Electric Vehicles… are they really that expensive?
Updated: Aug 3
Recently, the UK’s official climate advisers, recommended a ban on petrol and diesel cars by 2032, three years earlier than originally set out. This news, along with the fact that, according to Bloomberg Green, 'market gloom over the metals that will power the cars of the future is starting to lift' and combined with how battery technologies are continuing to get cheaper, all bodes well for the future of electric vehicles.
While shorter-term forecasts have been reduced, the longer-range predictions remain impressive. Bloomberg NEF predicts global electric-vehicle sales will return to growth over the next few years, rising from 2 million last year to 8.5 million by 2025, then climb to about 26 million by 2030. What about electric car sales in light of the COVID-19 pandemic? After a drop in April (-16%), the European passenger plug-in vehicle market rose back up in May, having scored 46,800 registrations (+23%), a great performance considering the overall market is still recovering. Last month’s plug-in vehicle shares were at 7.5% of the total car market (3.8% fully electric). That is more than doubling the 3.6% result of 2019. Overall, great news for the future of electric vehicles! We love to write about good news in the environmental innovation sector!
But now that electric vehicles are becoming steadily more popular by the day, and cheaper to produce, we wanted to revisit the price of investing in one. While the idea of an electric vehicle sounds appealing because of their environmental benefits… How much is buying one going to cost you?
It has been demonstrated that choosing an EV ('electric vehicle') over a conventional, internal combustion engine (ICE) vehicle can result in significant long-term savings, depending on certain factors.
The most apparent difference between EVs and ICEs (traditionally fuelled vehicles) is their fuel source, and what the consumer uses to power their vehicle. ICEs run on gasoline, burned internally to power the car, and EVs run on electricity. Electricity can come from a variety of sources, from the burning of coal or gas, or renewable sources such as solar, wind, and hydropower.
According to Quartz, the average cost of a new car in June 2019 in the U.S. was $36,600. Whereas the average cost of an electric vehicle decreased from $64,300 to $55,600: a 13.4% decrease from the year before. But even though the initial price of an EV may be higher, according to the U.S. Department of Energy, the cost of fuelling an electric vehicle is about half the cost of fuelling a gas-powered car, with an electric eGallon costing $1.24 and a gallon of gas costing $2.64 on average.
A 2018 study from the University of Michigan’s Transportation Research Institute determined that EVs cost less than half as much to operate as gas-powered cars. The average cost to operate an EV in the United States is $485 per year, while the average for a gasoline-powered vehicle is $1,117.
The price difference depends on gas and electric rates where you live, and the car you drive. If you’ve got a fuel-efficient car, they are designed to maximise their miles per gallon (mpg) rating, thus costing the least amount of money per mile travelled.
While you don’t pay a gas pump-type fee every time you charge your EV battery, the electricity that is used does count towards your home electric bill. But here’s some more good news: Using the USA's Department of Energy’s eGallon tool, you can directly compare electricity and gas costs when running an electric car vs. a conventional gas-powered car! This calculator is updated regularly, and compares the cost of driving a mile on gasoline vs. a mile on electricity, depending on where you live and energy prices at the time. Generally, the cost of electricity is decreasing in price, as renewable power generation costs fall lower and lower with advancements in technology and policy. Another great study that demonstrates that people generally save money investing in EVs is here.
Next up: Maintenance costs. With ICEs, engine maintenance can be a huge money drain, especially as cars age. If you’ve got an older car, you’ll know what we mean. Between changing the engine oil, coolant, transmission fluid, and belts - you’re in for a lot of bills over the years in maintaining your car. By comparison, electric vehicles generally fare better, as they don’t have internal combustion engines, so these costs almost disappear. Universal vehicle expenses like tire and brake changes, insurance, and structural repair are part of owning any vehicle, but EV owners avoid many of the repeated costs associated with combustion engine upkeep.
EV maintenance can still be expensive, however. The largest possible maintenance expense for an EV is usually a replacement battery pack. EVs have large, rechargeable batteries that are drained and recharged constantly, not unlike a cellular device or laptop, which leads to degradation and range loss over time. The vast majority of EV owners won’t have to replace their car’s battery, but it is a risk you run when operating an electric car.
So, what are the benefits of owning an electric vehicle? In the US, there is a wealth of federal and state incentives available. These rebates help to offset the generally higher up front costs of an electric car to make “going electric” more financially desirable and feasible. You can learn more about federal and state EV incentives in the US here! Some areas are introducing Clean Air Zones with fees designed to discourage polluting vehicles from entering certain areas. A key benefit of an electric car is being exempt from these charges.
Here’s another cost benefit: In London, once registered, electric car drivers can travel in both the congestion zone and the new Ultra Low Emission Zone for free. If this is a journey that you make often, the cost savings can be enormous. The Ultra Low Emission Zone for example costs £12.50 a day for cars. In a normal working year that could save a motorist as much as £2,875 on top of any fuel savings. As more and more cities consider introducing similar schemes, a switch to electric could be more advantageous right across the UK. In total, an electric car owner driving in London could save up to £2,875 a year in ULEV zone fees.
So, there you have it. The costs of electric vehicles, and the materials used to produce them, are steadily falling. While the upfront cost of investing them can be more costly than a diesel or petrol powered car, the long term investment is less costly and choosing an EV, depending on where you live, can be a strong financial decision.
Don’t forget to check out our app - we can help you calculate your monthly guideline CO2 allowance, based on recommendations from the Intergovernmental Panel on Climate Change, then balance emissions at the end of each month through verified nature-based offsets. Simply search “carbon print and CO2 tracker’ to find us in your app store!