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From the mailbag

What about the impact on the environment?

· Environment

This week, Paul writes:

Hi, I liked your site and your reasoning about buying a Tesla. Maybe because my car purchasing history is a bit like yours. I have had a few practical cars, but never an expensive luxury sedan. One of my key decision points was something I often find people don't mention - the environment. Driving a zero emission car has a huge value to me and the environment. It is hard to put a figure on it in your spreadsheet, but it should be a key priority for all car buyers. I live in Oslo Norway and the electricity is sustainable from water tubines, but even with less sustainable electricity, EVs are a better option than a combustion engine.

 

Thanks, Paul. This is a great point. When Travis and I created the model, we didn't have a simple, recognized way to account for the environmental impact. Some of this was priced into the cost of energy and the tax credit here in the US, but it's not unreasonable to assume that not all of the associated externalities are priced in.

Another related point is safety. Travis and I talked about how to price in the value of a safer car. Again, we didn't have a simple way to account for this. On the one hand, how do you put a price on the safety of your spouse and/or children? On the other hand, where do you draw a limit (other than your budget)?

When Travis did his analysis, he provided a small bump for safety. In my case, I decided to take the financial numbers, look at the difference, then subjectively determine whether the gap, if any, would be closed by additional impacts, like the environment, safety, etc. So if the Model S were, say, $1,500 more expensive than the Honda Odyssey, are my contribution to the environment and my family's safety worth $1,500? In this case, however, the gap was small enough that I didn't even need to ask that question.

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