Are EVs cheaper to own?
In a new study conducted by Energy Innovation, a policy and technology LLC, EVs were found to be cheaper off the lot in most states than gasoline-powered vehicles despite their typically higher sticker price. In Q1 of 2021, nearly 81% of new-car buyers chose to finance their purchases, while 34.5% of used-car buyers did the same. While the monthly payment of a car note is a burdensome expense for many Americans, the true cost-savings of EVs over the course of their life means that a higher monthly payment via purchase of an EV can actually save you money in the long-term. The numbers don’t lie, even if Big Oil wants you to believe that EVs aren’t affordable for the average American.
Energy Innovation’s study conducted various vehicle comparisons, such as the Hyundai Kona SEL and the Ford F-150, both of which have EV versions currently available that were found to be “cheaper to own per month in every single state.” For instance, the Kona SEL (non-electric) had an MSRP of $24,745 in comparison to the Kona Electric SEL which had an MSRP of $35,245. Despite this large price tag difference, when the monthly ownership cost during the financing term was calculated, the Kona Electric SEL averages $676/month while the Kona SEL averages $739.5/month. The same trend also holds true for the Ford F-150, although the margin with the F-150 and the F-150 Lightning Pro is a bit smaller than the difference saved with the Hyundai Kona Electric SEL and its non-electric counterpart per month. While these model comparisons consistently favored the electric models, other models that were compared didn’t have the same consistency in value. With the price of electricity vs. gasoline and incentive program offerings differing between states, the savings for other electric cars before loan repayment were variable by state.
These monthly savings quickly accrue over the course of a year, sometimes up to thousands of dollars saved. For instance, the Hyundai Kona SEL “is nearly $800 less a year than the gasoline version, and the Ford F-150 Lightning Pro is nearly $1,400 less a year” (before loan repayment). These annual savings, while important in their own right, become even more relevant when that aforementioned financing is taken into account. The study also looked at monthly ownership costs after loan repayment, which is where savings take off: after completing their loan repayment, “consumers save on average anywhere from $1,500 to $2,000 per year” depending on state-vehicle combination, with some combinations of car model and state of residency generating savings as high as $3,000 per year. This is markedly higher than the $800 and $1,400 savings of the Kona Electric SEL and Ford F-150 Lightning before repayment; the monthly cost of the Kona Electric SEL after repayment is $245 whereas the Kona SEL (non-electric) is $375 per month after repayment. Multiply that $130 difference by 12 months and you get $1,560 average savings after loan repayment over the course of a year in addition to the savings accrued before the loan repayment. In fact, after repayment of the financing loan, all models compared in the study were less expensive per month when choosing the electric version for every single state. If that doesn’t tell you the true cost of EVs, then maybe this will:
In another Consumer Reports study conducted in 2020, analysts found that “owning an electric vehicle will save the typical driver $6,000 to $10,000 over the life of the vehicle.” When examining how EVs save drivers money, they found that EV owners “are spending half as much to repair and maintain their vehicle as owners of gas-powered vehicles.” These maintenance savings come from the fact that electric vehicles don’t have internal combustion engines which require regular maintenance in the way of oil and other fluid changes. Additionally, an internal combustion engine has a lot of moving parts: pistons, a transmission, all the shiny bobbles and bits that go ‘round. A battery pack lacks all of these moving parts, meaning that there are less likely to be things that break from wear and need to be replaced. The repair and maintenance costs for one of these gas-powered cars with a traditional engine was found to be $9,200 over the life of the vehicle, which is double the battery electric vehicle (BEV, traditional EVs) and plug-in hybrid electric vehicle (PHEV) lifetime costs of $4,600 each. Taking the difference in maintenance costs with your average fuel savings in most states and you can see why EVs are becoming the obviously logical option for buyers. Add in the $7,500 federal incentive for an EV purchase, plus any state incentives, and the numbers start to run away with themselves for the overwhelming majority of states in the country.
With 48% of respondents in an Autolist survey administered earlier this year saying EVs are too expensive, these figures become integral to accurately assessing and communicating the true cost of EV ownership. A 2020 Consumer Reports survey found that 71% of respondents said they had at least some interest in getting an EV at some point, with 31% saying that they would consider, or would definitely get, an EV for their next lease or purchase. That same study also asked “all drivers except the 4% who definitely plan to buy or lease an electric vehicle next, which, if any, of a set of attributes are holding them back.” The choices, of which a maximum of 3 could be chosen, were as follows:
- Not enough public charging stations (48%)
- Purchase Price (43%)
- Insufficient driving range (42%)
- Don’t know enough about EVs to buy one (30%)
- Nowhere to charge it at home (28%)
- Long charging times (21%)
- Lack of options among plug-in electric models currently on the market (14%)
- Higher state registration fees for EVs (9%)
- Difficult to use technology (2%)
- Other (6%)
With the second most-selected barrier to EV ownership being the purchase price, we can see how the higher initial price tag of EVs is easy to spin or misinterpret as meaning the cars themselves are always more expensive. However, by taking into account all associated costs, it’s easy to see which direction the car industry will continue to head and which direction is going to hurt your wallet more.
The question to you, reader: Now that you know all of the facts and figures, are you going to make the smart choice and go electric?