Tesla Model 3 vs. Honda Accord vs. Toyota Camry – Full Financial Breakdown

For this analysis, what we’re looking to find out two things:

• Is the Tesla less expensive to operate in the short run?
• Is the Tesla less expensive to operate in the long run?

In other words, are you saving money by going with a Tesla? And then looking at that through the lens of a monthly cost in the beginning and after selling the car.

To make this a fair comparison, we’ll need to make a few assumptions:

• The sources for depreciation and maintenance costs are accurate
• You are financing the car with the same down payment, across each option
• Your interest rate will be the same, regardless of the car you choose
• You are only purchasing the bare minimum accessories that would be needed for practical day-to-day travel.
• You are selling the car at the end of 5 years. This is needed to realize depreciation.

Additionally, we’re not looking into any of the features of the cars; it’s simply a vehicle for getting from point A to point B.

Lastly, there are some factors that will be entirely specific to you and where you live. Think for example, gas prices, insurance, taxes, etc. There is a spreadsheet you can access where you can modify these numbers, but I am also listing those assumptions below.

Download theGoogle Sheets Workbook through the link below.

• You are purchasing the car in Indiana (You have the ability to adjust these factors specific to your state in the spreadsheet)
• Your insurance rate is the same across all vehicles
• The gas price used is at $3.00 even.
• Your electricity rate is consistent (or you can use the average if you have off-peak, peak hours, etc.)

Below is a breakdown of the cost factors we’ll be looking at.

• Cost / Financing
• Tax and Title
• County and State Registration
• Destination and Documentation + Order Fee
• Gas and Electricity Cost
• Maintenance
• Insurance
• Depreciation
• Misc Accessories and Needed Add-ons
• Tax Credits and Incentives

Cost and Financing

Tesla does not negotiate pricing on their vehicles. The only opportunity to do so, may be with purchasing a demo car. For the sake of consistency, I’ll only be using the MSRP of the other vehicles as well.

The Accord and Camry models are the trims closest to the price of the Tesla. These trims fall on the higher end of options with Honda and Toyota. I have added a few features to get the vehicle prices and layouts closer to the same.

2021 Tesla Model 3 SR+

Trim Summary:

The SR+ is the base model for the Model 3 series. It comes standard with 18″ Aero Wheels, Pearl White paint, and 263 miles of range. The SR+ is rear wheel drive.

Available Upgrades

• $10,000 – Full Self Driving Capabilities
• $1,000 to $2,000 – Paint Options
• $1,500 – 19″ Sport Wheels
• $1,000 – Premium Interior

*These upgrades have NOT been included in the calculations.

Base MSRP

$37,990

Monthly Cost to Operate

$270

5 Year Value Retention

57.30%

Combined MPG/MPGe

142 MPGe

Honda Accord Touring 2.0T

Trim Summary:

The Accord Touring 2.0T is Honda’s premium trim option for the Accord line up. It comes standard with 19″ wheels. The Accord Touring 2.0T is front wheel drive.

Additional Upgrades

• $425 – All Season Weather Package
• $417 – Heated Steering Wheel
• $395 – Platinum White Pearl Paint
• More available through Honda

*These upgrades have been included in the calculations.

Base MSRP

$36,900

Monthly Cost to Operate

$363

5 Year Value Retention

51.04%

Combined MPG/MPGe

27 MPG

Toyota Camry XSE V6

Trim Summary:

The Camry XSE V6 is Toyota’s premium option for the Camry line up. It comes standard with 19″ wheels. The Camry XSE is front wheel drive.

Additional Upgrades

• $2,020 – Navigation Upgrade Package
• $425 – Wind Chill Pearl Paint
• More available through Toyota

*These upgrades have been included in the calculations.

Base MSRP

$35,545

Monthly Cost to Operate

$360

5 Year Value Retention

49.13%

Combined MPG/MPGe

27 MPG

For financing, we’ll assume you’re putting $12,500 down (or trading in a vehicle for an equivalent amount), with a 60-month loan at a 2.14% interest rate. Part of the trade-in will go towards the destination and doc fee for the vehicle, title registration, and state taxes.

