Yes, electric vehicles will be affordable by 2040.
(They already are.)
I just leased a 2018 Kia Soul EV (Electric Vehicle) for $5 a day.* That’s less than many people pay for their smart phone, cable service, or their Starbucks habit. If I wanted to buy instead of lease, I could have picked up a used Nissan Leaf EV for less than $7,000. **
And yet, in response to the introduction of a California bill*** requiring model-year 2040 and later cars be zero emissions, oil interests claim that EVs won’t be affordable for lower and middle class families by 2040.
Seriously? In 22 years? There’s just no evidence of that.
On the contrary, by every indication, making the switch from gas cars to EVs would result in lower costs of vehicle ownership for everyone, including middle-class and low-income families. What’s more, it would provide healthcare cost savings, especially for families living near busy roads, by reducing their incidence 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, even without incentives and subsidies. Some predict price parity will come as early as 2020 or 2022.
Second, the bans on gasoline vehicles in other countries will ultimately drive EV costs down. Many countries, including India, France and Great Britain, are banning gasoline vehicles by 2030 or 2040. China plans to lead the 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 EVs more affordable than gas cars even today:
Electricity is cheaper than gasoline – In California, average fuel savings are $752/year with electricity instead of gasoline; it costs around half as much to fuel an EV. 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.
California utilities offer a 30% to 35% discount on electricity rates for low income customers, reducing the price of fueling an EV even further.
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.
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, and drivers have reported going more than 100,000 miles with less than 8% battery degradation. If the battery wears out more quickly than it should, 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).
Purchase and lease prices are already competitive with gas cars: For new EVs, the average purchase price dropped 11% from 2016 to 2017, to $34,000 -- slightly less than the average price of all new cars. For certain EVs, the price is already less than the equivalent gas model after federal incentives (up to $7,500) and rebates (up to $2,500). In 2018, many new EVs are priced around $20,000 after incentives and rebates. EV lease deals are competitive as well, at around $4 to $10 per day.
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. With up to $7,500 in federal tax incentives, the discount can be as high as $12,000. California’s Cash for Clunkers program offers an additional $1,500 to low income families retiring an old, polluting vehicle, for a total discount of up to $13,500. Last year, the city of Los Angeles launched an EV car-sharing program for low income residents.
Used EVs are cheap and getting cheaper: In many parts of California, used electric vehicles can be had for well under $10,000. 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 in 2040 will mean money back in your pocket -- and you can even start saving today.
*2018 Kia Soul EV at $3,268 down, $139/month for a 36-month lease, including all taxes and fees at Winn Kia of Fremont. I’ll get $3,000 in rebates -- $2,500 from the state of California and $500 from PG&E. Range is 120 miles/charge city, 95 miles/charge freeway. For about $7/day, I could have leased a Chevy Bolt EV, which gets 238 miles/charge.
**Search results from www.cargurus.com for used Nissan Leaf EVs near me, 2/12/18:
*** AB 1745, the Clean Cars 2040 Act, would require that, starting with model-year 2040, passenger vehicles must have zero emissions. People could buy, keep, or sell their model-year 2039 and earlier gas cars without restriction.