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Myths Regarding Electric Vehicles- #5 Cha-Ching!

(Joseph Gottlieb, CTO, Thursday, October 10, 2019)

Electric vehicle? No way! Do you think I am a millionaire or something?

A prevalent myth around electric vehicles is that they are unaffordable. Plain and simple, they cost too much. Even if you could purchase one, you will never afford the maintenance. Plus, you have to consider the cost of all that additional electricity.

Sure, a Battista will put you back a couple of million dollars and a comparable performance Telsa Roadster costs around $200k – but a Tesla Model 3 is about $36k. The average price of a new car in the United States is around $35,000. There are many electric vehicles available below that average price including the Nissan Leaf and Volkswagen e-Golf. There is a federal tax credit for purchasing an electric vehicle, ranging from $2500 to $7500 depending on the size of the vehicle and its battery capacity.

Owners do pay 21% more for car insurance because electric vehicles cost more to repair after an accident due to the cost of the battery pack. That should change as battery costs go down. A few years ago, batteries accounted for half the price of an electric vehicle. Today, they account for 33% of the total cost. By 2025, the cost will drop to 20% of the total.

An electric car is cheaper to maintain- no fluid changes or tune-ups, less moving parts to break, simple one-speed transmission results in less wear and tear, and battery packs generally have a warranty of 8 years or 100k miles.  In fact, a 2018 study from University of Michigan’s Transportation Research Institute found electric vehicle cost half as much to operate as gas powered vehicles, $485 per year versus $1117. On average, electricity is less expensive than gas and electric vehicles are more efficient than gas powered vehicles.

The electricity cost analysis isn’t always completely straight forward, depending on how the utility charges. Electricity costs vary from 9.3 centers per kilowatt-hour in Louisiana to 32.3 cents in Hawaii. However, Hawaii also has the second highest gas prices in the country. Southern California Edison has a triple-tier, consumption-based plan ranging from 18 to 37 cents. One plan charges separately for EV charging but requires a separate meter that costs over $1000 to install. If the vehicle has a small battery, homeowners can charge the vehicle on standard household current. Charging stations charge by the hour, so the cost is higher for a car with a slow onboard charger. On approach is solar panels to cover that extra expense. And, with the sun always shining and the cost of electricity not dropping in southern California, solar panels could pay for themselves quickly and may be necessary to mitigate costs – with or without an electric vehicle purchase.

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