For the purpose of this analysis, I am assuming you’re registering the vehicles in Indiana.

Tax and Title

Indiana has a sales tax rate of 7%. For the Tesla, the cost comes out to $1784.30. The Honda costs $1,764.52. The Toyota, $1,853.95.

Title registration is only about $15 and is a flat rate across all vehicles, so I have omitted that from these calculations.

County and State Taxes

This varies greatly across the US, but for Indiana the main cost contributor is a vehicle excise tax that is based on the class and age of the vehicle. The class is based on the MSRP of the vehicle and the age is the current year subtracted by the model year.

The details of Indiana’s vehicle excise tax can be found here.

Regardless, the class for these vehicles is the second highest, class 16. That means the excise tax cost will be the below for the next 5 years.

Then for some unknown reason to me, there’s an additional $150.00 annual electric vehicle surcharge tax in Indiana. Then additional $20.00 county tax for where I live.

I have included additional slots in the spreadsheet for you to add your own municipality’s taxes.

For the 5 year cost of taxes, the Tesla is the highest at $2,648. The Toyota and Honda are lower at $1,898.

Indiana only requires a license plate on the rear and the fee is minimal, so I have also omitted that cost from this calculation. I went ahead and opted for a University License plate for my alma mater – The University of Southern Indiana. HUM SCREAGS!

Destination, Doc, and Order Fee

At the time of writing this, you can’t just walk onto a Tesla lot and purchase a brand new vehicle. Instead, you need to place a $100.00 deposit online to reserve your spot. Then there is a $1,200 destination and doc fee added on top of that.

The Honda and Toyota also have a destination and doc fee of $995.

Gas and Electricity Cost

Again, these costs can vary widely based on location. For this analysis, I am using my location of Evansville, IN and the current costs I see on my electric bill and a flat $3.00/gallon of gas.

My electric cost comes out to about $0.1785/kWh for my home. We’ll assume you are only charging at home, no supercharger use, with a 95% efficiency on the Tesla Wall Connector. Some energy is lost as heat from the wall connector to the car.

DON’T FORGET

Charging at 220V/240V is generally accepted as the most efficient means of charging. You will lose more energy by trying to charge at 110V through the mobile connector than you would with the Wall Connector or Nema 14-50.

Evansville does not have off peak, super off peak, or peak hours for electrical use. My home is 100% on the grid with no other power sources like solar or wind.

We’ll assume you are driving 15,000 miles per year

• Tesla Model 3 SR+
  • MPGe: 142
• Honda Accord Touring 2.0T
  • MPG City/Highway: 22 / 32
• Toyota Camry XSE V6
  • MPG City/Highway: 22 / 32

What is “MPGe”?

MPGe is the EPA’s equivalent of MPG. It stands for Miles per Gallon-Equivalent. This rating is for vehicles that use a non-liquid fuel to operate. Think hybrid vehicles, fully electric, and natural gas vehicles.

At $3.00/gallon of gas, driving 15,000 miles per year, and a combined MPG of 27, the Honda will cost $8,333 over 5 years to fuel, or $1,667 per year. The Toyota with the same specifications, will cost the same at $8,333 over 5 years or $1,667 per year.

On the other hand, the Tesla at 142MPGe and a charger efficiency of 95% and electric cost of $0.1785/kWh will cost $3,337 over 5 years, or $667 per year.

Maintenance Costs

Teslas rarely require any major work or maintenance (less moving parts, less issues). Most owners report that tires tend to wear out a bit faster and that’s it. Any minor repairs are typically done by a mobile repair vehicle from Tesla and are under warranty.

With any vehicle, it’s difficult to predict actual maintenance costs. But even more so with a gas-powered car in comparison to an electric vehicle due to more moving parts and greater design complexities.

