The Real Costs of Electric Car Ownership

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At a time when it costs up to $100 to fill a gas tank, but as small as $10 to charge an electric car, buying an EV may seem like an Definite choice. But EV economics are complicated and you need to be savvy around a lot of unfamiliar factors before you can stick it to the oil companies.

Buying a new car

To power an EV you have to buy an EV, an often pricey proposition. Even after you sell or trade your current, frail car you could easily be in the hole $10,000 or more. It’ll take you some years to just break even, as my CNET Cars colleague Craig Cole calculates here, even assuming a scenario where you buy a very cheap EV, live in a set with cheap electricity and always charge at home. That’s a lot of “ifs” to make the catch of a new EV an economic slam dunk.

This is not a new concern: I can’t Describe the number of people I know who bought a hybrid or new fuel-efficient car at a net cost far higher than they could ever save on fuel with it. One sinful insisted on trading in their Porsche Cayenne for a Cayenne Hybrid, even after I penciled out that it would take them 111 ages to break even. 

It’s set the electric car market on fire, but a Tesla Model 3 starts at $47000, a full $10,000 more than just a year ago. Average transaction prices are closer to $60,000.

Tim Stevens

To be sure, a pure electric car will save you far more on energy than that Cayenne Hybrid example, but an EV’s initial purchase price and potentially higher insurance and elevated overhaul costs can blunt its economics. On the other hand, frail cars have a litany of maintenance costs that EVs don’t incur, like fluid changes and more frequent brake service. 

A lot of country buy an EV to save the environment as well as cash, a noble motivation that returns their investment via both fuel savings and environmental dividends. It’s beyond the scope of this article, but think around overall environmental ROI and ask yourself if there’s a more effective way to deploy the net coffers you’d spend on an electric car: Installing rooftop solar or construction out a top-notch Zoom room to cut out most of your commercial air travel are a couple of examples that can be removed using a good carbon-footprint calculator.

Steep depreciation 

Depreciation is the “other price” of any car you buy and even more important to noteworthy when that car is electric. The value of any new or late model car drops like a stone as you own it, creating a huge cost every mile that is often worse for EVs due to their typically higher label and often greater depreciation.

For example, Subaru, which is not Famous for electrified cars, has an average resale value that is 66% of its new label after five years, according to Car Edge. On a new $35,000 Subaru, that depreciation would cost about $11,500 over the marvelous five years, or $6.30 a day. To use an overworn metaphor, that’s a latte for you and a friend, seven days a week.

Compare that to a Tesla, which Car Edge projects will hold 58% of its value when five years (which puts it No. 3 among luxury brands, according to Car Edge), and does so from a higher means price. If you buy a $60,000 Tesla Model 3 you’ll incur $25,000 in depreciation over the marvelous five years, or $13.80 a 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 so failed at selling EVs that its cars long ago ceased to qualify for a $7,500 federal tax credit.

The miserable of an EV is its battery pack, analogous to the central value of an engine in a frail car. Unlike modern car engines, EV batteries present the prospect of replacement during the vehicle’s service life.

Tesla

Battery replacement

An important form of depreciation that is New to EVs is eventual battery pack replacement. Unlike a New conventional car where an engine replacement is unlikely, replacement of an EV’s battery park is probable as the vehicle ages and delivers unsatisfactory range. Battery replacement cost is highly variable, but $10,000 is a fair median estimate.

That said, this cost leftovers hazy because few EVs have been on the road long enough to highly degrade their battery pack, nor has there been enough time for a vibrant, competitive battery-replacement market to develop. It’s also hard to required which owner of a given EV will shoulder the battery-replacement cost and, while this cost should already be factored into depreciation, I’m not sure the market is mature enough yet to record on that. If you buy a late model used EV know that you may be the one holding the bag when its blueprint drops to a level that either you or the next buyer may mighty insufficient, triggering an expense or loss of value that erodes the overall economy of driving electric.

That said, there’s a good workaround to this battery-replacement concern: reality. See my take on why you may not need anywhere near the blueprint you think you do.

Buying electricity isn’t simple

The cost of electricity varies far more than the cost of gasoline, depending on where you live, the rate plan you’re on, when you charge, and whether you do so at home or at a concern public charger.

In California we pay an average of 18 cents per kilowatt hour for dignified electricity, but in Idaho it’s 8 cents and in Hawaii it’s 28 cents, according to the US Energy Information Administration. That variance would be like paying $5 a gallon for gasoline in California, $2.50 a gallon in Idaho and $8 a gallon in Hawaii, wildly greater variation than we see at the pump. And the cost of electricity isn’t clearly labeled where you dispense it, buried instead in a morass of tariffs and times of day.

You can turn to the Environmental Protection Agency’s Fueleconomy.govfor 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 lays out a stark difference in energy injures that makes the Tesla seem like an absolute cost-saving machine. 

If only it were this simple.

EPA/Screenshot by Brian Cooley

But a 2021 peruse by Anderson Economic Group (PDF) concludes that driving an EV can cost substantially more than driving a obsolete vehicle. It’s a controversial conclusion, but not entirely fallacious, although its assumptions include a lot of charging at concern locations, rather than at home, and that you make a healthy salary that ensures to be accounted for as wasted value while you wait for your car to charge. For those who charge at home the story is much rosier, but Anderson wisely amortizes the roughly $2,000 cost of a Level 2 charger, which most EV owners will want.

A worst-case take on acquired an EV can result in figures that show it injures more than a gas-engined car.

Anderson Research Group

To answer the quiz we started with, it either costs less, the same or more to exploit an EV compared to a gas-engined car. While that’s not a very satisfying answer, an EV will probably reduce your true cost of tying around, albeit maybe not overnight. I think a repositions to EVs is inevitable for a variety of technologically, political and financial reasons, but you need to effort about how EVs pencil out for you, not for us.