I have to admit it. Elon Musk got me and managed to persuade me into buying the newer Tesla Model 3 Highland.

WTF is wrong with me?

I mean, I am supposed to be the typical average worker who manages to accumulate a one million portfolio by working, saving, and investing hard. This is done over a long period of time, and now I go and blow it all by spending £40K on a fast depreciating asset?

We all know that spending money on a new car is never a wise financial decision. One of my biggest financial regrets is overspending money on cars. I grew up during the car personalisation trend, or car tuning as we used to call it. I spent thousands of euros on personalising my car and ended up trading it in for €2,000 miserable euros. Did it make financial sense? Obviously not, but did I enjoy the experience? Very much.

Is that why I bought the Tesla Model 3 Highland? For enjoyment? Well, yeah, partly I guess so! Perhaps I am having a middle life crisis as I am reaching my 40s? Possibly! Or maybe the reason is a fading commitment to financial independence?

That was my thinking retrieved from my 2020 Twitter account:

The Forkari! Every time I remember about this car it makes me laugh! I bought it during the summer of 2019 for £450 and served one year of commuting purposes. £450 of annual depreciation compared to the £4,000-£5,000 I will experience now is a big financial difference.

I am fully aware of the implications. This £40K financial dent is going to affect my net worth loss in the next decades. The loss could be hundreds of thousands. But despite knowing this I don’t have any feeling of regret – at least not yet. Will regret appear after a decade? Will it resemble the regret I felt for spending on car personalisation during my early 20s?

Maybe it will, and hence that’s why I think I found the motivation to write this blog post.

Was the Tesla Model 3 Highland the cheapest and most cost-effective buying choice?

No, it was not. However, do I think it was the best purchase after considering my current situation and plans ahead?

Definetely! I don’t have any feeling of regret. I have done my research. I took an informed decision with the best of my knowledge and available information at the time.

I am partly writing this for my Tony future self. He may be grumpy because he can’t afford to buy a retirement house in Portugal, blaming it all on the decision I took today.

‘Why on earth I spent £40K on a today’s worthless Tesla?’ I know myself, I know that question will be there banging about in my head.

This blog post is the calming recipe, Tony san.

These are all the points I went through and considered at the time before purchasing.

1. I dreamed of being as self-reliant and green as possible

What do I really mean is that I wanted solar panels and an electric vehicle at home. We installed the solar panels with a home battery in May this year 2024. The next purchase was clearly an electric vehicle. This choice was to maximize the energy tariffs for EVs in the UK.

How much we’ll save in electricity in the next 10Y thanks to owning an EV?

The average price per KWh in the UK today is close to 25p. In the last decade electricity prices have increased 36% (or 3% annually) in the UK. If I use this data as a reference for future price increases, then in 10 years the price for KWh will be 0.34p. I will use the average of 0.295p/KWh for my 10Y savings calculations.

We consume around 2,400KWh per year which translates into a cost of £7,080 on electricity in 10Y. That is what we would pay if we had no solar panels, battery or EV. Since we now own an EV we can enjoy night reduced rates. We pay 7p/KWh from 11:30pm to 5:30am, that gives us enough time to charge our home battery fully, which then we’ll discharge during the rest of the day to feed our home electricity needs.

The useable battery size we have installed is 5.2 KWh. As battery degrades over time, let’s assume for my calculations that the real usable daily battery size over a span of 10 years is 4.5KWh.

Every year, our battery can supply 1,642 KWh of energy, so we only need to pull 758KWh from the grid at the higher energy rate. That means that thanks to the battery and EV tariff alone we save £4,844 in 10Y.

On top of that we have our 4.4KWp array of solar panels. Being conservative, the panels shoud be able to produce 4,000KWh of electricity per year, which we can use to cover the remaining 758KWh of our house needs and export the rest at a rate of 0.15p/KWh, which in total help us save another £7,099 in 10Y.

These are simplified calculations as for intance I am not taking into account energy losses (which according to data collected from the app is 6%).

To wrap up, I will assume that the total extra savings after 10Y thanks to an EV is around £3,000.

2. Cost savings in fuel and maintenance

Another perk of owning an EV is the savings on fuel and the maintenance costs.

To compare costs I will use my previous 14Y old Seat Leon as a reference. A 1.2l petrol engine with limited power and torque but relatevely high consumption of 40mpg as average. I spent £1,700 a year on petrol at current prices. The equivalent for the Tesla Model 3 is £177. That alone is over £15K of savings in 10Y.

ICE cars need more maintence as they have more moving mechanical components that eventually need replacement within the their normal car lifespan. Some of these are the timming belt (£650), clutch (£700), brake pads and disc replacement (£800), exhaust (£800), oils changes (£1,500) and spark plugs replacements (£600). All this together is around £5,000 of savings on maintenance cost that don’t need doing on an EV.

Some will argue that I should include the cost of a battery replacement as a maintenance cost of an EV. Similar as engines and transmissions on ICE cars, EV batteries are designed to last the entire car lifetime and therefore I don’t count it as a maintenance cost.

3. It is the most efficient EV to buy in the UK today

Another decisive factor for me to choose the model 3 was its efficency. According to EV Database, the new facelifted version of the model 3 is at the top of the efficiency list. The second comparable car is the Ionic 6 and that is £7,000 more expensive than the Model 3.

