Image from: https://www.budgetpulse.com
We are told climate change calamities around the world will range from food shortages to increasing desertification, resource wars to famine, and extreme weather to rising sea levels. Most of these changes are already occurring, and with many, we are already seeing the affects.
If there is any chance to slow down, stop, or even reverse these consequences, it will require major changes - changes that we can control. Eliminating the need for fossil-fuel-burning internal combustion engines and replacing them with clean, electric-powered vehicles is one of the quickest and easiest changes that we could make. Driving an EV could lead to a reduction in both noise and air pollution, cleansing our cities, and ultimately creating a healthy, more productive environment.
In order to make this happen, the rubber has to hit the road, and we, or our fleet managers, have to actually buy these new electric vehicles. As we look at the sticker price, our eyes tend to bulge out as we think to ourselves, “on second thought, maybe I’ll wait a couple years for the price to come down." So much for saving the planet.
Altruism, or, the act of spending a bit more to make you feel that you are creating positive change in the world is one thing, but purchasing a car can be a big financial decision for many of us. More often than not, it is one of our larger life investments. Understandably, the majority of society may be price-sensitive or on a strict budget when it comes to a car purchase, and this forces many of us to look for the best deal that is out there. An electric car is about $15,000 more than the equivalent gasoline car, so how does one justify that cost?
Looking beyond the MSRP will allow for a better understanding of an electric vehicle’s full value.
EVs generally have a much lower cost of maintenance than gas-fueled cars and this can more than make up for their higher purchase price. There are also government incentives - both state and federal - that also bring down the overall cost of the vehicle. Below is a sampling of both electric and gasoline car prices for roughly equivalent cars (MSRP from maker website, no options selected).
Fast Charging $750 option
· Spark 1LT Manual $14,865
· Spark 2LT Manual $16,265
Making up for this price premium means finding at least $15,000 in ownership cost savings by going electric. Let’s take a look at a few ways we can find those savings outside of the dealership.
The U.S. government - both federal and state - incentivizes electric or plug-in hybrid vehicle purchases with both tax credits and cash payments. For passenger cars, the Federal credit is calculated based on the battery pack size. This will top out at $7,500. For commercial fleet vehicles, the Department of Energy has a host of credits available for fleet owners
. Additionally, many state governments also give credits and incentives on top of the federal programs.
Where does that leave our price premium? $15,000 - $7,500 = $7,500 remaining, or less
depending on your state’s programs
Fuel cost savings
: Unlike the tax credit, the fuel cost savings is a true cost-of-ownership savings.
Electricity used as fuel for a vehicle is cheaper than gasoline on a mile-for-mile basis. The more you drive, the more you save. This makes it very attractive for fleet owners whose vehicles tend to rack up a lot of miles.
For passenger cars, the EPA makes it easy, publishing figures on the Monroney label
The BMW i3 has been cited as the most efficient electric car on the market, which gets more miles per kiloWatt-hour than any other passenger car. This is estimated to save $5,250 in fuel cost over 5 years at the average of 15,000 miles per year of driving and $3.50/gallon for gas.
While gas is currently roughly $1.00 cheaper than this in some states, we’re already seeing it steadily on the rise once again, and the trend is not expected to stop anytime soon.
That brings our price premium to:
$15,000 - $7,500 - $5,250 = $2,250
While the cost of car maintenance is more difficult to calculate, it is another area of potential savings. Unlike gas-fueled cars, electric cars do not need oil changes, spark plugs, catalytic converters, transmission flushes, etc. Regenerative braking also means using fewer brake pads.
Even though electric vehicles require some maintenance, it does not add up to the amount of maintenance that is needed for gas or diesel vehicles.
A 2013 AAA press release
claims that a typical gasoline sedan has $0.61 per mile maintenance costs or $9,151 per year.
and Kelley Blue Book
sites both calculate the total cost of ownership, but their figures don’t come close to each other nor to the AAA figures.
The savings claimed by Edmunds and KBB is about $500 over five years.
There is reason to doubt that figure in oil changes alone; Jiffy Lube charges roughly $45.00 for its lowest tier oil change. At the bare minimum, of changing out your oil twice a year, over five years, you’ve already hit
$450.00, not accounting for tax. Additional anecdotal evidence from EV owners is that the savings in maintenance costs are drastically higher than this.
Even fleet owners with electric trucks see a significant maintenance savings. This is partly due to a surprising benefit:
where diesel trucks will go for maintenance 3 times a year, electric trucks only require two maintenance periods a year.
That means they remain in service for more hours per year than the diesel trucks.
Because there is a lack of reliable figures on maintenance cost savings, it is hard to add this figure into our savings calculations, but we can safely say it’s at least $500, putting our calculations at $1,750
Realistically though, the figure could be much lower; depending on actual fuel cost savings and actual maintenance savings, we could be paying for the entire price premium (or more).
As they say, time is money.
How this applies to electric vehicles is that they save us time in two ways:
1) By charging the EV at home and work, the driver is always assured of a full tank when they leave home or the fleet depot.
So long as their travel fits within the vehicles range, they don’t have to go out of their way to stop at a refueling station.
That’s unlike the gasoline vehicle drivers who have to go out of their way to find, and stop at, a gasoline station every 300 miles or so to refill the tank.
Let’s estimate that being worth about 10-30 minutes a week.
2) For those times when you do need to charge on the go, you can often find charging stations near your destinations.
For example, workplace charging is becoming common in many areas, as are charging stations in shopping centers and vibrant downtown districts.
Your time involvement in such scenarios is solely the 30 seconds or so it takes to plug in the car, no matter how long the recharge session takes.
Another way electric vehicle drivers can save time is by taking advantage of those states who allow unrestricted travel for electric vehicles in the HOV lanes. Many states are now giving passes to EV owners to travel in lanes normally reserved for carpools. Depending on the commute, it could be worth 30 minutes or more per day. That can add up to over 5 hours a week or 250 hours per year. What’s that time worth to you?
Those paid by the hour know exactly what their time is worth.
: So are electric vehicles really more affordable than traditional cars? The remaining price premium we calculated, $1,750 or less, is really pretty modest and the realistic savings
could be increased if, for example, you drive more than 15,000 miles a year.
The bottom line is that buying an electric car isn’t a fad or a foolish waste of money; between upfront government and state incentives, yearly tax write-offs, considerably less maintenance and no need to stop at the gas station thanks to home and desti
nation charging, it seems clear that EVs provide an exceptionally greater value to the driver both in terms of money and time. So if you're in the market for a new car, the question shouldn't be can you really afford to buy an EV, but can you really afford NOT to?