Nonetheless, I am using Edmund’s maintenance cost estimates from each vehicle’s page.

• 2021 Toyota Camry XSE V6 Edmunds
• 2021 Honda Accord Touring 2.0T
• 2021 Tesla Model 3 LR AWD

And you might be asking, “Brian, why in the hell are you not using Edmunds to estimate the Tesla?” Good question, chiefly because it doesn’t exist as of writing this article. And before you ask your next question, it’s because the previous year and year before that doesn’t exist either.

Tesla Estimates

I think it’s unrealistic to think there are absolutely 0 maintenance costs with the Tesla, so I am making some additional assumptions. Tire life depends heavily on the driver and driving conditions, but we’ll assume they need to be replaced at the end of year 2 and 4, right around the 30,000mi mark. Additionally, you might have some ticky-tacky cosmetic repairs over each year. Or at the least, you’ll be buying some wax, tire shine, etc.

Total cost of maintenance over 5 years for the Tesla is $2,300. The Honda comes to $3,991 and the Toyota at $3,794.

Warranty

The estimates don’t take warranties into account. The maintenance costs assumed are general items that wouldn’t be covered under the manufacturer’s warranty. The chart below illustrates the warranties provided by each manufacturer.

• Tesla
  • New Vehicle Limited Warranty: 4 years or 50,000 miles, whichever comes first
  • Battery and Drive Unit Warranty
    • Model 3 SR+: 8 years or 100,000 miles, whichever comes first with minimum 70% retention of battery capacity.
    • Model 3 LR AWD:8 years or 120,000 miles, whichever comes first with minimum 70% retention of battery capacity.
    • Model 3 Performance: 8 years or 120,000 miles, whichever comes first with minimum 70% retention of battery capacity.
  • More can be read here: Tesla Warranties
• Honda
  • New Vehicle Limited Warranty: 3 yrs or 36,000 miles, whichever comes first. Tires are warranted separately.
  • Powertrain Limited Warranty: 5 years or 60,000 miles, whichever comes first
  • Other warranties can be found here: Honda Warranties
• Toyota
  • New Vehicle Limited Warranty: 3 yrs or 36,000 miles, whichever comes first.
  • Powertrain Limited Warranty: 5 years or 60,000 miles whichever comes first.
  • Other warranties can be found here: Toyota Warranties

Insurance Costs

To get an accurate estimate for your insurance costs, you’ll want to input your information into some online estimators. For this analysis I took what I am currently paying on my 2021 Tesla Model 3 LR AWD and applied that 6 month cost to all vehicles.

Adjust the costs how you wish, but I set mine at:

• Liability to Others
  • Bodily Injury: $100k each person / $300k each accident
  • Property Damage Liability: $100k each accident
• Uninsured/Underinsured Motorist: $100k each person / $300k each accident
• Uninsured Motorist Property Damage: $100k each accident
• Comprehensive: Actual cash value
• Collision: Actual cash value
• Loan/Lease Payoff (Gap Coverage): 25% of actual cash value
  • Just in case you total it shortly after driving it off the lot.

For me, insurance is $659 every 6 months, or $1,318. For reference, I’m a 26 year old male, living in Indiana. This rate is not bundled with my home insurance.

DID YOU KNOW?

There’s over 200 something factors that go into insurance cost calculations. Each company has their own algorithm, but everything from your driving record, age, demographic, area of residence, etc. all play into the cost of your insurance.

Here’s why I opted for a higher deductible.

It makes sense to go with the higher deductible, assuming you save the difference between the monthly costs. For example, say I was quoted at $120/mo with a $1000 deductible and $140/month at a $500 deductible.

$140 – $120 = $20 each month. If I can 25 months without needing to file a claim, then that’s $500 I would save in my bank account. $500 deductible / $20 savings every month = 25 months.

Based on my driving history, I haven’t had a wreck or ticket (knock on wood), in 6 or so years. Therefore the $1000 deductible makes sense, as long as I save that money back.

