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18 Year Old Kid Working Part Time... I want a Model S

This seems like a stretch, but I figured I might as well give it a shot.

I am an 18 year old kid just out of high school. I have plans to start college in the spring and earn a degree in the field of radiology, more specifically ultrasound.

Anyway, I am extremely worried about the possibility of missing out on a chance to purchase a Model S. The problem is the fact that I don't have $50,000 dollars laying around and with my current part time job I am only making a measly ~130 dollars a week.

I have been encapsulated by the smooth and streamline appeal of the Tesla since I learned about it back in 2008-09.

I am a responsible person as I am quickly paying off my laptop right now and will be avoiding all interest by paying it off early.

I was just wondering, for a person like myself, what would my options be for financing or will I just have to wait?

I am also a young person (28) and still working my first job out of college, got married last year, had our first child last week.

There is no chance of me affording a model S. Unless they have some crazy finance option... it will remain a dream.

As far as I know there are no options other than 'get richer'.

Thats just how it is with new tech. I recall buying my 21' LCD computer monitor for $600 while in school.

Now you can get a 21' for uner $200.

I hope that someday I can get the Model S before it becomes popular in my area so I can still turn heads and be considered an early adopter.

In reality I wont be able to afford one untill 2017 or something lol

If you really believe Tesla will succeed and are ready to take risks, go buy some TSLA 2013 calls. The most bullish are at a strike of $40. They cost around $4 (x100, as each one represents 100 shares). If TSLA goes to $100 by Jan 2013, you can sell each one for $60 (x100) but if it stays below $40 you lose everything. In fact you win $100 for each dollar TSLA goes above $40 (for each option you have).

So, this is very risky, you should put a sum that you can afford to lose (I know it's hard right now). But if it works well, it will accelerate you on the path to your Model S.

Probably later this summer, 2014 options will be available. They will obviously be more expensive at the same strike, but give Tesla more time to fully develop and investors to understand the new era.

@viao44 - I feel your pain...

@Nicu - Are you talking about the stock market? I have been VERY serious about possibly taking some chances in it. Especially after taking a semester class with stocks, I made a 10x increase in a stock game which ran off the actual market... that was with no pressure though.

Go to school, pick a high paying, high demand field of study that you also love, work your tail off, get amazing grades, go to grad school, get a great job, stay out of stupid debt and you'll have no problem owning a Model S. Just don't expect one by 2013...

If you really want it, you will find a way and make the necessary sacrifices. That being said it's only a car - don't jeopardize your career ambitions for a car. It will be here there when you are ready.

On the bright side you can certainly make more than $180 a week. The world is full of earning and experience potential. I was clearing six figures by the time I was 20. Just look at the world of start-ups. Just today we heard about a 15 year old kid selling out his start-up (http://www.geekwire.com/2011/seattle-area-15yearold-sells-startup-compan...). Mind you a start-up is more than money - it's about changing the world! :)

I feel for you, I will be 26 by the time I receive my Tesla late next year. But the only reason why I MIGHT be able to afford one next year is because I have already been working full time for a few years while completing my BA Degree and paying off that school loan. So now all I need to worry about is saving up for the Tesla and for the Townhouse... so my hope is things fall in to place and that i get a stroke of luck in doing so. P2835 already so I cannot wait.

But don't worry, they are planning on the smaller car soon to "Blue Star" I believe is the codename for it. Supposed to be around the 30k range instead the 55k range. Shoot for that and work your way up.

Yes, I am talking about the stock market. Options are contracts that let you buy (calls) or sell (puts) a stock at a given price (strike) up to (or at, if european style) a given date (expiration). They were invented to manage risk. So you could take extra risk for a possible big win, but extra risk means that most of the time you lose. There are rare opportunities, as maybe Tesla is, when the market does not fully understand the implications of a new technology. So you get to buy a bargain stock or, if you get lucky, get 10x bagger on options. If you do not know what options are, please do not invest in that only because I advised it. Talk to someone who has time to advise you or just go the safer route by buying stock (even there, nothing is a given).

I forgot the most important. You have to finish your studies as well as possible and as Mittar said, choose something you like because you're going to do a lot of it. And you cannot be among the best if you don't really like it. Of course, all this means years of patience, but doing so you will have huge gains with almost no risk. My options suggestion was just to accelerate getting the S, not a way to gamble your life on. Do not forget the S is just a car, your life / career are much more important !

Good luck !

