How much does a Tesla save on gas? A frugal review

Some of you may know that we bought a Tesla Model Y in 2020 to replace my wife’s aging 16-year old car. Decreased long-term cost of ownership from gas savings is frequently touted as a benefit of Tesla and other electric vehicles (EVs). In fact, Tesla advertises this directly on their website. After exactly 2 years of ownership, I want to see how much money we’ve actually saved on gas by driving a Tesla.

Gas prices are high

Taken in June at my local gas station. If your car needs premium gas - ouch!

Gas prices in the United States are at or near all-time highs due to a confluence of economic and geopolitical events, including record inflation and the ongoing war in Ukraine. I think it’s safe to say that a majority of Americans are feeling the pain at the pump right now. While gas prices within the country are subject to geographical variations, the average price of gas hit $5 per gallon in June. Even President Biden has directly addressed this issue by taking the unusual step of using the strategic oil reserve. Clearly, rising gas prices represent a significant economic as well as political problem. As of mid-August, however, gas prices are slowing coming back down.

Are Teslas cheaper to drive?

With gas prices being so high, many people have been asking me how much my Tesla costs to “fill up”. This leads to a slew of other questions, such as range, how often I have to charge it, and whether my electricity bills have increased appreciably. At the end of the day, it’s all very convoluted to explain. People really want to know if Teslas are in fact cheaper to drive.

Let’s get the suspense out of the way. The answer is unequivocally yes. I don’t think there’s any reasonable argument or debate otherwise, and we’ll look at the calculations in a minute. The main question then is how much cheaper?

When you try to order a Tesla from their website, they tout “6-year gas savings” of $6,600. In fact, by default, Tesla’s displayed price for their vehicles is not the purchase price, but rather the price after taking these savings into account. This is a significant amount of money, and if true, would seemingly justify a price premium of $6,600 for a Tesla versus a comparable gas vehicle. Presumably, this gap shrinks if the length of ownership is less than 6 years, and grows if the length of ownership is more than 6 years. In reality, the cost difference between a gas and electric car depends on the mileage, and Tesla uses an average of 10,000 miles driven per year in their calculations.

Tesla does have a gas savings calculator on their site, but it’s buried under the financing options, and for some reason, they insist on a metric of 6-year gas savings. Most egregiously, however, Tesla’s calculator does not allow you to adjust how efficient your Tesla is! You’re stuck with Tesla’s published efficiency numbers for that specific model, which may be quite different than your real-world driving results.

Therefore, I made my own Tesla/EV fuel savings calculator that lets you easily compare the fuel costs of a Tesla (or any other EV) versus a traditional gas car. You can modify the values for your own situation, local gas and electricity prices, and driving habits.

My calculator

Explanation

Tesla efficiency: this is how efficient your Tesla (or other EV) is. There are several ways to express this, although by default, Tesla displays this as watt-hours per mile (Wh/mi). In other words, this is how many watt-hours of electricity it takes for the vehicle to drive one mile. This is set to 250 in the calculator by default, which is approximately what the most popular Tesla (the Model 3) gets under normal conditions, and also Tesla’s published result for the Model 3. If you own a Tesla, you can check your actual efficiency in the odometer. For other EVs on the market, check out this great chart:

This image is from Electric Car EPA Efficiency Mega Comparison (US): Feb 13, 2022 at insideevs.com.

As you can see, not all EVs are created equal. The Tesla Model 3 consumes 255 Wh to drive one mile, while the 2022 Audi e-tron needs twice as much at 535 Wh per mile. EV efficiency not only affects the cost to drive, but also the maximum range of the EV (along with battery size). Keep in mind that unlike miles per gallon, when it comes to watt-hours per mile, the less the better.

Electricity cost: this is how much your electricity costs. Most utility providers express this in cents per kilowatt-hour (kWh). You can find this on your electric bill or contract. For example, it costs me 16.1 cents per kWh (1,000 Wh), after all costs and delivery charges are accounted for.

Gas car efficiency: this is how efficient your gas car is. Expressed as miles per gallon (mpg), which most U.S. consumers are familiar with.

Gas cost: this is how much your gas costs. Expressed as dollars per gallon.

Cost per mile driven in Tesla: with the above inputs, this is how much it costs in fuel (electricity) to drive one mile in the Tesla.

Cost per mile driven in gas car: with the above inputs, this is how much it costs in fuel (gas) to drive one mile in the gas car.

Miles driven: this is how many miles are driven. You can use an annual estimate, the distance of a specific trip, the lifetime mileage of your car, or any other choice.