4. The new facelift covers most of the issues of the previous Model 3

The Tesla Model 3 was announced on 2016 and went into mass production and sale in 2017 in the US. It is well known that the first cars had several quality issues. That is pretty normal since it was the first mass produced Tesla car. However, over the years Tesla has improved the manufacturing process and quality control, and today’s manufactured cars are almost comparable to the quality of a German built car.

We have 8 years of data on the Model 3. We know that the first models were noisy on the roads, the suspension felt cheap, and that the design on suspension arms and bushes was weak as parts wore out quickly due to the heavy weight of the car. Those problems were resolved in the 2024 facelift and should no longer be an issue. Mechanically speaking, the chance of something major going wrong with this model is low.

5. Longer lifespan of the LFP (Lithium-Ion-Phosphate) batteries

Since 2021, the Model SR+ is sold with LFP batteries This chemistry compared to the NCA/NCM batteries generally offer longer lifespans, better degradation ratios, improved safety and a reduced environmental impact. Typically LFPs expect a lifetime of at least 2000 cycles, which means the battery can handle +500,000 miles in a Model 3 standard range.

The chart below from a 2020 study shows the battery degradation we can expect in relation to the cycles and the battery chemistry:

6. Tesla’s charging network reliability

The charging infrastructure here in the UK is growing fast at a 37% YOY increase (according to the Zap-map EV charging statistics report), but it is not ready for a full switch to electric yet, having to build still loads of charging points if enviromental targets want to be met. It is also not very inspiring to seeing many of the already built charging points malfunctioning, or most disapointgly, not functioning at all caused by a lack of proper maintenance.

We want to enjoy the long journeys as much as the short journeys, and since we visit several parts of the UK each year, the hassle free and straight forward charging experience that Tesla bring is a big plus.

7. Pioneering EV brand

Tesla is solely focued on designing, producing and selling electric vehicles. This brand has pioneered the EV technology and forced other major car brands on producing their own EVs.

Now, let’s compare that with Volkswagen and the emission scandal, also known as the Dieselgate. Why shoud I support a brand that prioritised sells over CO2 reductions? I believe this company is still suffering from this scandal, with new management taking on rushed decisions to save the brand image that has resulted in the design and production of lower quality cars and reliability scores, packed with outdated looking technology at a non-competitive price.

8. It is fun to drive

I felt in love with this car the day I test drove it. It transmits sportiness, it is fast, has precise steering and stays well put on the road. That and the intant acceleration and quietness of the car makes it simply a great car to drive.

9. Camping mode

Tesla’s camping mode, USB-C ports and large storage capacity makes it a great car for camping. We only need a made to measure inflatable mattress, a couple of pillows and a duvet and we are ready to lay down in the car and watch the stars through the panoramic roof before we fall to sleep.

10. Great finance deal

The UK government is pushing car companies to sell more EVs or face nasty fines. That’s forced dealerships to offer big discounts on new EVs together with very attractive finance deals. While Tesla didn’t offer any price discount on its cars, it lowered the loan rates to 0-2.9% and reintroduced a discount via a referral link.

As a Tesla owner it means I also get a referral link that I can share with others. You’ll get £500 off the purchase of a Tesla product if using the link below:

https://ts.la/antonio508993

At the time I bought it the referral discount was £500 and the interest rate for the model 3 was 2.9%. On top of that I got a demo car with 2,700 miles on the odometer but offered with a £2,090 discount.

I had enough available cash to pay it outright, but given that the loan interest rate is lower than the Bank of England rate and our mortgage rate, I opted for the 5 years hire purchase with a £10k deposit upfront.

What about a second hand Model 3?

I long pondered about getting a 2021 second hand instead, but knowing the issues these tend to have (the fatigue stress issues on the suspension arms and bushes mainly), the fact of having to pay the whole cost (£25K) upfront due to high rates for second hand cars and the frog outdated looking of the car didn’t convince me.

11. It was time to reward myself

I had a rough start with investing. In 2019 I lost €45K with algotrading in Forex and then lost a few more thousands the following years with P2P investments. In order to recover from this, I decided to work hard and save as much as possible so I could invest my hard earned cash in stocks. Saving over 50% of my salary became the norm, and thanks to that effort I have this year managed to recover all the lost money in positive returns.

It was time to reward myself for my accomplishment.

12. Total Cost of Ownership (TCO)

It is not after we compare the TCO of a Model 3 with a comparable petrol car that we realise about the real value of the rear-drive model 3. The basic models of a comparable car, a BMW M3 or Audi A4 both cost over £40K alone.

Going back to my previous calculations on savings, we total a £23,000 over a period of 10Y. We’ll probably spend more on insurance, tires and may lose more on depreciation with the Tesla, but despite that, things need to get real twisted before the model 3 becomes less financially viable than a comparable petrol car.

Conclusion

In conclusion, spending £40K on a new fast depreciating asset won’t help to reach my financial goal faster. It does, however, keep me motivated on the journey. It also helps me to enjoy the day to day life a little bit more.

I am greener than ever. I save money on energy on each mile I drive. It helps us to reduce our home electricity bills. I enjoy the power, torque, tech, sportiveness, and quietness of the car. It simply makes me a happier man.

Was it worth the money?

I feel it is for now, but will time change my mind?