The actual cost of owning an electric car

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At a time when refueling a gas tank costs up to $ 100, but only $ 10 to charge an electric car, buying an EV may seem like an obvious choice. But the economics of EVs are complicated and you have to be smart about a lot of unknown factors before you can put that up to the oil companies.

Buying a new car

To drive an EV you must buy EV, often an expensive offer. Even after you sell or replace your current, conventional car, you could easily be in the $ 10,000 or more hole. It will take you a few years to just pay off, like my colleague from CNET Cars Craig Cole calculates here, even assuming a scenario where you buy a very cheap EV, live in a place with cheap electricity and always charge at home. That’s a lot of “ifs” for buying a new EV to be an economic dunk.

This is not a new concern: I can’t count the number of people I know who have bought a hybrid or other fuel-efficient car at a net price far higher than they could ever save on fuel with it. One friend insisted on replacing their Porsche Cayenne with a Cayenne Hybrid, even after I said in pencil that it would take them 111 years to make it to the end.

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

It has ignited the electric car market, but the Tesla Model 3 starts at $ 47,000, a full $ 10,000 more than just a year ago. Average transaction prices are closer to $ 60,000.

Tim Stevens / CNET

To be sure, a clean electric car will save you a lot more energy than that Cayenne Hybrid example, but the initial purchase price of the EV and potentially higher insurance and increased repair costs it can blunt its economy. On the other hand, conventional cars have a number of maintenance costs that EVs do not bear, such as fluid changes and more frequent brake services.

Many people buy EVs to save the environment and money, which is a noble motivation that pays them back through fuel savings and environmental dividends. This is beyond the scope of this article, but consider the overall return on investment in the environment and ask yourself if there is a more efficient way to allocate the net funds you would spend on an electric car: Installing solar energy on the roof or construction a top Zoom room to reduce most of your business travel by plane, there are a few examples that can be considered using a good carbon footprint calculator.

Great depreciation

Depreciation is the “second price” of any car you buy and it is even more important to consider when that car is electric. The value of any new or late car model falls like a stone as you own it, creating a significant cost per mile that is often worse for EVs due to their typically higher cost and often higher depreciation.

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

Compare that to Tesla, whose Car Edge will project 58% of its value after five years (which puts it in 3rd place among luxury brands, according to Car Edge), at a higher average price. If you buy a Tesla Model 3 for $ 60,000, you will have $ 25,000 in depreciation in the first five years, or $ 13.80 per day – such as buying you and three friends latte every day. Part of the pain comes from the fact that Tesla has been so successful in selling electric vehicles from its cars has long ceased to qualify for a $ 7,500 federal tax credit.

Tesla Model 3 battery

The heart of the EV is its battery, analogous to the center value of an engine in a conventional car. Unlike modern car engines, EV batteries are replaceable during the life of the vehicle.


Battery replacement

An important form of depreciation that is unique to EV is the eventual replacement of the battery. Unlike a modern conventional car where engine replacement is unlikely, EV battery replacement is likely as the vehicle ages and provides unsatisfactory range. The cost of replacing the battery is highly variable, but $ 10,000 is a fair average estimate.

However, this cost remains hazy as several electric vehicles have been on the road long enough to greatly degrade their batteries, nor has there been enough time to develop a vibrant, competitive battery replacement market. It’s also hard to predict which owner of a particular EV will bear the cost of replacing the battery and, although this cost should already be included in the depreciation, I’m not sure the market is still mature enough to count on it. If you buy a later model of a used EV, know that you are the one holding the bag when its range falls to a level you or the next customer may consider insufficient, causing cost or loss of value that impairs overall driving economy electric.

Still, there is a good solution to this battery replacement problem: reality. See my opinion on why you may not need it even close to the range you think you need.

Buying electricity is not easy

The cost of electricity varies much more than the price of petrol, depending on where you live, the tariff plan you use, when you refuel and whether you do it at home or at a public commercial charger.

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 U.S. Energy Information Administration. That difference would be like paying $ 5 a gallon for gasoline in California, $ 2.50 a gallon in Idaho and $ 8 a gallon in Hawaii, a wildly larger variation than we see at the gas station. And the price of electricity is not clearly marked where you deliver it, instead buried in a bunch of tariffs and time of day.

You can contact the Environmental Protection Agency to compare costs between cars, gas or electric. The comparison between the BMW 330i xDrive and the Tesla Model 3 Long Range shows a huge difference in energy costs which makes Tesla seem like a machine that absolutely saves costs.

BMW 330i compared to Tesla Model 3 fuel costs

If only it were this simple.

EPA / Screenshot Brian Cooley / CNET

But a 2021 study by the Anderson Economic Group (PDF) concludes that driving an electric vehicle can cost significantly more than driving a conventional vehicle. This is a controversial conclusion, but not completely unfounded, although his assumptions include a lot of billing in commercial places, not at home, and that you earn a healthy salary that should be considered as lost value while waiting for your car to be charged. For those who charge at home, the story is a lot rosier, but Anderson wisely amortizes the price of approximately $ 2,000 for a Level 2 charger, which most electric vehicle owners would want.

Anderson Group report on EV costs

In the worst case, owning an EV can result in figures showing that it costs more than a car with a gas engine.

Anderson Research Group

To answer the question we started with, managing an EV costs less, the same or more compared to a car with a gas engine. While that’s not a very satisfactory answer, EV is likely to reduce your actual cost of movement, though perhaps not overnight. I think the transition to electric vehicles is inevitable for a variety of technological, political and financial reasons, but you have to worry about how EVs will be for you and not for us.

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