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The true cost of owning an electric car

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


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Do you know what it really costs to drive an electric car?


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At a time when it costs up to $100 to fill up a gas tank but only $10 to charge an electric car, buying an electric vehicle seems like an obvious choice. But the economics of electric vehicles are complicated and you need to understand many unknown factors before you can leave it to the oil companies.

Buying a new car

To drive an electric vehicle, you have to Buy an EV, an often expensive affair. Even after you’ve sold or traded in your current, conventional car, you could easily be in the $10,000 or more hole. As my colleague from CNET Cars, it will take you several years to break even Craig Cole does the math 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 isn’t a new concern: I can’t count the number of people I know who have bought a hybrid car or other fuel-efficient car at a net cost far greater than they could ever save fuel by doing so. A friend insisted on trading his Porsche Cayenne for a Cayenne Hybrid even after I pointed out that it would take 111 years to breakeven.

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, a full $10,000 more than it was a year ago. Average transaction prices are closer to $60,000.

Tim Stevens/CNET

Certainly a pure electric car saves you a lot more energy than the Cayenne hybrid example, but the purchase price of an electric vehicle and possibly higher insurance and increased repair costs can blunt its profitability. On the other hand, conventional cars have a litany of maintenance costs that EVs don’t, such as: B. Fluid changes and more frequent brake service.

Many people buy an electric vehicle to save the environment and money, a noble motivation that will return their investment in both fuel savings and environmental dividends. It’s beyond the scope of this article, but consider the total return on investment for the environment and ask yourself if there’s a more effective way to use the net money you would spend on an electric car: Installation of a solar system on the roof or building one Top notch zoom room to save most of your business air travel are some examples that can be taken into account with a good carbon footprint calculator.

Steep devaluation

Depreciation is the “other price” of every car you buy, and more important to consider if that car is electric. The value of any new or late model car drops like a rock when you own it, resulting in a significant cost per mile that is often worse for electric vehicles due to their typically higher price and often greater depreciation.

For example, Subaru, which isn’t known for electric 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, that depreciation would cost about $11,500, or $6.30 per day, over the first five years. To use a well-worn metaphor, that’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 (making it the #3 luxury brand according to Car Edge), and at a higher average price. If you buy a $60,000 Tesla Model 3, you’ll accrue $25,000 in depreciation over the first five years, or $13.80 a day — like buying from you and three friends a latte every day. Some of the pain stems from the fact that Tesla has been as successful at selling electric vehicles as its cars long ago stopped qualifying for a $7,500 tax credit.

Tesla Model 3 battery

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

Tesla

battery replacement

An important form of depreciation, unique to electric vehicles, is the eventual replacement of the battery pack. In contrast to a modern conventional car, where engine replacement is unlikely, an electric vehicle’s battery pack is likely to be replaced as the vehicle ages and delivers unsatisfactory range. Battery replacement costs vary widely, but $10,000 is a fair average estimate.

However, these costs remain hazy as few EVs are on the road long enough to severely degrade their battery pack, nor has there been enough time for a dynamic, competitive battery replacement market to develop. It’s also difficult to predict which owner of a given EV will bear the cost of replacing the battery, and while that cost should already be accounted for in depreciation, I’m not sure the market is mature enough to rely on it yet . When you buy a recent used electric vehicle, you know that you may be the one holding the bag if its range drops to a level that either you or the next buyer finds insufficient, resulting in expense or a loss in value, which undermines the overall economy of driving electrically.

However, there is a good workaround for this battery replacement problem: reality. See why You may not need anywhere near the reach you think you need.

Buying electricity is not easy

Electricity costs vary much more than petrol costs depending on where you live, what tariff you use, when you charge and whether you do it at home or at a commercial public charger.

In California we pay an average of 18 cents per kilowatt-hour for household electricity, but in Idaho it’s 8 cents and in Hawaii it’s 28 cents, according to the US Energy Information Administration. This discrepancy would be like paying $5 a gallon in California, $2.50 a gallon in Idaho, and $8 a gallon in Hawaii, a far larger discrepancy than what we see at the pump. And the cost of electricity isn’t clearly labeled as to where you hand it in, but buried in a morass of tariffs and time of day.

You can contact the Environmental Protection Agency’s Fueleconomy.gov for a cost comparison between car, gas or electric. A direct comparison between a BMW 330i xDrive and a Tesla Model 3 Long Range shows a clear difference in energy costs, which makes the Tesla appear like an absolute cost-saving machine.

BMW 330i vs. Tesla Model 3 fuel costs

If it just could be that easy.

EPA/Screenshot by Brian Cooley/CNET

However, a 2021 study by the Anderson Economic Group (PDF) concludes that driving an electric vehicle can cost significantly more than driving a conventional vehicle. It’s a debatable conclusion, but not entirely unfounded, although their assumptions include that a lot is charged at commercial locations rather than at home, and that you earn a healthy salary that must be viewed as wasted value while you wait for your car to be charged . For those charging at home, the story is a lot rosier, but Anderson recoupes the roughly $2,000 cost of a Level 2 charger that most EV owners will want.

Anderson Group report on the cost of electric vehicles

A worst-case assumption about owning an electric vehicle can lead to figures showing that it costs more than a petrol-powered car.

Anderson Research Group

To answer the question posed at the beginning, it costs less, the same or more to run an electric vehicle compared to a petrol car. While that’s not a very satisfying answer, an electric vehicle will likely lower your true cost of transportation, though perhaps not overnight. I think an EV transition is inevitable for various technological, political and financial reasons, but you need to think about how EVs are shaping up for you and not for us.

https://www.cnet.com/roadshow/news/electric-vehicle-ownership-costs/ The true cost of owning an electric car

Chris Barrese

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