CarMax ROI Problem

Tesla Model 3
Tesla Model 3

Thesis:

The total cost of ownership for buying a new Tesla Model 3 significantly higher than buying a used one. The new car was $55,990, and the two-year car was $25,000.

The difference is the result of the older car being 1/2 the cost of the newer car. However, the used car may need more repairs.

Method

Total cost of ownership included the following variables:

  • Initial car purchase price
  • Financing cost ($5,000 downpayment, 6% APR)
  • Estimated annual maintenance

Limitations

Purchase cost was pulled from Carmax and dealer websites. Annual maintenance estimated from personal experience.