Depreciation

The general trend of all new cars is that they lose 20% of their value the moment you drive them off the lot. This seems to remain true for Tesla, as it does the Honda and Toyota. Depreciation fluctuates with the used and new car demand, so again, I’ll be estimating this with a third-party.

In general, Honda and Toyota as a brand have had vehicles that tend to hold their value better than any other competitor.

Teslas are generally expected to retain 57.30% of their retail value at the end of 5 years when purchased new. Hondas are expected to retain 51.04% and Toyotas are expected to retain 49.13%.

At the end of 5 years, you can expect to sell the Tesla for around $22,400. The Honda for approximately $20,000 and the Toyota for $19,800.

There is a calculator in those links if you want to adjust any of the depreciation curves.

This is under the assumption you’re averaging 15,000 miles per year and you purchase the car brand new. Also keep in mind that depreciation only matters if you decide to sell or trade in the car. That’s when the depreciation is ‘realized.’

Accessories and Needed Add-Ons

If you ask me, the Tesla Wall Connector is a must if you’re commuting to work every day. The included charger only provides 4 miles to the vehicle’s range per hour. Therefore, you need at least a Nema 14-50 outlet (220/240V), but preferably the Wall Connector.

This is the Tesla wall connector I installed in my garage.

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The Wall Connector appears to be the most efficient means of charging and since I installed mine myself, I understand the costs better. Below is a video for how to do it. With the Wall Connector, you can get up to 40mi/hr of charge. More than enough to charge the batteries overnight.

I estimated the cost to be about $780, which includes the charger, and an afternoon to get it done.

Admittedly, I already have the tools to get the job done, so I have not included that cost. For an electrician to do this, most estimate around $300-$500 if you don’t have a subpanel like I do in the video. Don’t let an electrician charge you more than $500 for this job. That’s an illogical amount and they’re inflating the quote because a Tesla is seen as a ‘luxury item’.

Tax Credits and Other Incentives

Unfortunately, there are no state credits or incentives for Indiana. In fact, Indiana residents get charged extra for having an electric vehicle (see $150 EV excise tax in the beginning). However, on the federal level, anyone can claim up to 30% back on the install cost of a charging station, like the Tesla Wall Connector.

Other states still have some tax credits available for EVs, but no federal tax credits are left for Teslas. A full list can be found on fueleconomy.gov.

Summarizing the Costs

*Relfects a slightly lower destination/doc fee than the Tesla. More of the trade-in value goes towards the loan.

At this point you’re probably sick of looking at graphs, so let’s break this down into some charts with further explanation.

Total 5 Year Cost to Operate

This cost includes everything you would have to pay to keep your car running and on the streets legally. This category includes:

• County and State Taxes
• Destination and Doc/Order Fee
• Gas and Electric Expense
• Insurance
• Maintenance

In the end, the Tesla ultimately ends up being the least expensive mainly due to the cost of fuel and maintenance.

Monthly Cost to Operate

After figuring out the cost to operate over 5 years, we can then divide those values by 60 (5 years = 60 months), to figure out what it costs to operate each vehicle every month on average. I have included costs that include and do not include the estimated loan payment.

Total 5 Year Out-of-Pocket Spend

This cost wraps up everything you’ll need to spend to get the car, plus any additional accessories and add-ons you’ll need. This includes:

• All of the Operating Costs above (County and State Taxes, Destination Doc/Order Fees, Gas or Electric Expense, Insurance, Maintenance)
• Cost of Loan
• Trade-in Value
• Down Payment
• Minus any Tax Incentives

Your operating costs are self-explanatory. To get this value we must also include the original loan amount + the interest you’ll be paying on the loan over the next 60 months. Additionally, you trading in a vehicle that has value + a down payment in order to get the new car. Then we subtract out any tax incentives you’d receive.

