I wrote earlier this week that I would conduct some new 5 year cost of ownership comparisons between the Tesla Model 3 and its top luxury car competitors. I’ve actually never before conducted an analysis comparing the Model 3’s cost of ownership to the cost of ownership of the Mercedes C-Class or Audi A4. I think the main reason is that it was just clear from the Model 3 comparison with the BMW 3 Series and 4 Series that the Model 3 would embarrass these other cars on a cost of ownership basis. Nonetheless, now seemed like a good time for a new round of comparisons.
Based on assumptions I used this time around, which I’ll discuss on the bottom of the article, the Model 3 shows a tremendously lower 5 year cost of ownership than the Mercedes-Benz C-Class or Audi A4. Actually, the Model 3’s 5 year cost of ownership in these comparisons is approximately 60% that of the popular Mercedes and Audi models, a major cost advantage.
Even if some of the assumptions I used here are very different from your own personal or regional figures, there’s such a great a difference in cost that it’s almost certain the Model 3 would come out on the cheaper side of the competition for the vast majority of people. I encourage you to crunch the numbers for yourself with some models that interest you and figures that match your lifestyle and region. You can copy my Google Sheet and update any or all of the assumptions.
Let’s look beyond cost, though. Regarding how these models compare on other topics, I’ll focus on 6 matters: performance, safety, interior design, infotainment, autonomous driving tech, and cargo & passenger space.
Performance: The handling of the Model 3 has been widely praised by automotive journalists. It seems to be second to none in this class. The low center of gravity (from the batteries lining the bottom of the car) combined with Tesla’s electric powertrain expertise and software leadership are simply unbeatable. In terms of acceleration, here’s a chart for the trims used above for these models:
Safety: The Model 3 logged the best score of any car ever tested by the NHTSA. That means it has the lowest probability of injury for a car of this size. The IIHS also recently published an evaluation of the Model 3 and gave it the highest possible rating, Top Safety Pick+. The Model 3 has also scored well in European and Australian safety tests. While we don’t have detailed NHTSA results from the other models, you can see that the A4 and C-Class each did get overall safety scores of 5 stars from the NHTSA. The C-Class also got the IIHS’s top safety rating, while the A4 was one level down, landing a Top Safety Pick rating rather than a Top Safety Pick+ rating.
Interior design: This is a highly subjective matter. In my opinion, Tesla’s seats are as good as it gets without including a massage machine inside them, and the minimalist, clean dash is perfect. The center console is also of a high quality and I can’t really ask for more in that category. Others will prefer a more traditional premium-class dashboard and center console. I don’t think there’s any way to get around the fact this is a very subjective matter.
Infotainment: Whereas the interior design of the Model 3 is a sharply different yet subjective matter, the infotainment tech is a different story. What you find in the Model 3 versus the C-Class or A4 is again dramatically different, but I think in this case Tesla’s infotainment is objectively much better. Tesla has long claimed or acknowledged that it’s in the business of producing computers on wheels, and the company’s infotainment superiority is a testament to that. With all kinds of games, a drawing pad, the best navigation screen and backup camera, great music options and sound systems, and now Netflix and YouTube, the Model 3’s infotainment tech is a league or three above that of the C300 and A4.
Autonomous driving tech: I need to test out what Mercedes-Benz and Audi currently offer in order to better evaluate this. It seems clear from other reports and comparisons that Tesla’s Autopilot tech is much smoother, better, and more user friendly. It’s also rapidly improving and is updated in existing cars through over-the-air updates. That said, I need to have some time using the Mercedes-Benz and Audi semi-autonomous driving suites to offer a genuine review.
Cargo & passenger space: The Model 3 offers more cargo space, more leg room, and more head space than the other two models.
Getting back to the cost of ownership analysis at the top, here’s a quick rundown of the assumptions I used and why: 15,000 miles a year was used because it’s what Edmunds uses in its cost of ownership calculations and is very close to the last reported national average, and presuming that vehicle miles driven has increased on a per capita basis over time, 15,000 miles could well be the norm now.
Gas prices vary a great deal from state to state, and they could also rise significantly in the next 5 years or drop a bit. I decided to use a figure somewhere between today’s average price of gas in Florida and in California. I expect gas prices to rise in the coming years, but figured it was better to be conservative for this analysis.
Electricity prices (or, more precisely, charging prices) can also vary a lot by region and by individual. I settled on a figure near the national average for retail electricity. As I noted a few hours a day, I spend $0/kWh on charging, so $0.13/kWh seems like a wild, expensive assumption, but I realize there are others who routinely have to pay for public charging and most EV drivers charge at home and pay retail electricity prices for that. As always, the best thing is to put in the figure that you think best fits your situation in the coming years in order to produce a relevant analysis for your own story.
A down payment of $5,000 seems like it would be common, and an interest rate of 4.25% is quite good but also half a percentage point higher than what I’m paying.
For depreciation or resale value, I used figures from Kelley Blue Book and Edmunds (I couldn’t find Kelley Blue Book estimates for the C-Class or A4 and couldn’t find Edmunds estimates for the Model 3). I think they’re fine guesses, even though I actually expect the Model 3 to hold its value better than Kelley Blue Book expects and the gas cars to drop in value more than Edmunds expects.
I’ll say it one more time: copy my Google Sheet and run an analysis of your own based on your own figures and best forecasts. It’s fun!
If you’d like to buy a Tesla and get 2,000 miles (3,000 km) of free Supercharging, feel free to use my referral code by October 1: https://ts.la/zachary63404. After October 1, it’s presumed that you will get 1,000 miles (1,500 km) of free Supercharging by using that referral code (or someone else’s).