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At a time when it costs up to $ 100 to fill a gas tank, but as little as $ 10 to charge an electric car, it can seem like an obvious choice to buy an electric car. But EV finances are complicated, and you need to have knowledge of many unknown factors before you can keep it to the oil companies.
Buy a new car
To drive an electric car you must purchase an electric car, an often costly proposition. Even after selling or exchanging your current conventional car, you could easily be in the $ 10,000 or more hole. It will take you several years to get in balance, like my CNET Cars colleague, even if you assume a scenario where you buy a very cheap electric car, live in a place with cheap electricity and always charge at home. There are many “ifs” to make the purchase of a new electric car a financially nasty dunk.
This is not a new concern: I can not count the number of people I know who bought a hybrid car or other fuel-efficient car at a net cost that is far higher than they could ever save on fuel with it. A friend insisted on swapping his Porsche Cayenne for a Cayenne Hybrid, even after I wrote out that it would take them 111 years to balance.
Admittedly, a pure electric car will save you much more energy than the Cayenne Hybrid example, but an electric car’s first purchase price and potentially higher insurance andcan dull the economy. On the other hand, conventional cars have a number of maintenance costs that electric cars do not incur, such as fluid changes and more frequent brake service.
Many people buy an electric car to save the environment as well as money, a noble motivation that returns the investment through both fuel savings and environmental benefits. It is beyond the scope of this article, but think about the overall environmental return and ask yourself if there is a more efficient way to spend the net funds you want to spend on an electric car:or expand one to cut out most business flights are a few examples that can be considered using a good carbon footprint calculator.
Depreciation is the “second price” of any car you buy and more importantly consider when that car is electric. The value of any new or late model car falls like a rock when you own it, creating a significant cost every mile that is often worse for electric cars due to their typically higher price and often greater depreciation.
For example, Subaru, which is not known for electrified cars, has an average resale value that is 66% of the new price after five years, according to Car Edge. On a new $ 35,000 Subaru, this depreciation will cost around $ 11,500 over the first five years, or $ 6.30 a day. To use a worn out metaphor, there is a latte for you and a friend, seven days a week.
Compare that to a Tesla, which Car Edge estimates will have 58% of value after five years (which puts it at No. 3 among luxury brands, according to Car Edge), and does so from a higher average price. If you buy a Tesla Model 3 for $ 60,000, you will incur $ 25,000 in depreciation over the first five years, or $ 13.80 per day – like buying you and three friends a latte every single day. Part of the pain is due to the fact that Tesla has been as successful in selling electric cars as their cars.
An important form of depreciation that is unique to electric cars is the possible replacement of the battery pack. Unlike a modern conventional car where an engine replacement is unlikely, the replacement of an electric car’s battery park is likely as the vehicle ages and provides unsatisfactory range. Battery replacement cost varies widely, but $ 10,000 is a reasonable average estimate.
That said, this cost remains unclear because few electric cars have been on the road long enough to degrade their battery pack, nor has there been enough time to develop a vibrant, competitive battery replacement market. It is also difficult to predict which owner of a given electric car will bear the cost of battery replacement, and although this cost should already be included in the impairment, I’m not sure the market is mature enough to count on it yet. If you are buying a used electric car in late model, you need to know that you can be the one holding the backpack when the range drops to a level that either you or the next buyer considers insufficient, which triggers an expense or loss of value that consumes the total the economy of electric driving.
That said, there is a good solution to this concern about battery replacement: reality. See my view on why.
Buying electricity is not easy
The cost of electricity varies much more than the cost of petrol, depending on where you live, the price plan you have, when you charge, and whether you do it at home or on a commercial public charger.
In California, we pay an average of 18 cents per kilowatt hour for electricity in homes, but in Idaho it is 8 cents and in Hawaii it is 28 cents, according to the US Energy Information Administration. This variation would be like paying $ 5 per gallon for gasoline in California, $ 2.50 per gallon in Idaho and $ 8 per gallon in Hawaii, a much larger variation than we see at the pump. And the cost of electricity is not clearly marked where you dispense it, instead buried in a swamp of tariffs and times of day.
You can contact the Environmental Protection Agency’s Fueleconomy.gov for a cost comparison between cars, gas or electric. A head-to-head comparison between a BMW 330i xDrive and a Tesla Model 3 Long Range shows a strong difference in energy costs that make the Tesla seem like an absolute cost-saving machine.
But a 2021 study by the Anderson Economic Group (PDF) concludes that driving an electric car can cost significantly more than driving a conventional vehicle. This is a controversial conclusion, but not entirely unfounded, although the assumptions include a lot of charging in commercial places, instead of at home, and that you earn a healthy salary that must be considered a waste of value while you wait for your car to charge. For those who charge at home, the story is much more rosy, but Anderson wisely amortizes the cost of around 2000 dollars for a level 2 charger, which most electric car owners want.
To answer the question we started with, it costs either less, the same or more to operate an electric car compared to a car with a petrol engine. Although not a very satisfactory answer, an electric car is likely to reduce the actual cost of getting around, though perhaps not overnight. I think a switch to electric cars is inevitable for a number of technological, political and economic reasons, but you have to worry about how electric cars are suitable for you, not for us.