It's always good to have dreams, it pulls you forward. By the time you can afford a Model S, you will find that there is something much better available then (or that something else has become much more important to you), and you will consider yourself lucky that you did not commit to this particular object too early. In any case you can dream of the Model S now and imagine yourself owning one at some time in the future, that is enjoyable and worthwhile in itself. Costs you nothing!

It's really encouraging that young people aspire to driving electric vehicles, even if the least expensive ones don't look that cool (Leaf, Volt). Even with a college degree and a good job, I didn't drive anything really cool until my late 20s. Unfortunately, I think it will take at least 5 years for Tesla to produce a car that sells under $40K. But in 2012 and 2013, you will have lots of other options for PEVs under $40K. So start saving. If you are in your early 20s, I suspect that you will have other (more important) priorities, as opposed to spending $50K on a cool looking high tech car (which depreciates).

There are already a few companies which take cool used cars and convert them to plug-in vehicles with 50mi to 75mi range. You could complete a project like that today for under $30K.

And you young people. Don't feel bad if you have to wait. I'm 70 now and the only new car I've owned is a Prius. I really want a Model S, but my wife says we can't afford it. I made the reservation/deposit in Feb. of 2010. I could pay cash for one when it comes out, but it would take of big junk out of my remaining retirement portfolio (i.e. what hasn't already been annuitized). And the stock market hasn't been doing much positive since the first quarter. If it had continued as it did first quarter, I could have paid for a Model S with just the increase by the end of the year.

Now I'm afraid I may lose my chance. OTOH, we're a lot better off than a lot of people in the U.S.

The other big issue is infrastructure. We want to be able to make long road trips without having to stop for an overnight charge after only going 200 to 300 miles each day. When we were young we could travel 2000 miles in 2 days (48 hours total). On occasion we will still make 750 miles in one day.

I don't want a vehicle that only goes 100 miles on a charge, because then it would be sitting home while we travel in the gas guzzler.

P.S. That's chunk, not junk. The other thing I want is for this site to permit editing.

Agree with @Nicu. Buy some options on Tesla. If Tesla does crazy well then they will basically be buying the car for you. If not, you lose a couple hundred bucks, which in the grand scheme of things is no big deal. You are young and have all your life to make it back. Anything in between and you at least have a nice down payment for your Model S.

As Elon would no doubt say: at least "success is a possible outcome".

I'm not afraid to lose $400 or a little more on calls, but have no idea how to do that. How can one order stock for as little as $1 per share on lots of 100. I already own 50 shares of normally purchased TSLA stock. I've heard of covered calls, but I'm not sure how calls and strikes work. Normal shares of TSLA have never been lower than about $15.

In options trading you are not buying the stock. You are basically purchasing the option to buy the stock at a set price sometime in the future.

So if you buy an options contract at a strike price of $40 and the stock never reaches $40 your options expire worthless on the expiration date. This is why it is considered a risky investment strategy.

However if the stock were to go to 70 you would receive the difference $30 (70-40). Given that you paid $4 for the "call" option your profit would be $26 per share. One options contract (100 shares) would earn you a $2,600 return on a four hundred dollar investment. The big "IF" is that tesla stock would need to rise by 150+ percent before the expiration date to make this happen.

Hope that helps - You can buy and sell options like stocks - there are a lot of resources online.

I don't think $2600 or even the $6000 as previously stated will buy him a $70k car!

Calls and puts should only be used by sophisticated investors. Other people are basically gambling at roulette type odds.

TSLA price is going down right now because President Obama is releasing oil from the strategic reserve. This will lower short term gas price but raise long term prices by increasing overall demand. Long term help to Tesla assuming it survives the next few years as the price of oil will be higher and competion from other car companies may be slowed.

1) Dream big... one day you'll get there. During college I had a picture of a Porsche 911 above my desk. That was my aspiration, I have still yet to buy that car now 8 years out.

2) New things will come... Model X, "Blue Star," the "new" roadster, that will entice you when you have the cash to buy. My 911 savings is now pointed at the Model S, I want to test drive it first.

3) Debt... if anything else this is the only lesson you must learn. DON'T GO INTO DEBT FOR A DEPRECIATING ITEM (ie. Car, Laptop). You are screwing yourself both ways when you do that... and FYI -all housing is depreciating right now and will be for the next ~3-5 years if not longer!

4) CASH IS KING. Before leveraging yourself, make sure you have 12-month of savings to live without a job at your current standards.

Study hard! Good luck!

“Puts” and “Calls” are basically legitimized gambling on Wall St. While we are at it, why don’t we also advise the young man to set up a “Margin” account as well, so he can wager even more money that he does not have?

