Ownership Costs of Electric Vehicles

$$$ – How much really?

The full financial costs for driving electric are purchase, maintenance, and operating. Because maintenance and operating costs are so low for electric vehicles (EVs) (more below), the focus has been on the purchase price. The purchase price of EVs is expected to reach parity with comparable conventional cars in the next few years (estimated to be 2023-2025 by many manufacturers). Depending on what you pay for electricity and how much you drive, the full life cycle cost for EVs are likely already cheaper. But most car buyers are focused on the sticker price.

Why are sticker prices so high? To some degree, manufacturers have chosen to enter the electric market with premium models, to give electrification an image of elegance (and profit margins are higher). Also, there are higher costs and lower sales associated with bringing new technologies to market. Uptake of new products is always slow initially (it was so even with cellular telephones), which makes it difficult for new technology to be priced competitively at first. Manufacturers recognize sales of new products cannibalize sales of older models, for which the product development costs have already been recouped (better to slow down the introduction of new products in order to milk the profits out of the old ones). Although prices are steadily declining, lithium car batteries are still expensive and buyers are hesitant because they are unfamiliar with their properties, costs, and risks.

Let’s talk batteries

This creates an opportunity for those who are more comfortable with the technology. A key discovery of the last several years is that lithium batteries hold up very well under heavy long-term use. For example, there are Tesla cars that have been in use as long-distance taxis for more than 500,000 miles, and they are still doing fine on their original batteries. Consumer-reported experience with Tesla Model S batteries indicates that about 95% of the original range is still available after 50,000 miles and 90% of the original range is available after 150,000 miles. (See video below.)

Thus the fear that expensive batteries might need frequent replacement has receded. The purchase price of a used entry-level EV is nonetheless still very reasonable. For example, browsing Colorado area used Nissan Leafs (kbb.com accessed 25 Nov 2019) I found four 2012-2013 models ranging from $7,200 (w/ 41,400 miles on odometer) to $9,400 (w/ 38,700 miles). I am aware of private sale prices that were substantially lower than those. Thus there are entry level vehicles available at entry level prices.

There are a variety of state, local, and federal rebates available for purchase of new electric vehicles. These seem to change weekly and are difficult to monitor. In December 2019, the US Congress neglected to extend or expand federal EV tax credits. Political uncertainty is rampant. One might think car dealerships would be well-versed in these rebates and eager to pass along the knowledge to prospective buyers, but experience suggests otherwise.

The best place to learn about rebates or tax incentives is: plugincars.com. In December 2019 all battery electric vehicles (BEVs) qualify for a federal tax credit, but they are stepping down every quarter year for Tesla and GM. The Plugincars website emphasizes rebates are also available at other levels of government (Colorado has an excellent tax credit–$5,000) and there are cost savings for other elements of electrification (Farmer’s Insurance has a 5% discount on insurance of electrics; some utilities such as La Plata Electric Association offer large rebates on installation of home chargers). The state of Colorado also has grants for installation of both residential and commercial chargers (FourCore.org is the go-to place for information and assistance in applying for charger grants).

So, what does a new electric car cost?

In November 2019, I did a computer search of car dealerships in the Four Corners area, and found two on the lots, and one arriving. The Chevrolet Bolt (EV) on the lot at Morehart Murphy in Durango is a 2019 with a garish yellow-green color and is discounted to $30,900. The Nissan Leaf (EV) on the Nissan of Durango lot is a 2019 ($35,900). A 2020 Prius Prime (PHEV) is coming to Durango Motor Company and is listed for $34,500. No PHEV or EVs were for sale on the web pages of car dealerships in Farmington area or Cortez. This paucity of offerings is not entirely due to lack of buyer interest. There are about 104 pure electric vehicles (EVs) registered in La Plata County and about half of the owners went to the trouble and risk of purchasing their vehicles elsewhere, because local dealerships do not offer the models. This reluctance on the part of dealerships is likely to change when Colorado’s zero-emissions vehicle (ZEV) standard comes into full force. There are about 48 models of PHEVs and EVs for sale somewhere in the US as of December 2019. For the record, in November 2019 there were also 631 HEVs and PHEVs registered in La Plata County, Colorado but there is no clear way to separate the plug-ins from the regular hybrids in the registrations.

What do we want? Trucks and SUVs!

