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How Much Should You Earn To Afford A Tesla?

by Clint | Updated: July 1st, 2022
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So you like the look of the latest Tesla? Want to save money on fuel bills? Want to switch from a petrol car to an EV and avoid smelly car flumes?

As you probably already know, the amount you need to earn to afford a Tesla is more than you would need to earn to buy an equivalent ICE touring sedan or SUV. However, the economics of owning an EV is somewhat different from that of an ICE. The actual salary you need to own a Tesla depends on a number of factors, including the Tesla model, how much of your income you feel comfortable spending on a vehicle, and the ownership type.

What Are the Biggest Factors?


The biggest factor behind the salary needed to buy a Tesla is its age. Like any vehicle, Teslas depreciate rapidly, particularly during the period after it is driven out of the showroom. Second-hand Teslas can be bought for a lot less than a showroom Tesla, albeit with few financing options.

The second main factor in knowing how much you need to earn is Tesla Model, battery size, and whether you opt to purchase or lease. All Teslas are expensive, but the higher-powered versions with 100 kWh battery packs and higher motor ratings are going to need more money.

How Much Do Teslas Cost New?

The absolute minimum you will pay for a showroom Tesla in the first quarter of 2022 is an RWD Model 3 at just over $46,000. The cost of a Model 3 increases to just under $60,000 for the Performance model with no added features, and peaks out at about $70,000 with all added features installed.

The price of a Model Y ranges from just under $61,000 to a little under $64,000 for cars with no added features and goes up to $80,000 with all added features installed. Model S prices range from just under $100,000 to just under $135,000 for no added features and go up to $150,000 for a Plaid with all added features installed. These are the amounts you will pay if you buy a Tesla online via their website or in their showrooms.

Tesla ModelModelBase Price ($)
Model 3Standard46,490
Long Range52,490
Model YLong range60,990
Model SStandard99,490
Model XStandard110,490

Buying a Tesla Model 3 With a Loan: Monthly Cost

Taking the $46,490 standard Model 3 as an example, the monthly cost of owning a Tesla bought via a loan with a down payment is $652. This assumes a down payment of $ 4,500 and a loan term of 6 years at 2.74 % APR. Financial experts recommend spending a maximum of 10-15% of your gross income on a car.

This includes the cost of the car itself, fuel, repairs, and maintenance. Spending 15-20% of your income on a car is considered high, and spending more than 30% of gross income on a car could lead to financial difficulties.

Taking the bottom end of these percentages (10%), the amount you need to gross per month to afford a Tesla is $ 6,520 or just over $ 78,000 a year. Taking the top end of the percentages (20%), the amount you need to earn is just under $ 40,000 a year. So the salary needed to pay for a basic Model 3 safely is $ 40,000 – $ 78,000 a year.

Including Running Costs

The above calculations do not include the cost of running your Tesla. The two essential costs you will need to meet to run a Tesla are charging and insurance. Assuming a commute of 40 miles per day at a moderate pace, a consumption rate of 242 Wh per mile, and a cost per unit of electricity at $0.16 per kWh, the “fuel” cost of running a standard Model 3 is $ 46 a month.

This includes additional driving at weekends. The cost of insuring a Tesla is higher than an ICE due to the high cost of repairs and can be estimated at $ 120 per month.

With these essential costs included, the monthly cost of owning a standard Tesla Model 3 is $ 818. As a function of financial expert opinion (i.e. using 10-20% of income on financing a vehicle), the annual salary needed to afford this cost is $ 49,000 – $ 98,000.

Leasing a Tesla Model 3

White Tesla Model 3
<a href=httpswwwflickrcomphotos160866001N0751257613019 rel=nofollow class=broken link>Photo<a> by Marco Verch licensed under <a href=httpscreativecommonsorglicensesby20 rel=nofollow>CC BY 20<a>

Taking the standard Model 3 again as an example, the monthly cost of leasing a Tesla is $468. This is based on a down payment of $ 4,500, a term of three years, and an APR of 4.6%. This allows up to 10,000 miles a year (27 miles a day).

