motor maintenance because its not apples to apples. You can however look at replacement cost as an indication of serviceability. A 400hp electric motor costs about $24,000 vs. a 400hp gas engine at about $6000.

The gas engine is still far more economical at this point even factoring in fuel costs.

To help some understand why the Model S could be "cheaper" to own vs a Honda Odyssey it's important to understand a few factors:

1. Low fuel costs - electricity is way cheaper than gas and when you factor in gas savings over 8 years, you get substantial savings (ie., $20k over 8 years if driving 15k miles a year, of course depends on gas prices and electricity prices).

2. Low maintenance costs - there's no oil changes, timing belt, etc. It's basically tires. Even brakes you don't need to change often because of regenerative braking.

3. High residual value due to upgradeability - the battery pack is swappable, so after 8 years (or longer) you can swap out battery packs to a bigger pack (ie., 400+ mile range). This is a great feature and will add residual value to the Model S. Also, over-the-air updates keeps the software always up to date.

4. High residual value due to battery pack - the battery pack for the Model S is holding up well with customers so far, and after 8 years it should show minimal degradation (ie., 10-15% likely, max 20%). In other words, the battery will still hold substantial value and when a person buys a 8-year-old Model S in the future, they are not only buying the car but they are buying the battery pack (ie., fuel savings) as well. This is why the residual value of a Model S (or another EV with a large battery pack) will be substantially higher than a comparable ICE car.

What you have here is a fairly atypical fuel engine lifetime that you are treating as typical.

Travis (who forked my model to create the cash flow model) and I chatted about this. It's primarily due to the effect of time value on money, when you finance the car. If you were to purchase the car outright, you would want to use the 1st tab; vs. financing, the 2nd tab.