Tesla and other electric vehicle (EV) producers are in the news again as final 2020 sales have been made public. This, coupled with the car-buying boom, may have you inspired to explore new wheels and to adopt an all-electric way of life. Whether it is a Tesla or another manufacturer’s EV model, it’s natural to want to conduct a cost exercise to see if an increase in sticker price will be offset when factoring in fuel, repairs, insurance, and even a tax credit.
We’ve detailed four questions to ask, should you find yourself considering entering the world of electric vehicles.
Will my savings at the pump offset the initial costs over time?
Your EV certainly won’t go anywhere without power. However, you may have to dive a little deeper to understand the costs associated with charging an EV. The first steps are looking into:
- Mileage offered: A large push in the EV market right now is getting more mileage out of an EV battery. For EVs, you’ll find this is discussed as the vehicle’s “range” instead of its miles per gallon. However, the Environmental Protection Agency (EPA) requires car manufacturers to also include what’s known as MPGe, or “miles per gallon gasoline-equivalent.” Be sure to put measurements into terms you can simply understand, as it’s imperative to know the maximum number of miles your EV will travel after a full charge. The U.S. Department of Energy (DOE) also offers a helpful EV cost calculator that lets you search its database for specific vehicles and their associated gas mileage.
- Home-based charging stations: MPGe and total range are a moot point if the cost to charge the vehicle is more than that of a gas vehicle. Thankfully, you can charge most EVs for less than the cost to fill a car with liquid fuel, especially if you charge your EV at home rather than using a fee-based charging station.
- Public charging stations: If you’re primarily utilizing charging stations, you may find your gas savings start to diminish fairly quickly. Some public charging stations are free, but others have both per-minute fees and kilowatt-hour (kWh) fees. A charging station that costs $0.79 per kWh is likely not going to give you the cost savings you really want if that’s the only option you have to charge your vehicle. Environmental benefits aside, if saving money is your end goal, you’re likely better off using a residential charging station for the majority of your EV charging.
Will an electric vehicle actually increase my insurance costs?
As noted by Pacific Gas & Electric Corp., you could save thousands in fuel costs within five years with many popular EVs. But there is a drawback for EVs, and that’s the higher insurance rates. Most EVs simply cost more money to purchase. Pricier cars almost always have pricier insurance. That being the case, if you want an EV, you may need to consider purchasing a lower-priced model to avoid the higher insurance rates that could eliminate the fuel-saving benefit of owning the vehicle.
For example, the average annual insurance premium for a Tesla Model Y is just under $3,100. For the Tesla Model X, the average creeps up over $5,100 annually. Meanwhile, the mileage range difference between the two vehicles is potentially less than 50 miles. If you’re more after long-term fuel savings and a vehicle that is environmentally friendly, a cheaper EV model might be worth it.
Do EVs cost more to repair?
Contrary to popular belief, EVs are less expensive to own in the long term, even when you consider repair costs. A 2020 Consumer Reports study found that the cost to repair and maintain a battery electric vehicle (BEV) is roughly half the cost to repair and maintain an internal combustion engine (ICE) vehicle. That remains true up to 100,000 miles of usage. Even up to 200,000 miles, BEVs are still around 47% cheaper to repair. Some of this relates to driving habits. Even plug-in hybrid vehicles have lower average lifetime repair costs compared to gasoline models.
Will I be able to easily adjust to driving an EV?
Some potential EV buyers might be concerned about the highly technical nature of an EV. Especially when driverless features factor in, the EV may seem less approachable compared to a traditional gasoline vehicle.
The good news here is that you don’t need to worry about going it alone. Most companies selling EVs offer vehicle training to ensure you know how to operate your vehicle. If you purchase an EV from a dealership, the sales representatives should also be able to walk you through the features.
We’re currently entering a new age of EVs. Not only are purchase prices dropping, but mileage ranges are increasing and maintenance costs are falling. An EV might be priced higher than a gas model, but the long-term benefits of owning an EV are greater than ever.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
© 2022 Newsmax Finance. All rights reserved.