Are electric vehicles affordable?
Many people overestimate the cost of an electric vehicle (EV). In fact, switching from a gasoline powered vehicle to an electric one means lower costs of vehicle ownership for everyone, including middle-class and low-income families. What’s more, it provides healthcare cost savings, especially for families living near busy roads, by reducing risks of asthma, heart and lung diseases, and other vehicle-emissions-related health problems.
Let’s break it down:
First, EV battery costs are dropping. Electric vehicle prices are largely determined by the cost of the battery. As technology improves and EV production increases, EV battery costs have been steadily falling, and are expected to keep falling:
Because of this drop in battery costs, financial analysts predict that the purchase price of new EVs will be the same as (or less than) comparable gas cars by 2025 or earlier, even without incentives and subsidies.
Purchase and lease prices for many EVs are already competitive with gas cars: The average price of a light-duty (gasoline-powered) vehicle is $37,590, according to Kelley Blue Book. Many electric vehicles have a lower list price than that, including the Nissan Leaf ($30k), Hyndai Ioniq Electric ($30k), Volkswagen eGolf ($32k), Fiat 500e ($33k), Kia Soul EV ($34k), Tesla Model 3 ($35,400), Chevy Bolt EV ($36,600), and Hyundai Kona Electric SUV ($36,900). Subtract another $7,500 for the federal tax credit and $2,500 for the state rebate (in California), and these EVs are in the $25,000 range. Also, average prices are already lower for electric vehicles in certain luxury vehicle segments and the mid-size SUV crossover segment.
Gasoline vehicle bans in other countries will further drive EV costs down. More than 15 countries have announced plans to stop selling new gasoline vehicles as of a certain year (the first is Norway in 2025). China is leading an electric vehicle revolution. In response, most automakers are already committing to electrify their fleets. As automakers increase production to serve the growing global demand for EVs, they’ll gain economies of scale. This will enable them to lower their prices to compete for market share.
Additional factors are making total cost of EV ownership more affordable to own than gas cars today:
Electricity is cheaper than gasoline – according to the US Department of Energy, average electricity costs are half those of gasoline. Click here to compare costs in your state. Even assuming you pay extra to charge at public charging stations 20% of the time (such as when traveling longer distances), fuel costs are still less than for gasoline.
Eleven states provide discounted electricity rates for low-income customers, reducing the price of fueling an EV even further. For instance, California utilities offer a 30% to 35% electricity rate discount.
Electricity will continue to be cheaper than gasoline. Electricity is highly regulated and locally generated from a variety of sources. Electricity prices have been largely stable (around $1 per gallon equivalent), and are forecast to remain so, especially since renewable sources, which are the majority of new electricity generation coming online, are cheaper than existing fossil fuel sources. Also, a large-scale move to electric vehicles would likely reduce electricity rates to all electric utility customers.
The price of gasoline, in contrast, has fluctuated wildly based on a variety of global political, economic and environmental factors, and will likely rise again. In case you’ve forgotten, here’s a graph showing gasoline price’s wild ride:
There’s less maintenance: EV maintenance is cheaper because EVs have far fewer moving parts, don’t require oil changes, and don’t have timing belts, fan belts, spark plugs, head gaskets, cylinder heads, air filters exhausts, transmission fluids or mufflers. Additionally, EVs have regenerative braking that uses the electric motor to slow the car rather than the brakes, allowing further savings on brake pads and rotors.
EV batteries are made to last. EV batteries are typically warranted for 8 years/100,000 miles, but some EVs have already traveled more than 350,000 miles on a single battery. It’s estimated that current batteries will last for 500,000 miles, and Tesla has disclosed details of a new, 1 million-mile battery. When this is factored into the total price of the vehicle, the EV comes out much cheaper than a gas-powered car (that may last up to 200,000 miles, if you spend the money on regular maintenance). If the battery does wear out, buying a new one is the effective equivalent of getting a new EV — unlike a gas vehicle, whose mechanical parts will continue to fail with age.
Low income families get extra discounts on purchasing and leasing: In California, families making less than 300% of the federal poverty rate are eligible for a rebate of up to $4,500 on the purchase or lease of a new EV. California’s Cash for Clunkers program offers an additional $1,500 to low income families retiring an old, polluting vehicle. Last year, the city of Los Angeles launched an EV car-sharing program for low income residents. A Sacramento pilot is challenging the idea that EVs are only for the rich.
Used EVs are cheap and getting cheaper: In many parts of California, used electric vehicles such as the Nissan Leaf can be had for well under $10,000. Low income families in the California Bay Area can get $5,000 off the cost of a USED EV, AND a free charger with home installation, under the new Clean Cars for All program. Low income drivers in Marin County can get an additional $3,500 off the price of a used EV. With more sales of new EVs, the market for used EVs will continue to grow.
Despite what oil companies may say, moving from gas cars to EVs will mean money back in your pocket -- and you can even start saving today.