Buying a new electric car is not nearly as profitable as it might seem at first glance. Those looking to replace a traditional vehicle with the increasingly popular zero-emission cars should brace themselves for a price shock. But not when buying, but when selling.
Electric vehicles (EVs) are more efficient than gasoline or diesel cars and provide owners with significant operating savings ranging from a few hundred to several thousand dollars a year. The amount depends on the type of vehicle when comparing the cost of using electricity from the grid and filling up fuel at a gas station.
Electric vehicles are cheaper to repair and maintain. But the money saved, including a $7,500 federal tax credit in the first year of purchase, doesn’t make up for the EV’s appalling depreciation. EVs lose value in the US market by an average of $5,704 per year in the first five years of operation, i.e. about $28,500 in total, against a market average of $3,172 per year, or about $16,000 over five years.
Electricity costs remain one of the most attractive performance metrics for electric cars. With an average US cost of electricity of 12.6 cents per 1 kWh, EVs cost the owner an average of 3.68 cents per mile, with market averages of 10.26 cents per mile and 5.59 cents for hybrids ( Ford Fusion, Toyota Prius, Toyota RAV4, Hyundai Sonata, and Honda Accord). In comparison, fuel costs for one of the most popular vehicle types in the local market—full-size pickup trucks (Ford F-150, Chevy Silverado, Ram 1500, Toyota Tundra, and Nissan Titan)— cost the owner an average of 13.88 cents per mile.
To avoid unnecessary expenses, most car experts recommend buying used electric vehicles. The downside of depreciation is that a second or third owner of an EV will actually save money. While the upfront costs of EVs can still be high, the cheap maintenance and fuel make them a really affordable choice in the long run. Even though most used EVs have less range than fresh models, the selection is still good at large car dealerships, like Indy Auto Man in Indianapolis.
The battery has always been considered the main and most significant source of costs in an electric vehicle. However, modern batteries are reliable and designed for continuous use. Even after 4-5 years, EV power plants still hold 90% of their original capacity. Also, many manufacturers give a warranty on batteries. In the US, this warranty is 8 years or 100 miles. Nissan says the Leaf retains 75% of its original battery capacity even after 120,000 miles. Elon Musk claims that after 200,000 miles, Tesla will lose no more than 10 percent in battery capacity.
Moreover, battery prices are declining due to rapidly growing demand for electric cars and increased production volumes. Prices are expected to fall by 45.7% in 2022, to a round value of $100 per kWh.
There is no point in overpaying for a new electric vehicle anymore. Even if the time comes to replace the battery, a used car will still be a more profitable purchase.