The real costs of owning an electric car

The real costs of owning an electric car

The real costs of owning an electric car

This story is part Branch, CNET’s hub for all things electric vehicles and the future of electrified mobility. From vehicle reviews to helpful tips and the latest industry news, we’ve got you covered.

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At a time when it costs up to $100 to fill a tank of gas, but as little as $10 to charge an electric car, buying an electric vehicle might seem like an obvious choice. But the economics of electric vehicles are complicated and you need to know many unknown factors before you can stick with the oil companies.

Buy a new car

To drive an EV, you need to buy an EV, an often expensive proposition. Even after selling or trading in your current conventional car, you could easily be in the $10,000 or more hole. It will take you several years to break even, as my colleague from CNET Cars Craig Cole calculates here, even assuming a scenario where you buy a very cheap electric vehicle, live in a place with cheap electricity and always charge at home. That’s a lot of “ifs” to make buying a new electric vehicle an economic slam dunk.

This is not a new concern: I cannot count the number of people I know who have purchased a hybrid car or other fuel-efficient car at a net cost far greater than they could ever save on the fuel with. A friend insisted on trading in his Porsche Cayenne for a Cayenne Hybrid, even after I figured out it would take them 111 years to break even.

2018 Tesla Model 3 parked on a country road with a wind farm in the background

It’s set the electric car market on fire, but a Tesla Model 3 starts at $47,000, up $10,000 from just a year ago. Average transaction prices are closer to $60,000.

Tim Stevens/CNET

Granted, a pure electric car will save you a lot more energy than this Cayenne hybrid example, but the initial purchase price of an EV and potentially higher insurance and high repair costs can blunt its economy. On the other hand, conventional cars have a litany of maintenance costs that EVs don’t incur, such as fluid changes and more frequent brake servicing.

Many people buy an electric vehicle to save the environment as well as money, a noble motivation that allows them to recoup their investment through both fuel savings and environmental dividends. That’s beyond the scope of this article, but think about the overall environmental return on investment and ask yourself if there’s a more efficient way to deploy the net funds you’d spend on an electric car: Installation of solar panels on the roof or building a high-end Zoom room to reduce most of your business air travel are some examples that can be considered with the help of a good carbon footprint calculator.

Strong depreciation

Depreciation is the “other price” of any car you buy and it’s even more important to consider it when that car is electric. The value of any new or recent car drops like a stone the longer you own it, creating a substantial cost with every mile that is often worse for electric vehicles due to their generally higher price and often depreciation. more important.

For example, Subaru, which isn’t known for electrified cars, has an average resale value that’s 66% of its new price after five years, according to Car Edge. On a new $35,000 Subaru, this depreciation would cost about $11,500 over the first five years, or $6.30 per day. To use a tired metaphor, it’s a latte for you and a friend, seven days a week.

Compare that to a Tesla, which Car Edge predicts will hold 58% of its value after five years (putting it third among luxury brands, according to Car Edge), and that’s starting at an average price. higher. If you buy a $60,000 Tesla Model 3, you’ll incur $25,000 of depreciation in the first five years, or $13.80 a day – as you buy and Three friends a latte every day. Part of the pain is that Tesla has been so successful at selling electric vehicles than its cars has long since ceased to qualify for a federal tax credit of $7,500.

Tesla model 3 battery

The heart of an electric vehicle is its battery, analogous to the central value of an engine in a conventional car. Unlike modern car engines, batteries in electric vehicles offer the possibility of being replaced during the life of the vehicle.

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Battery replacement

An important form of depreciation that is unique to electric vehicles is the eventual replacement of the battery. Unlike a modern conventional car where engine replacement is unlikely, replacement of an electric vehicle’s battery bank is likely as the vehicle ages and provides unsatisfactory range. Battery replacement cost varies widely, but $10,000 is a fair midpoint estimate.

That said, that cost remains unclear because few EVs have been on the road long enough to severely degrade their battery, and there hasn’t been enough time for a vibrant and competitive battery replacement market to develop. . It is also difficult to predict which owner of a given electric vehicle will bear the cost of replacing the battery and, although this cost should already be taken into account in the depreciation, I am not sure that the market is mature enough to rely on that. If you’re buying a late-model used electric vehicle, be aware that you may be the one holding the bag when its range drops to a level that you or the next buyer may consider insufficient, resulting in an expense or loss of value that erodes the overall economy of driving. electric.

That said, there is a good workaround to this battery replacement problem: reality. See my opinion on why you may not need the range you think you have.

Buying electricity is not easy

The cost of electricity varies much more than the cost of gas, depending on where you live, what plan you subscribe to, when you charge, and whether you do it at home or at a public charger commercial.

In California, we pay an average of 18 cents per kilowatt hour for residential electricity, but in Idaho it’s 8 cents and in Hawaii it’s 28 cents, according to the US Energy Information Administration. This differential would be equivalent to 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 what we see at the pumps. And the cost of electricity isn’t clearly labeled where you distribute it, buried instead in a jumble of rates and times of day.

You can turn to the Environmental Protection Agency’s for a cost comparison between cars, petrol or electric. A direct comparison between a BMW 330i xDrive and a Tesla Model 3 Long Range highlights a stark difference in energy costs that makes the Tesla an absolute money-saving machine.

BMW 330i Fuel Costs vs Tesla Model 3

If only it were that simple.

EPA/Screenshot by Brian Cooley/CNET

But a 2021 study by Anderson Economic Group (PDF) concludes that driving an electric vehicle can cost significantly more than driving a conventional vehicle. It’s a controversial conclusion, but not entirely unfounded, although its assumptions include many loads in commercial places rather than home, and that you earn a healthy salary that should be accounted for as wasted value while you wait for that. your car charge. For those charging at home, the story is much rosier, but Anderson wisely writes off the roughly $2,000 cost of a Level 2 charger, which is what most EV owners will want.

Anderson Group report on the cost of electric vehicles

In the worst-case scenario, owning an electric vehicle can yield numbers that show it costs more than a gasoline-powered car.

Anderson Research Group

To answer the original question, it costs less, the same, or more to run an EV compared to a gasoline-powered car. Although not a very satisfying answer, an electric vehicle will probably reduce your actual cost of travel, but perhaps not overnight. I think a shift to electric vehicles is inevitable for a variety of technological, political and financial reasons, but you have to worry about how electric vehicles shape up for you, not for us.

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