Young man, the last thing you need to do is consider spending money you do not have on a “wager”, just for a chance at purchasing an “awesome” asset (car) with a guaranteed declining value. I’ve done very well in stocks and also in real estate. But never by placing a bet to obtain an asset that I already know will lose value.

That reminds me! thanks for the post. I was waiting for the oil reserve sell off to get some Tesla stock at a lower rate.....

Also don't feel bad I've wanted a respectable electric car for 10 years that was under 80K and I have finally got... ordered one... well ok just reserved it, at least I hope it's under $80k. I'll have to see what my options add up to.
So give it 10 years (probably more like 5) and see what you can get.... also start saving now. The stock investment is a great idea.

DaveVA,

Your explanation makes more sense to me, and doesn't seem nearly as impressive as the original suggestion.

If you have the right idea, then if Tesla stock is $40/share on Jan. 1, 2013. You have the option to buy (actually you could buy if the price were lower, but still have to pay $40/share). If it were actually $40/share you'd be $400 behind ($4/share). The stock would have to have gone to $41/share for you to break even. Anything above that would be profit. It doesn't sound very good to me. I'd be better off to wait to see if Tesla stock drops a few dollars and buy another 50 shares. Still a long way below the cost of the car, but I do believe in supporting the company, and the $5000 I've put down is a no interest loan to the company if I don't complete the purchase.

Actually, that should be "If I have the right idea".

Dave, it's basically a bet on your own judgment about whether the stock will be higher or lower on a specific date. If it's higher, you get to buy at your current price and immediately resell at the higher price -- that would be "exercising" the options. In practice, you sell the option itself to someone buying stock for a smidge below the new price.

You don't have to wait till the option "strikes" to sell; it has its own fluctuating price in the interim. You could take your profits at any point, if any. And leverage your gains with some new options purchases on something else, etc.

As far as the "loss" side goes, it's very real, but limited to the original investment, which is a small fraction of the potential gain. The counterbalance is that the cutoff for 0 return is very sharp, as you note.

That's what playing with options is like. You could lose all of the (say) $500 you put into them, but if the underlying price doubles you could earn ~40 x $500 = $20,000.

P.S. Of course you can "bet" a stock will be lower, in which case you purchase options to sell shares at the current price. On strike date, you can buy at that future cheaper level and immediately resell at the current higher one. Etc.

Or you can hedge, and buy both kinds. In that case, the only way you lose everything is if the price is essentially unchanged. The multiplier effect is cut in half, of course, since you spend twice as much up front, knowing that half of it is going to be worthless.

I see some knowledgeable people here wrt to stocks and options. Actually I did not suggest that the option play would pay for the Model S, it will just accelerate it (obviously you could get 5 or 10 options if you afford it). For $400 you could win $6000 if the share goes to $100, under $40 you lose everything, at $44 you break even ( 100 x ($44-$40) = $400, your initial investment). I actually have 32 TSLA calls, with strikes from $22.5 to $40, 4 of them expiring in Jan '12 and the rest in Jan '13. It's risky, but I got those with (obscene) profits on AAPL calls during the last two years.

There will be many people who argue that TSLA is already overvalued, as they lose $50M every quarter. But they are actually profitable on both the Roadster and the power train businesses. It's just that they spend $500M-$600M on developing a new car, bought a manufacturing facility and tooling it, hand building alphas etc. There is no way to go from 500 cars a year to 40k cars a year being profitable all the way. Other reasons are that batteries are still too expensive and you will not have enough returns on gas savings to pay back your premium for the high tech. They compare it to appalling sales of Leafs and Volts. But those are exactly the cars that are too expensive for what they offer. Model S will be as good or better as its ICE counterparts (Audi 6, BMW 5, even some Jaguars) at no price premium. The savings on gas, repairs and checkups and greenness are just a bonus. Here are some bears on Tesla or EVs in general
http://www.fool.com/investing/general/2011/06/23/is-tesla-sitting-on-an-...
http://seekingalpha.com/author/john-petersen/articles

Given the great future of Tesla (probable - not sure, manufacturing is hard, car manufacturing and car business in general are unbelievably hard), it is very good that those bears exist and that they are vocal. It keeps the stock low for a while so we could load up. Tesla will be the Apple of cars and competitors will struggle to copy them for years. In the meantime they will just throw slim balls at them (Li shortage is no better than oil shortage, you can get electrocuted in a crash, cells explode, cell degrade fast, range, range, range etc.). But the situation is very comparable to that of the iPad. It was already on the market a year ago and everybody was dismissing it as just a toy for diehard fanbois. Until it started to sell in the tens of millions a year and now it's too late to catch up to !

