Can you drive a Tesla Model 3 for $78 per month?

By all accounts, Teslas are technological marvels, safe, dependable and fun to drive. But cheap? Well, there’s no question that an EV will save you money on fuel and maintenance compared to a legacy vehicle. And a Tesla isn’t a particularly expensive vehicle if your alternative is a BMW, a Mercedes or an Audi, the brands to which the Californian EV is usually compared.

Above: Graham Stephan and his Tesla Model 3 (Instagram: @gpstephan)

But can you really drive a Tesla Model 3 for $78 per month? Graham Stephan claims the answer is yes, and he explains his reasoning in a recent video that quickly garnered over 3 million views and 13,000 comments. If you’re like most new-car buyers, you’re probably looking for some logic to use to justify your emotion-based purchase, and Graham’s math is as good as any.

Mr. Stephan starts with a $40,000 Model 3, which is still eligible for a $3,750 federal tax credit, as well as a $2,500 cash rebate in California. If your tax situation is such that you can take advantage of the tax credit, and you live in the Golden State, then you’re down to $33,750 right off the bat (several other states and local utilities offer rebates, tax credits and other incentives).

Above: This Tesla video has already racked up over 3 million views (Youtube: Graham Stephan)

Stephan was able to finance 100% of his purchase with Tesla, at a pretty reasonable interest rate of 3.75%, so his total upfront cost was $4,437, which covered sales tax, tag and title. His payment will be $640 a month, or $7,680 per year. According to Stephanomics, that makes his first-year costs $5,867. Because he’s buying the car through his business, he can write off the interest, taxes and depreciation, which he figures will result in $4,925 in tax savings. Subtract that from the first-year costs, and voila! A brand new Tesla costs him only $78 per month.

Your mileage may vary. Those who live in less enlightened states (Florida, for example) will not enjoy the tasty rebate that Californians do. To take full advantage of the federal tax credit, which cannot be carried forward to a future year, and which applies only to income tax (not to self-employment or other taxes), you have to have a fairly high taxable income. To enjoy the tax savings that Stephan cites, you need to be using your new car strictly for business, and you need to be in a very high tax bracket. Furthermore, the calculations presented in this video apply only to the first year of ownership (Stephan has produced a follow-up video, see below, that addresses this issue).


Above: A deep dive into the numbers (Youtube: Graham Stephan)

So, is Stephan’s math as sound as a nut, or as fuzzy as a newborn duckling? We’ll leave that to you, dear readers, to decide. The bottom line is this: if you want a new Tesla, buy one!


Written by: Charles Morris