These used and new purchase prices are not greatly out of line with comparable conventional cars. With the available tax rebates, electric cars are arguably more economical than the purchase of conventional cars. What is missing is local availability of SUVs, pickup trucks, economical commuter vehicles, luxury cars, vans, and heavy duty trucks. Most of these vehicle types will become available outside of the Four Corners in 2020 and 2021. Luxury vehicles by Tesla, Audi, Jaguar, and Volvo are already available in major urban dealerships. Some of the premium models qualify as SUVs, and all of the premium models are available with all-wheel drive. Six models are available with all-electric ranges in excess of 250 miles; fourteen models, including the locally available Bolt and Leaf, have all-electric ranges in excess of 200 miles. For a regularly updated inventory of the models available in the US see plugincars.com/cars

Maintenance

Purchasing an electric vehicle is a big step, but only part of the expense of owning one. There are also maintenance costs to consider, and fuel to buy. A PHEV differs little from a conventional car or hybrid electric vehicle (HEV) in maintenance costs, although a PHEV that is routinely driven on battery power alone will accrue scheduled engine maintenance needs at a slower rate because the engine is rarely used. For example, a Hesperus, Colorado Volt (PHEV) owner reports having needed only two oil changes (and no other scheduled maintenance) in 75,000 miles, about half of which were done on battery power.

New York City recently released a study that quantified the maintenance costs that the city expended on its fleet vehicles. NYC found that conventional cars cost 2-4 times that of BEVs, and that the average BEV cost the city $386 per year in maintenance costs. There were large differences among models of course. For example, the Ford Focus BEV cost $386/year, whereas the Ford Focus gas model cost $1805. In one case (the Fusion), it was possible to compare BEV ($497) to a Fusion PHEV ($1311) to a Fusion gas model ($1621). The least expensive (to maintain) vehicles in the fleet were all BEVs: Chevy Bolt ($205) and Nissan Leaf ($344). Fleet costs are apt to be higher than those for privately owned vehicles.

The maintenance for a BEV is substantially lower than that for a PHEV or HEV, because most of the moving parts have been eliminated. Tesla likes to point out that when it invented its first EV, it took out 2000 moving parts and replaced them with 17. EV wear and tear requires replacement of the tires and little else, as braking in an EV is mostly done by regeneration, which pumps power back into the battery and does not require use of the regular (friction) brakes except for panic stops. Of course there are a few chassis joints that must occasionally be greased, but the brushless electric motors are extremely durable and are expected to outlast their owners. We’ve not yet heard of any major mechanical repairs on a BEV. This may offer insight into the reluctance of local dealerships to sell EVs, as EV sales offer the dealers little in the way of profitable service visits.

Insurance

Other vehicle ownership costs are largely fixed (such as insurance) or similar to those of conventional vehicles (replacement of tires, for example). Experience with insuring electrical cars suggests a modest reduction in insurance costs, probably for several reasons. One is that the heavy battery in an electric car is situated as low as possible in the vehicle, greatly reducing the risk of a rollover accident. Another is that electric vehicles are newer and have the latest safety features built into them. A third is that the range available to an electric car is prominently displayed on the dash, and is strongly tied to speed (air and rolling resistance increase as the square of speed); the slower you drive the more miles your EV will go, and you see this every time you drive. This latter feature promotes slower driving, and the likelihood that older drivers purchase most EVs probably promotes the low accident rate associated with EVs.

Fuel costs

The fuel cost of EVs is the major advantage over a conventional car (see the cost estimates reported in Commuter Charging). That section explains that for a 200 mile charge of electrons, the cost of electricity in the Four Corners area is $3-6, depending on your local utility’s rate structure and driving conditions. Using a value of $5 per 200 miles suggests that the fuel cost of an EV is around $0.025 per mile if you buy the electricity from the grid at typical residential rates. This is where the primary cost savings occurs for EV owners. Compare that to the per-mile fuel cost of a comparable conventional vehicle ($0.10-$0.15/mi) and multiply by the number of miles that you would drive in a year or in the life of a car. You can also estimate the life-cycle costs of owning an electric vehicle and compare those to a conventional vehicle using the Vehicle Cost Calculator found at afdc.energy.gov/calc. All of these calculations assume volatile gasoline prices will stay low. Perhaps they will. Perhaps they won’t. Electricity, on the other hand is typically regulated by Public Utility Commissions. Petroleum prices are not regulated and often swing due to changes in global markets and politics.

One interesting feature of the low marginal cost of electric driving is what economists call the moral hazard. Because it is so inexpensive to operate an EV, one is tempted to drive more miles and consume all the savings engendered by the high efficiency of electrics.