Maybe I should end this (boring ?) Tesla apology with saying that the future is not sure, it takes a bit of faith to make a serious investment in TSLA. But it may turn out to be the best of your life. If you hare already a very stable / comfortable situation, you may commit a small percentage of your portfolio as safety is more important than huge gains (and probably prefer TSLA stock to options). But if you are young and are anyway going to earn good money for 40 years ahead and only have $1000 or so, you may simply go all in if you are sure not to cry about the eventual loss.

Liquify:

If Tesla succeeds, and I expect that it will, you will not lose the chance of getting a Tesla by waiting. In fact, after the Model S, Tesla plans to develop and market a much less expensive electric car.

IMO, gambling is a very poor strategy to build savings. If you will forgive extreme language, I'll say that gambling is a stupid way to try to build savings. Options and margins are legalized gambling, and they make as much sense as going to Las Vegas and betting at craps or roulette. Remember that with options you are not trying to predict whether a stock will go up or down: You are trying to predict whether it will go up or down MORE or LESS than the professionals on Wall Street think it will. Do you believe you can out-guess those professionals?

Pay off your debts as you are doing. Go to school as you are planning. And recognize that you can't have everything immediately. If you need transportation, buy a used Civic or Corolla, and by the time you graduate, there will be better EVs than the Model S available.

Hard work and patience, not gambling and borrowing, are the responsible thing.

To answer your original question: What are your options for financing, talk to your local bank or credit union. Note, however, that borrowing to buy a luxury item like a fancy car is the path to perpetual debt.

@ daniel1948

It is amazing how perspective changes with age. How fast we forget our past dreams and excitement. How we pass from carefree youth (when we want to take chances) to conservative and standard happiness (wealth, peer respect, nice car to show to the neighbors etc.). I am 33 and observing this alarming transformation on myself. Not criticizing others for a natural phenomenon, just observing it and daring to spell it out.

The young fellow here asked for some opinions about his crazy dream, knowing that it is a stretch and actually formulating in terms of chance : "give it a shot". The stock market is the largest casino, yes, but a reversed one. What do I mean ? Go to the standard casino, play the machines or randomly bet on roulette. You lose 3-5% at every turn in average. While there are chances that you win big from time to time, the whole place is designed to take advantage of the flows of our brain : most of the time you do not stop when you win, but play until you're broke. If somehow you resist that, they will "help" you get on "the path".

What about the stock market ? Invest randomly and you get an average gain of 6% per year (inflation corrected) - at least over the last century (check for example the "Financial Markets" Yale course on iTunes, prof. Schiller). There are some who manage to get more out of it and for that there have to be some losers (who will obviously be the most vocal / talked about). So if you have some capital that is not working, unless you are simply risk averse and prefer to lose 2-3% per year (inflation), you should invest it.

Now we come to options. They are dangerous high power tools. You say you cannot beat professionals on Wall Street. Of course you can, but not at their own game. You have the freedom to change the game. They are very good to take the cream off everybody in the short term (if they cannot do it legally, they have the power to manipulate stocks for a short time period while hiding it from the SEC - which employs one person to look for stock manipulation but he spends his day on porn websites - lobbies are quite powerful, and a nice way to govern your country). But those Wall Street guys are not allowed to think out of the box. Everything is short term. Even the math formulas they employ break down on the long term. If you don't believe it, how is it we do not know, after centuries of bubbles and economical disasters, to detect and prevent them ?

To come back to my ramble, long term investment or option play (yes, options are still a kind of gamble) is outside their narrow vision field. They are simply clueless about what going to happen in 2 years with Tesla, for example. One reason is because they only understand financial formulas, not the real business of the company. The other is that the (long term) future is so damn hard to predict. But here you have a fair chance to win. Especially if you understand what this little company is building (the future of the automobile). Or at least if you are highly excited about them and think (there could be a trap here, of course) many people will be. It things go as planned (I expect they will, Model S was already delayed and probably Tesla under promises now), Tesla will torn a profit around the beginning of 2013 (that is when the longest lived options available today expire - soon there will be 2014 options, more expensive but much "safer"). This will be a major event from the point of view of Wall Street - profitability. If this happens, I do not see any way the stock will stay under $50. But they may realize it only when Tesla announces earnings, probably February.