Total fuel savings: this is the final estimate of how much the Tesla will save in fuel costs compared to a gas car, given all of the above inputs and the total miles driven.

My data

My Tesla’s odometer reads only 6,550 miles after 2 years. That’s not a lot of mileage - only 3,000 miles per year! Most Americans drive much more than this. Our average energy consumption thus far is 273 Wh/mile. This is comparable to the chart by insideEV above, which shows an average of 276 Wh/mile for a 2022 AWD Tesla Model Y. Tesla cars are some of the more efficient EVs on the market.

My current electric plan is 16.1 cents per kWh for the next 20 months. Prior to this contract, my electricity was around 14 cents per month (yay inflation). The average cost of electricity in the U.S., as of May 2022, is 14.92 cents per kWh according to eia.gov. Electricity prices vary widely by state and by the particulars of your contract.

The car that the Model Y replaced was a 2007 Honda CRV, which gets 23 combined mpg according to google.

Keeping in mind that both gas and electricity prices have fluctuated since 2020, based on on my own data, we have saved approximately $800 in gas costs so far after driving 6,550 miles. If, like most Americans, we drove 20,000 miles in 2 years, our gas savings would be over $2,000.

Some other musings

Because most EVs are relatively efficient, unless you have very unusual circumstances, it will be cheaper to drive a mile in an EV compared to a gas car. Using my own data and my calculator above, my Tesla will be cheaper to drive unless the price of gas decreases by over 4-fold to less than $1 per gallon, or my price of electricity increases by 4-fold to over 65 cents per kWh.

Note that while electricity prices can also fluctuate, most utility providers allow you to lock in a contract for months, or years. There’s no such guarantee with gas at the pump.

EVs which utilize regenerative braking are often more efficient in city driving than highway driving. This is in contrast to gas cars, which tend to be more efficient on the highway, as brakes are used less often. This can be seen in the above efficiency chart, where most EVs use less Wh/mile in the city compared to the highway.

Your driving habits and commute can have a significant impact on your personal driving efficiency and fuel costs. Some people practice hypermiling, but others take it too far. Published efficiency numbers are only estimates and do not apply to your own situation.

Supercharging and other public charging electricity costs are typically higher than home charging. While the cost of electricity at superchargers varies by location, one source says it is approximately 25 cents per kWh, which almost twice the cost of electricity in most homes. Despite this, even if you exclusively used public charging, a Tesla is still 2 to 3 times cheaper on fuel costs.

Some places, including some employers, offer free EV charging, so this is an added bonus. You’re unlikely to get free gasoline anywhere.

EV chargers are not 100% efficient, so you will experience some losses when charging. Tesla charging efficiency depends on a number of factors, but probably comes out to about 90%. Basically, what this means is that if you pull 1 kWh of electricity from your electric socket, only 0.9 kWh goes into the battery after some losses in the charging process itself. On the other hand, if you put 1 gallon of gasoline in your gas tank, 1 gallon goes into the tank.

Batteries slowly lose charge over time. While gasoline has a defined shelf-life and will go bad if not used for a few months, the volume of gas in your tank won’t appreciably decrease. On the other hand, EV batteries do experience parasitic drain over time. The exact amount of drain depends on the EV. Note that Tesla vehicles are always powered on to some degree and will use small amounts of electricity in order to receive updates, maintain battery temperatures, run sentry mode cameras, and communicate with the Tesla app, for example.

Tesla cars require little, if no maintenance. You will most likely save money on things like filter changes and oil changes. Regenerative breaking will also save on traditional wear items like brake pads. After two years of ownership, our total maintenance cost is $0.

Conclusion

The cheapest new Tesla you can buy is a basic rear-wheel drive Model 3 sedan, which costs $48,490 after delivery fees, but before tax (as of 8/15/22; Tesla prices change frequently).

This sounds pretty pricy, until we see that the average price of new car in the United States, as of July 2022, is now approximately $48,000. Of course, there are much cheaper new cars out there. But the no-frills, entry level Tesla is, by definition, within reach of the average new car buyer’s budget.

Don’t get me wrong: while entry-level Tesla models are in the same price bracket as the average new car in the U.S., for most people, they remain luxury or aspirational products. I’m not suggesting that getting a Tesla is frugal at all. You can buy a brand new, reliable Honda Civic for half that price. It is clear, however, that Tesla and most other EVs do provide significant fuel savings per mile compared to traditional cars. While a Tesla may cost more upfront, after enough mileage, a Tesla can break even or even come out ahead in terms of total cost of ownership.

As always, thanks for reading!