Can I Make A Cybertruck Pay For Itself?

Last week at work I mentioned that I would consider buying a Tesla in a couple years because Elon Musk hinted that they would make a minivan in the future. A minivan is highly practical for my life considering I have 4 kids and also need to move appliances and building supplies for our rental houses. I’m well known for driving inexpensive vehicles. I sold my last car for $500 after driving it for 5 years. Currently I’m on year 2 of driving a 2001 Pontiac Montana. While we were joking about it being difficult to picture me driving a new vehicle, my boss mentioned that if there is a way to get Tesla to pay for it, I would figure it out…Challenge accepted. Because we don’t know when the minivan will be released or what it will cost we will use the Cybertruck in place of the Tesla minivan to answer this question.

 

Step 1: Section 179 Business Deduction: The Cybertruck will cost $40,000 for the base model. It should also weigh over 6,000 pounds, allowing for a 100% first year business depreciation. That means in year 1 I can take 100% of the cost of the vehicle off my taxes. Since I plan to be in the 22% federal tax bracket depreciating $40,000 in year one will save me $8,800. We are now down to a cost of $31,200.

Step 2: The Federal Tax Credit: It looks like the federal tax credit for EVs may end up getting renewed. The original law had a sunset provision that after a certain number of vehicles were sold the tax credit would go away. With the Democrats controlling the house, the senate, and the presidency it is likely that such a renewal would be popular. Providing that it is the same credit as existed before AND that it lasts long enough for the $40,000 Cybertruck to be in production, then I would receive a $7,500 tax credit on the Cybertruck. We are now down to a cost of only $23,700.

Cost of Ownership For A Cybertruck:

Fuel Savings: The single motor Tesla Cybertruck is projected to have an efficiency of 25.6kwh per 100km, or per 62 miles for us Americans. The cost for grid electricity where I am at with all fees included is roughly 15 cents per KwH. This puts us at $3.84 cents to go 62 miles. This works out to 6.2 cents per mile. With a similar sized vehicle we would be lucky to get 25 mpg, which is what the Ford F150 gets. This equals 2.5 gallons of gas for an equivalent distance. At $3 per gallon, it would cost $7.50 to travel the same distance. This works out to 12 cents per mile. With an estimate of 10,000 miles per year I would save $580 in the first year alone. Because this is after tax money (I had to pay income taxes to have money for fuel) The total of Federal, State, and Payroll taxes for me adds up to 34%, meaning it is the equivalent of $880 of pretax income saved. 

The fuel savings would be even greater if I put solar panels on my house and used a Powerwall to shift demand from the grid to off peak times. We would be producing a lot of our power at a much lower cost from the panels and buying power from the grid at night during off peak times and switch to the on peak/off peak billing model. This would significantly cut down on the total electricity cost.

Depreciation: A normal vehicle, let’s use the F150, depreciates 28.6% in the first year, followed by 6.8% in the second year and 5.1% in the 3rd year for total depreciation cost of 40.5% in 3 years. The Tesla model 3 by comparison loses about 10% of its value after 3 years. Depreciation is a major cost of ownership.

After 3 years the Cybertruck will have saved $1,740 in fuel costs and depreciated only $4,000 compared to $16,200 for a comparably priced F150.

Only paying $23,700 after tax incentives for a new truck and then having it depreciate at an incredibly slow rate greatly changes the economics of new vehicle ownership. So far buying a Cybertruck doesn’t seem crazy to me and the math works well, but we can take one massive leap forward.

Getting The Cybertruck for Free:

Tesla has been working on self driving for years. They have a significant industry advantage. Full self driving is currently priced at $10,000, however Tesla will soon be offering a subscription model. My guess is a subscription model would be about the price of self driving amortized over 5 years. Since the vehicle will last for 20+ years this would be a significant profit center for Tesla. If we assume $200 a month for full self driving then we can make some assumptions:

IF the Tesla ride hailing network goes live, then my Cybertruck could rent itself out when I am not using it. Since a normal Uber ride costs $1 to $2 per mile and the Cybertruck has a lot more utility, being a truck, I think it would get close to the top of this range. If every day my Cybertruck drove 30 miles on average, it would earn gross revenue of $1,800 ($60 per day X 30 days) for the month. Assuming Tesla takes a 50% cut of this, I would have $900 in gross revenue. Subtract 10 cents per mile for fuel and any wear and tear, and I have $90 in expenses. $900 in gross revenue – $90 in variable costs – $200 in full self driving costs = $610 per month in income. $610 per month in income is $7,320 per year. On a $23,700 investment this is a 30.8% ROI! And I get to drive it all the time!

What If The Autonomous Network Doesn’t Happen?

There are other options to make my Cybertruck make money.  Turo.com is a site that allows people to rent out their vehicles to others. The average person on their site that rents out their vehicle when not using it earns $708 per month.  This is really good and would not require me to have self driving to take advantage of it. I also wouldn’t have to cover fuel costs.  $708 per month is  $8,496 per year, a 35.8% ROI, but it gets better!  The Cybertruck is more useful than the average vehicle.  It is unique, has a cool look, functions as a truck, and can comfortably fit 6 people.  The Tesla Model 3 rents often on Turo for $130 – $160 per day.  With the added functionality of a truck, I could see the Cybertruck renting out on the high side.  I can see it going for $175 a day.  If I rented it out for 6 days a month, only 20% of the time I would earn $1,050 a month from it as opposed to the $708 average, this provides me with a staggering 41% ROI, and I can of course decide when to rent it out and have use of it 80% of the time.

Getting Crazy With It:

Having A Cybertruck available to rent out effectively provides test drives and advertising for the Cybertruck.  It’s a revolutionary vehicle and there will be a lot of interest in people wanting to test drive it.  The more people who try it out the better.  The more it is seen on the road the better.  I own a decent chunk of Tesla stock, so if I can advertise for Tesla and help a half dozen people a month drive the car, I’m sure some of them will eventually buy, therefore increasing the value of my stock in the long run.  

The Cybertruck is the first vehicle produced by Tesla that is designed to be built efficiently by the machine that makes the machine.  Tesla’s true product is the Gigafactory, and Giga Austin, the 4th official Gigafactory, will be the most efficient manufacturing facility in the world.  The Cybertruck is the first major departure from body on frame technology and is manufactured in a way to reduce parts, reduce processes, and ultimately produce extremely fast and inexpensively.  This shift, coupled with Tesla’s massive reduction in battery cost, and autonomous driving will cause Tesla to become the most valuable company on Earth within 5 years.  

What do you think? Do you think it makes sense to buy a Cybertruck?  I’m on the fence because I am extremely adverse to buying a new vehicle.  I don’t like having a lot of my net worth tied up in something going down in value, but with how slow Tesla’s depreciate, the incentives, the lower cost of operation, and my increasing net worth, I think in 2023 I may be at a point where it makes sense.

 

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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