In any case, this is a gamble (as most things in life - even the thing you study for 6 years may just be out of fashion or old tech by the time you graduate or a bit later). But from what I could tell, it is a positive net gain in probability that takes advantage of a blind spot of Wall Street. As already mentioned, it is not suitable for all people. More conservative investors should go by the stock - for them 10% / year is great. For young people, this is peanuts, better spend the money for something fun !

typos : (darn edit button)

flows -> flaws
what is going to happen
torn -> turn

Nicu:

There's a big difference between investing and speculating. Investing is long-term, and over the long term the market has done pretty well. There are entire decades when there is no change over all. And you never know if you are buying in right before a big drop. Still, if your time horizon is 30 years, historically you should do well.

But the OP did not seem to be asking how he could get a Tesla in 30 years. He asked what were his chances of getting a loan now, and I suggested that only his bank or credit union could answer that.

Someone else suggested options.

Options are gambling pure and simple. I happen to think that Tesla is a strong company with determined leadership and a technological lead. I will probably buy 25 or 50 shares once my Roadster comes, just because I like to own a bit of a company that I like. I bought 12 shares of Toyota when I got my Prius. Toyota is a strong company, but I've lost about a hundred bucks on my 12 shares. I don't care, because I didn't buy them as an investment, I bought them so I could feel part of a company that had built such a revolutionary car. But if I had gambled my savings on Toyota options or futures, I'd have lost a bundle.

To make enough money to buy a Model S by gambling on Tesla options, given that the OP does not have the money for the car now, would require a level of risk that would be as likely to wipe him out as to gain him his car. There are too many variables and too many unknowns.

Going for a dream is a positive thing if you do it in a positive way. Going for a dream by gambling is just plain foolish. He's better off investing his money in his own education and holding onto his dream of an EV until he can afford it. Maybe when he graduates with a good education after studying hard, he can get a job with Tesla, and get an employee discount after he's saved up for a few years.

Options, unless you're hedging, are gambling. That's not to say they're necessarily a bad gamble -- after all, gambling is very profitable for the Vegas casinos :-) -- but it does mean I wouldn't suggest them to anyone who hadn't thought of them on their own. If someone walked up to me and said "I'm certain due to my own personal analysis that Tesla stock will be over $60 on January 1, 2012, but I don't know how to bet on it," *THEN* I'd tell them about options.

I'll agree with what the other guy said: Debt is incredibly dangerous. It's not even a good idea to go into debt to go to COLLEGE, because you can't get rid of that debt in bankruptcy (in the US), and the financial payback from college is very questionable these days. If you can go to college in a country with cheaper tuition it may be advisable!

It's a far worse idea to go into debt for a car. Unless, say, you absolutely need a car in order to make income, because then the debt is necessary for you to get income -- so you can run the numbers and figure out whether the income you're making will more than cover the interest and running costs.

When in doubt, *get rid of debt, first.* The investment payback on that is huge, given that interest rates on debt are over 4% and you can't reliably get that return anywhere these days. (Unless you are a bank. ;-) I recommend being a bank; then you lend at rates higher than you borrow at. I haven't figured out how to become a bank yet, I think you need to be even richer than I am.)

Regarding electric cars, the prices on electric cars are going to go straight down over the years (thanks to improvements in battery technology, and thanks to paying off the initial design investment), and if you wait 10 years, or even 5, and you have a decent income over that period, you will be able to afford something similar to the Model S.

If you *really* want to be an *early* adopter of electric cars, look elsewhere; the seriously early adopters are the homebrew conversion people (and my hat is off to them for the work they put in), while there are numerous other short-range electric cars on the market right now.

But consider whether you even need one. If I were living in a city with really decent public transportation (which I'm not), I wouldn't even *get* a car, I'd just ride electric trains. You may be able to do this while going to college, and save lots of money.

ncn is exactly right. Do not go into $50,000 debt for a car at age 18 and pay off all debt (especially if you have any credit card or other expensive debt).

Liquify: I hate to say this but I really wouldn't try and buy a Model S right away. It's great the Model S is your dream car and I'm sure Tesla will be around in 5 years or so and still be selling the Model S. Plus you'll get hopefully a cheaper car with a better battery and less bugs (not the first year model).

Work hard in your first job and save up you money in some conservative investments. If you don't go for anything else crazy (big vacations, lots of electronic gadgets, new TV....etc) in the next few years, maybe you'll have enough. You also have to consider the cost of owning the car and fixing it if something happens after the warranty is over. Will you make enough so that if 3 years after you have the car and a $3,000 repair comes along, could you pull that money out of your savings or would you have to borrow it?

Having a dream car is fun and getting your dream car at age 18 would be awesome but also make your next dream car be much, much more expensive.


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