How we bought a Tesla Model S for $16K in 2014

TLDR; We bought a discounted inventory car using TSLA profits, taking advantage of both federal and state tax incentives. Read on for the longer version.

Humble Beginnings

Believe it or not, my wife and I are frugal car owners. We bought used Japanese cars and drove them forever: a 1996 Toyota 4Runner and a 2001 Honda Odyssey. The nicest car I’ve ever owned was a new 1995 Acura Integra GSR. It was a fun sporty car with stick shift. Unfortunately, it was stolen from our driveway in 2004. A chop shop wanted the VTEC engine. I miss that car.

For years, my daily driver was the ’96 4Runner, a hand-me-down from my wife after she got the new-to-us Odyssey. In 2012, during a lane change near collision on I-405, I watched an older Honda crash into the center divider after its shocks collapsed from the evasive maneuver. With two young kids, it’s probably time to upgrade the 16 year old SUV.

2012: What’s better than a BMW? A Nissan Leaf!

I thought maybe a used BMW 3-Series convertible would be fun, as they do come with manual transmission, and the kids are small enough for the rear seats. I shopped around and they were all in the mid $30K range, so almost $40K after tax, plus recurring fuel, maintenance, and insurance costs. I could never imagine spending this much on a car!

One day, I heard a radio ad for the Nissan Leaf. Apparently they were not selling too well since coming out in 2011. They were offering a 24 month lease for $250 per month. To Mr. frugal guy here, the numbers looked great. The total cost of the vehicle is $6000 for two years. Nissan also offered to install a EV charger in our garage free of charge. As a bonus, we wouldn’t need to sell the 4Runner, plus I can charge the car for free at Google. We signed a two year lease ending in October 2014.

The Leaf was a great little car! It was very zippy 0–30 mph. The hatchback with fold down seats was plenty big for our shopping trips. The 90 mile range was just enough to go to the Asian market by Ikea and back home, albeit without air conditioning or heat. I started to pay more attention to other EVs, electricity rates, the EV charging network, and solar power, even getting some quotes for our house. If only there was an EV as good as regular gas cars, everyone would transition to electric!

Early 2013: “Welcome to Google Kirkland, here’s your Tesla” — Memegen

I had a co-worker who was obsessed with Tesla (yes, even more than me). He took delivery of his Model S in December 2012, one of the first in Washington state. He took me on a test drive and I was like wow… this is a really nice car! Then, I started to notice that every day in the Google parking garage, there were more and more new Model S’s parked next to my Leaf. There was even an internal Google meme to joke about this phenomenon. I thought, maybe Tesla could amount to something one day? On Valentines Day, Feb 14 2013, I bought 300 shares at $38 (pre-split), a $11,400 side bet. I told my wife that if we’re lucky, these shares could help pay for a Tesla in a couple years.

The very next week, Tesla revealed the Model X. My wife loved it. We thought that would be the perfect car to replace the SUV and the minivan. We figured it will launch in two years or so, just before the Washington State tax incentive expires, where EVs are exempt from sales tax until mid 2015.

Late 2013: Jumping The Line

We knew the X would be an expensive car, so locking in the sales tax exemption would make a huge difference.

There was a spreadsheet on teslamotorsclub.com with the reservation count. By October 2013, there were already 6000+ Standard X reservations at the $5K level! This means we might not make the mid 2015 window.

Then I thought, wait a minute, there are only 800 Signature X reservations, which is the top of the line model with all available options, a special paint color, and would be delivered first. If we reserve one of those, we’ll jump the line, get bumped up in the delivery schedule, and make the tax deadline. Brilliant! I made the reservation, wired the $40K deposit to Tesla, and waited. It’s refundable anyway.

October 2014: A $40,000 VIP Party

2014 rolls around, and we were getting a little antsy about the X. In early October, news came out about the Tesla “D” reveal. Since I was a Signature X reservation holder, I got an invite! Was this the Model X reveal? Or something else? With hopes for the X, I went to the event in Los Angeles with a work friend and my cousin Vince.

The event was SUPER packed! There was music, drinks, hors d’oeuvres, and Tesla branded gifts. Tesla sure knows how to throw a party! When Elon came out, he revealed the All Wheel Drive Insane Mode with Auto-Pilot. The specs were eye popping: 0–60 mph in 3.2 seconds, in a 5 seater large family sedan! One of the factory robots was off to the side of the stage, waving around the AWD Model S chassis like a box of tissues.

Of course, we got a test ride in the car. There was a two sided track setup at the Hawthorne airport. One direction was the 0–60 straight, and the return side was a simulated street to show off autopilot. I own sport bikes and have ridden them at the racetrack, so I’m used to fast. But let me tell you, this Tesla was FAST! Insane mode lives up to its name. It throws you back in the seat and you can feel it in your chest. It’s as if Tesla had alien space technology or something!

Nov 2014: Goodbye Leaf, Hello Tesla

The D event was an incredible experience, but it was not the X. It’s looking like even with the Signature reservation, the X is going to miss the mid 2015 Washington state sales tax exemption.

By then, the lease had expired on the Leaf, and I’m back to driving the now 18 year old 4Runner. My wife and kids were already sold on the Model S, so I was the last one to be convinced. Upon their urging, I called up the Bellevue Tesla sales office. Turns out that after the D reveal event, they need to get rid of all inventory RWD Model Ss to make room for the new AWD models. They happen to have two classic Ss available.

Inventory cars are cars that have been either service loaners or test drive vehicles. They have miles on them but have never been registered to an actual owner, which means they qualify for the $7500 federal tax credit on EV purchases.

Usually the inventory car discounts are a dollar a mile, plus 1% per month of age. During this fire sale, Tesla sweetened the deal to 2% per month. We picked a Pearl White Model S 85 with the tech package and free unlimited super charging. It was manufactured in April (six months old) and had over 6000 miles on it. From the sticker price of $89K, subtract the discounts, the total was $72K out the door, no tax.

Remember the 300 shares of TSLA we purchased on Valentines Day 2013 for $38? They were worth about $238 a share by November 2014. For those new to TSLA, 2020 was pretty much a repeat of 2013–2014, where the stock went to the moon. I sold those original shares and paid for the car. We later filed and received the $7500 tax credit.

A $16,000 Family Car

So, the final math is 300 shares at $38, plus the long term capital gains tax, minus the $7500 tax credit, (300 * $38) + ($200 * 300 * 20%) — $7500 = $15,900. I guess I’m still a frugal guy after all! At this point, we still had the Signature Model X #818 reservation, but that’s another story.

Post Script

It is now 2021 and we’ve owned Casper for 7 years. In 2018, we added a Model 3 and sold our last gas car, a used (of course!) 2012 Fiat 500 Abarth. We’ve done multiple gas free road trips on Tesla’s super charging network from Seattle to Las Vegas, LA, and even to New Jersey and back through Toronto. Casper had a few upgrades along the way: paint protection film, a 90kWh battery, brand new (MCU) infotainment center. After 121,000 miles, he’s better than the day we brought him home.

Getting the Model S was more than a car purchase. The everyday ownership experiences had reaffirmed our investment conviction in TSLA stock through the FUD and lean years between 2015–2019. In 2020, the stock popped, and I was able to retire.

Thank you Elon, for creating the best car ever!

Originally published at https://www.linkedin.com.