Elon Musk's Tesla Model 3 is the least expensive Tesla — but is it affordable?

Everything Elon Musk touches seems to turn to gold — including Tesla. The automotive company has taken the idea of an eco-friendly electric car and turned it into a lust-worthy luxury vehicle.

When the first Teslas hit the market with hefty price tags of $100,000 or more for a brand-new Model S or Model X, the cars were accessible only to those with deep pockets.

Much has changed since those early days. Today, you can buy a Tesla with Bitcoin, and buyers can now choose a Model 3, which is considered an "affordable" Tesla.

But is it really? Here's what we found.

The price of a Tesla Model 3

Teslas aren't sold through traditional dealerships with lots filled with cars. Though the company operates stores where you can see the vehicles up close and possibly take a test drive, buyers have to order their cars online. Delivery takes up to 12 weeks.

The most affordable Tesla is the Model 3, which entered the market in 2017 at a starting price of $35,000 but now starts at about $38,000. "Delivery fees" add $1,200 to the price, for a total of about $39,200.

You'll pay state sales tax on a new Tesla, too, unless you live in Alaska, Delaware, Montana, New Hampshire or Oregon.

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The base price is for a white Tesla with standard wheels and an all-black interior. If you want a black, silver, blue or red Tesla, and you desire sport wheels or a black-and-white interior, you'll pay more.

When you place your Model 3 order, you'll pay a nonrefundable $100 order fee. That's much more reasonable than the $1,000 down payment that was required to reserve your spot in line when the Model 3 first debuted amid heavy demand.

Financing, tax credit, Bitcoin and insurance

Don't get the wrong idea: A down payment will be required when you lease or finance a Tesla, but it's due at signing — not when you order your vehicle. The company will want you to put $4,500 down.

The Tesla website's loan calculator estimates that financing through the automaker would give you a monthly payment of $519 for 72 months (six years). A three-year lease would cost $371 a month.

The government has offered generous federal tax credits of up to $7,500 for buyers of electric vehicles, but a limited number of credits were available by manufacturer, and the Tesla credits have long been "sold out." Now, the Biden administration is reportedly considering raising the credit to $10,000, and ending the limits.

If you’re into crypto, you can now buy a Tesla using Bitcoin. Musk, the Tesla CEO — or rather, "Technoking" (his real title now) — made the announcement on Twitter a month after Tesla bought $1.5 billion worth of the cryptocurrency.

Buying with Bitcoin is an option currently offered only to U.S. customers, though Musk says the company will soon expand that to other countries.

Keep in mind that insurance for electric cars generally costs more than for conventional vehicles, so it's essential to shop around thoroughly to find coverage at the best price.

Buying a used Tesla

When you buy a brand-new car, it typically loses 20% of its value in the first year. This is why in many cases it may be wiser to purchase a used car.

But the Tesla Model 3 doesn't follow the usual depreciation rules. Used cars sold through the company's website cost no less than a new Model 3; the main benefit of buying a used Tesla is that you won't be waiting up to three months for your vehicle.

Research by the automotive website iSeeCars found the Tesla Model 3 is the used car that's best at holding its value. The buyer of a used, 1-year-old car pays an average of just 2.1%, or $923, less than someone buying a new Model 3.

Tesla says the used cars it sells must pass a 145-point inspection and are covered by a limited used vehicle warranty, which adds another one year or 10,000 miles of coverage to whatever's left from the original warranty.

One option to buying used from Tesla is going online and using a major website with a broad inventory of used cars available for purchase, including Teslas. You can prequalify for financing and even get a Tesla delivered straight to your door, with a seven-day test-to-own period.

Fuel savings with a Tesla

In the U.S., the average car has a fuel economy of 24.9 miles per gallon, according to the Environmental Protection Agency. Let’s round that up to 25.

Federal Highway Administration data shows Americans drive different amounts at different ages in their lives; the age group that can afford a Tesla is probably driving around 15,000 miles per year, on average. There are multiple mile-tracking apps you can download on your phone if you need help tracking your own miles.

Let's assume that the current price of gasoline is $2.50 a gallon, a nice, round number. (Note: Using round numbers makes the math a heck of a lot easier to do and understand.)

So, let’s break it down: You're driving 15,000 miles in one year, and going 25 miles one one gallon of gas. That means you'll have to buy 600 gallons over the course of one year. (15,000 divided by 25 equals 600).

If you’re paying $2.50 for each gallon, that’s 600 times $2.50, which equals $1,500.00. Since there are 12 months in a year, you’re probably paying somewhere in the ballpark of $125 per month for gas.

So, what’s Tesla’s fuel economy? It’s the equivalent of a staggering 130 miles per gallon, the EPA says — even though the cars don't run on gasoline. But you will be paying for electricity, "supercharging" and a few other things.

The cost of electricity for your Tesla

The cheapest way to charge your Tesla (or any electric car) is to find a free charging station. If you’re not sure where to go, a number of apps are available that will show the charging stations closest to you.

As time goes on and electric cars become more common, you will probably see more of these stations popping up around your area. The only downside to using a free public charging station is that it can take a while for your battery to fill up. Expect to sit there for an hour or more.

Tesla has its own “Supercharging Stations" around the country that allow you to charge your battery in just 15 minutes. You do pay for the privilege; Tesla says pricing "may vary by location, and prices may change from time to time."

If you don’t have any charging stations in your local area, the only option will be to charge your car at home. Most people plug their electric cars into an outlet in their garage and just forget about them and go about their nightly business.

If you choose to charge your car this way, you'll want to plug it in at any time other than the "peak time" of the day, when electricity is most expensive. Peak hours and rates depend on where you live, so you’re going to want to ask your electric company what its policies are.

Cost of maintenance and repairs

One of the potential issues to keep in mind when buying a Tesla is that the cars have not existed for very long. There aren't many experienced mechanics who know how to fix the cars’ unique features, like the wing doors and the complicated computer system.

This means if something serious goes wrong, your car may need to be shipped to a Tesla service center. Depending on where you live, that can be a long journey.

Prominent tech reviewer Marques Brownlee offers valuable in-depth analysis of each Tesla model on his YouTube channel. He explains that only a few thousand miles into owning the Tesla Model S, his car began having very serious steering issues that could have caused an accident. The bright side was that car was still under warranty.

Tesla takes these issues very seriously and will give you a rental Tesla to drive while it takes care of the problems. Sometimes, a Tesla-certified mechanic will even drive to your house to help you, free of charge.

Remember that Tesla is still largely a luxury car; as with owning a BMW or Mercedes, parts can be expensive. New Teslas are covered under warranty for four years or 50,000 miles, whichever comes first.

If you never want to deal with the headache of paying for expensive repairs, you may want to consider selling it once the warranty is up.

The final verdict

The amount of money you'll save or spend by switching to a Tesla is going to vary, depending on your individual situation. You may not save money. You may pay more.

The Tesla Model 3 is far more affordable than the other Tesla models, including the Model S and Model X, which now start at around $80,000 and $90,000, respectively. So yes, you don't necessarily have to be rich to buy a $38,000 Model 3.

But if you're making a monthly payment of $519 for a new Tesla Model 3, that's $6,228 a year — and many other vehicles will cost you less.

If you're already paying in the ballpark of $600 per month for the vehicle you're currently driving and have your eye on a Model 3, then go for it.

You'll no longer be paying that hypothetical $125 a month for gasoline. But with a Tesla, you will be dealing with the additional cost of insurance, plus electricity expenses — including for any "supercharging" you do.