Do You Know What It Really Costs to Drive an Electric Car?

Speaker 1: We all know the basic math, right? It costs like a hundred bucks to fill up a gas tank these days, or only $12 to recharge a long range. EV no brainer, right? Where's the electric car dealer. Take me there, hold your horses. It's not that simple Speaker 1: [00:00:30] To drive an EV you've gotta buy an EV that's a huge amount of money up front to start saving money at, you know, tens of dollars at a time per recharge. Don't ignore it. I know a lot of people, smart people who wanted to get a more fuel efficient car. So they ended up getting a, you know, a hybrid version of what they drive. What have you. And I told them, you know, it's gonna take you basically forever to break even on this car, but they were so in love with the concept [00:01:00] of spending less on fuel going forward, they forgot that overall they're spending more on transportation in the mid and long term. Don't make that mistake with an EV. Now a lot of folks are gonna buy an EV of course, not just to save money on getting around, but to save the environment a noble aspiration. But think about what else you could do with that money. You're pouring into an electric car. Maybe you keep the one you've got that isn't so efficient, but put your money somewhere else to help [00:01:30] the environment. It's just an option. In any case, be clear-eyed about any fuel efficient or electric car you buy and reckon with the idea that you start off behind the eight ball, because you're putting a huge amount of money into the prospect front, Speaker 1: Ah, depreciation, a topic that is dry as a stick, but so important and even more so [00:02:00] with electric cars, this is the second price of any car. You know, what you pay for the car, but depreciation is this other great, big number that is also what you pay for a car. And I can't tell you how much people ignore this to their own major financial peril. The basic concept is that any late model or new car you buy drops like a stone in value for years, five to seven years, at least, and EVs do so even more pronouncedly because their new technology and as they get [00:02:30] made obsolete more quickly, they're worth less, more quickly. Speaker 1: For example, Subaru, which isn't even known for electrified cars has an average resale value of 66% retained after five years, according to car edge. So if you bought a $35,000 new Subaru, the depreciation will cost you $12,000 over the first five years or about $7 a day. Compare that to a Tesla, which car edge predicts will hold just [00:03:00] 58% of its value after five years. And of course costs more. So let's say you buy a $60,000 model three that'll cost you 25,000 in depreciation over the first five years, that's about $14 a day or more interestingly, nearly a hundred dollars a week. Just about the same amount of money you're saving by not using gas. Speaker 1: Then there's the battery. This is unique to EVs because they are much more [00:03:30] likely to need a full battery replacement sometime in their life than a combustion engine car that is very unlikely to need an engine replacement in its life. Now that said, the whole concept here remains a little hazy, partly because EVs haven't been on the road all that long. We don't have a great base of data of how they age out and need a battery pack replacement, nor has there been enough time for there to be a really vibrant market of those who will sell you and replace the battery shops and vendors and [00:04:00] such. It's very green right now. So I'm not gonna put any hard numbers on this, but very generally a new battery's about 10 grand for most electric cars. Just stick that over in the corner of your mind. It may not happen on your watch if you have the car for 3, 4, 5 years, but it will affect the depreciation during your watch because the next owner and the market knows that they're gonna get stuck. Making that big swap That said, I have a 100% [00:04:30] workaround for you on this whole battery packed replacement, nervousness. Don't sweat your range so much. See my other recent video to give you a reality check on what kind of car range you really need in an electric. It may be so little that you actually could drive a highly worn out electric car made years ago and have plenty of range for everyday use. Speaker 1: Okay, now let's get down to some real tactical stuff. What does it cost day to [00:05:00] day to put gas in a car versus volts into an electric car? And the big concept here is that it varies a lot more than gas to gas cars. Sure. Gas prices vary station to station corner to corner, but they vary about this much, the price to put electricity in your EV can vary this much. And that's based on where you charge when you charge, what kind of rate plan you might be on. Do you charge at home or do you go out to a commercial charging location? Speaker 1: For example, if you charge at home in California, [00:05:30] where I am, we average 18 cents per kilowat hour in Idaho, it's 8 cents, but in Hawaii, it's 28 cents. That would be like paying $5 a gallon in California, but only two 50 a gallon in Idaho, but $8 a gallon in Hawaii. You don't see that kind of variation around fuel prices. They're more like this. Electricity's kind of a wild west. I like to go to fuel economy.gov for a quick comparison between any two cars, gas or electric, let's say you were to compare [00:06:00] a BMW, three 30 I all wheel drive versus a Tesla model, three long range. It looks like. So check out the difference in energy cost over five years, a no brainer to buy the Tesla, right? Except that tool leaves out a few key factors. According to a recent study by Anderson economic group, your cost of electricity. Speaker 1: If you charge at home based on where you live, the rate scheme you're on in the time of day or the cost of charging at a commercial charge location, like a mall or a parking garage [00:06:30] where you're buying marked up voltage, then there's the cost of your time waiting for a charge it's not free. Even though car makers love to say, oh, look a half hour charge every once in a while. What a great time for you to get a coffee or grab some lunch. I don't want my car scheduling coffee or lunch. That's my business. And the time I have to spend doing that charge, I need to pay myself for it. And the time and electricity you spend getting to, and from a charge, if you don't do it at home. [00:07:00] So somewhere between the rosy picture you might get@fueleconomy.gov and the harsh reality check that the Anderson group talks about somewhere in there is a very interesting story that makes it not such a black and white drop dead obvious choice. So to answer the question we started with it either costs a lot less the same, or potentially more to drive an EV than a gas engine car, not real satisfying, right? Overall, I want you to make the right [00:07:30] decision on EV versus combustion car based on your interests, your motivations and your finances, and not necessarily looking for a macro answer. It doesn't need to be the one that drives you. I've given you the factors to figure out what makes sense for you. Go do your thing.