Total 5 Year Depreciation Cost

Keep in mind you will only incur this cost if you decide to sell the vehicle. Otherwise, you never really ‘realize’ the cost. Depreciation is the expected loss in value of the vehicle as it ages and gets used. I used an average of 15,000 miles driven per year. So at the end of year 5 when you sell, the vehicle will have 75,000 miles on it and be 5 years old.

You can expect your vehicle to have lost the below amounts from it’s original MSRP value.

5 Year Resale Value, Less Loan Interest

Now that we understand how depreciation affects the resale value and we have an estimate of how much we can get for the 5 year old car, we need to subtract out the cost of the loan. The interest cost of the loan is subtracted out from the estimated sale price of the 5 year old vehicle.

Monthly Cost to Operate, After Sale, Less Loan Interest

This graph is similar to the ‘Monthly Cost to Operate’ graph already covered, but this includes the realized depreciation expense. In the earlier graph we were strictly looking at the ‘everyday’ expenses. We were not taking into account the value the car is losing as time passes and the mileage goes up.

Now that the car has been sold, that depreciation expense has been realized, the loan has been paid off, and we can calculate a true cost to drive. 

Opportunity Cost

Opportunity cost is a dollar amount that you forego by deciding to purchase a new car, rather than continuing to drive you current vehicle AND investing the difference between your new car and current vehicle each month into an investment.

Let’s discuss a simple example first. Say it costs $200 per month to drive your current car and it costs $800 per month to drive a new car. The difference is $600. If you’re saying you can afford the new car, then you should be able to put $600 per month aside even if you keep driving your current car.

By putting that money aside and investing it, you can earn more money on that principal (original) monthly, by continually making monthly deposits into say, stocks, an ETF, bonds, etc.

However, if you choose to buy the new car, you are sacrificing the opportunity to earn on that principal amount since it’s going to cost of the new car.

2018 Ford Escape Example

For this example, I plugged in the values for a 2018 Ford Escape.

Including the cost of the loan, it costs  $966.78 to drive the 2021 Tesla Model 3 SR+ every month. We assume there is not a loan on your current vehicle. The Ford costs $414.91 to operate and drive every month. The difference between the Tesla and Ford is $551.87, which is how much more you would have to spend every month to drive the Tesla.

If you instead, put this $551.87 into an investment account every month, for the length of the loan you’re considering (ex. 60 months) and continued to drive the Ford…

• At the end of 60 months, you would have saved $33,664.11.
• Assuming you’d get a modest 3.5% return on your money and continued to deposit the $551.87 every month for 60 months, you’d have earned $3,600.96
• Therefore, you’d have $37,265.07 sitting in your account at the end of 60 months.

If you have some money already sitting in an investment account, you can earn on top of that.

Your opportunity cost in this scenario is about $3,600, assuming a 3.5% return.

The Bottom Line

Dollar for dollar, when a Tesla Model 3 SR+ is compared to a similarly priced Toyota Camry and Honda Accord, the Tesla costs less to operate and provides greater financial value in a 5 year run. This is looking at each of the cars simply as a vehicle for getting from point A to point B.

The answer to the two questions in the intro is yes and yes. The Tesla is less expensive to operate in the short run and the long run.

Individuals with a high credit score will be able to get a low interest rate from one of Tesla’s preferred lenders. Sometimes, Honda or Toyota will offer 0% APR financing on their vehicles which stands to save you about $1,500.00 over the course of the loan compared to the 2.14% interest rate and other assumed factors.

Unfortunately, Indiana does not offer any tax incentives for electric vehicles and instead charges EV owners an additional $150.00 annually for registering one.

Some states offer rebates worth up to several thousand dollars for the purchase of a new electric vehicle. Others offer up to a $700 rebate on the installation of a home charger, essentially making the Tesla charger free.

A list of those incentives can be found here.

From a strictly financial standpoint, if you are looking to purchase one of the cars covered here, the Tesla will save you the most amount of money in the long run.

Be sure to order your tesla using the link below to get 1,000 free supercharger miles.