Contrary to popular belief, car leasing does not come with insurance. Some Tesla leases come with six months of free supercharging, but car charging is another cost that has to be factored into the cost of running a leased Tesla. With these costs included, the monthly cost of leasing a standard Model 3 is $ 634.

Based on the opinion of financial experts regarding how much of your monthly income to spend on a vehicle, this would mean that you need to earn between $38,000 and $76,000 a year.

Buying or leasing a Model Y

2021 Tesla Model Y
<a href=httpswwwflickrcomphotosgreggjerdingen51645295538 rel=nofollow class=broken link>Photo<a> by Greg Gjerdingen licensed under <a href=httpscreativecommonsorglicensesby20 rel=nofollow>CC BY 20<a>

The current price of a standard long-range AWD Model Y is $60,990. Based on the same loan conditions described above for Model 3, the monthly payment cost for Model Y is $871. With charging ($36) and insurance costs ($120) included, this reaches $1027 per month. Note that the lower consumption of the Model Y reduces the charging costs compared to the Model 3. 

Based on this, you would need to earn $62,000-$123,000 per year to afford a new Model Y without surpassing the limitations recommended by financial experts. For the Performance AWD Model Y, this goes up to $65,000 – $130,000 a year.

On leasing a Model Y, the monthly costs are $821 a month including charging for the standard model and $784 a month for the Performance model. A salary of $ 49,000 – $107,000 is therefore needed to lease a Model Y.

Buying a Model S New

Tesla Model S
<a href=httpswwwflickrcomphotos30998987N0317263199692 rel=nofollow>Photo<a> by Mario Duran Ortiz licensed under <a href=httpscreativecommonsorglicensesby sa20 rel=nofollow>CC BY SA 20<a>

The monthly payment for a standard Model S via a loan is $ 1,407 with a downpayment of $ 7,500. For the Plaid, this goes up to $ 1,935 a month (with the same down-payment). With associated charging costs and insurance, these go up to $ 1,567 and 2133 respectively.

The salary range needed for a standard Model S through finance is, therefore, $94,000 – $ 188,000. For the Plaid, it is $128,000 – $256,000.

On leasing, the range of salaries needed for the Model S is $88,000 – $242,000 including charging costs of $ 40-78 a month.

Buying a Model S Second Hand

Owing to the 8-year expiry date on Tesla battery warranties, it is commonplace to find the 2014 Model S advertised for sale with reasonable mileage. These start from a little under $25,000. It is important to consider the absence of any battery warranty with such a purchase, but it is a means of owning a Tesla if your salary is below the salaries discussed above.

Assuming that car finance is needed, this would involve a monthly payment to the finance company of $ 373 assuming a loan term of five years, an APR of 4.5%, and a down-payment of $5,000. This includes registration fees and sales tax. Adding on the charging and insurance costs detailed above, this arrives at a total of $539 a month.

The salary range needed to afford a second-hand Model S is therefore $32,000 – $64,000. However, it is worth mentioning that the risk associated with buying an EV with no battery warranty may result in higher insurance costs.

Buying a Model X new

Tesla Model X
<a href=httpswwwflickrcomphotospkhamre29967937047 rel=nofollow>Photo<a> by Pål Kristian Hamre licensed under <a href=httpscreativecommonsorglicensesby sa20 rel=nofollow>CC BY SA 20<a>

The price of a new standard Tesla Model X is currently $110,490. On a 6-year term, the monthly cost of funding a Model X is $1762 including insurance and monthly charging costs of $ 69.

Based on a financial expert’s opinion, funding a Model X via a loan would need a salary of $105,000 – $ 211,000. For the Model X Plaid with a price of $131,990, this goes up to $125,000 – $250,000.

Via leasing, the monthly cost of funding a standard Model X is $1420 plus charging costs of $ 69 a month and insurance costs of $ 120 a month. This requires a salary of $97,000 – $193,000.

For the Plaid, the monthly cost of a lease goes up to $1,779 plus charging costs of $69 and insurance. This requires a salary of $118,000-$236,000.