Econ 101: Why I’ll Never Buy A Gas Car Again

Unless really necessary I wouldn’t buy a new gas-only car—one with an internal combustion engine, or ICE. I’d either purchase something with a plug or wait until there was a plug-in option for what I want. This isn’t a green decision, but a financial one based on operating costs and resale value.

A plug-in electric of any sort will likely cost at least $1,000 less per year to operate just in fuel savings. Let’s pretend we don’t know any of that though and buy a Subaru Forrester for $30,000. It’s had great reviews, gets good gas mileage, and historically has had good resale value.

Subaru Forester (Photo: Subaru of America)

Subaru Forester (Photo: Subaru of America)

Now let’s look four years down the road to 2020. We’ve enjoyed our Forrester but want something different so it’s time to sell it and get something new. Likely a battery electric vehicle, or BEV.

Ella is looking for a new used car. She’d like to spend about $15,000 or less but she also wants something fairly nice, so she’s thinking a used car about four years old should do it. She’s narrowed it down to our Forester and a Chevy Volt. Each cost $30,000 new in 2016, have been popular cars with good reviews, and have the features she wants. And each should be about $15,000 after four years of depreciation.

However, annual operating costs are a much bigger chunk of a $15,000 car than a $30,000 car. When the difference between cars was simply better gas mileage, this wasn’t too significant. Electric creates a much greater difference though, and thanks to articles on streets.mn and friends who’ve bought plug-in electric vehicles, or PEVs, she’s become more aware of this over the past couple of years. She’s also a lot more comfortable with the idea of an electric than she was in 2016.

Assuming she can drive the Volt on electricity for 80% of her miles then her operating costs look like this:

Screen Shot 2016-04-05 at 6.25.20 PM

The Volt will cost her $2,517 less to operate over the next four years. If gas prices go up, even to just $3/gallon, then the Forester will cost $4,336 more to operate.

Does she like our Forester $4,000 more than the Volt? Not quite. She wants $3,000 off the Forester, valuing it at $12,000. Ouch, that hurts, but we swallow hard and agree.

“That poor guy trying to sell the Forester” she thinks. “Oh wait, what if that’s me in five years? Will anyone want to buy an old gas engine car in 2025? Will the Forester be worth anything?”

A mechanic friend says to stick with the Volt. It can be converted to all electric with 200 miles of range for not too much money but the Forester will always require gas which is getting harder to find and more expensive.

Ella really likes the Forester but it has to work financially. She offers us $9,000. We counter with $10,000, but she turns it down saying that buying an ICE is just too big of a risk these days.

Reality Check

How realistic is that? There will be a lot of people in 2020 who will look at it just like Ella did above. But there will also be some who won’t think about operating costs or future resale value. There will certainly be downward pressure on resale of gas only ICE cars, we just don’t know how much. How efficient are markets? How many people will fully realize the benefits of PEVs? How many won’t have figured it out by then?

The differences between gas and BEVs are even greater. Not just because of a greater difference in fuel costs but also because BEVs are simpler, will need no oil changes and possibly less maintenance. BEVs should also hold their resale value better.

At what point is an ICE that costs $1,000 to $2,000 per year more to operate than a BEV effectively worthless?

Here’s a quick stab at what new car depreciation might look like over the next 10 years. At what point is an ICE that costs $1,000 to $2,000 per year more to operate than a BEV effectively worthless?

The big question that’s hung over the BEV industry is how long the batteries will last and how much they will cost to replace. Indications after eight years of mainstream battery electric vehicle sales and over one million on the road is that they will likely last for the life of the car.

Who Gets It?

In the large luxury segment of the U.S. car market, the only segment with a truly competitive PEV, Tesla have gone from 6% of the market in 2013 to 17% in 2014 to 25% in 2015. What drove such unprecedented growth?

2015 was the second year in a row that it wasn’t good to be trying to sell a Large Luxury ICE. (Chart: Tesla Motors Forum, ChadS)

A good part of it came from people who want to be green, like fast cars, or want the latest and greatest. And, as Audi’s Stefan Niemand said, once they experienced an electric they didn’t go back to buy an ICE.

An increasing bit of the purchase decision though is financial—people including probable resale value in their decisions. How much will a 7-series BMW be worth in four years if the world is going electric? People don’t like feeling like a chump. More than a few new Tesla owners have said that they’d have preferred a more sedan-like vehicle such as a Mercedes S-Class but were concerned about resale in an electric future.

Tesla Model X (Photo: Autoblog)

Tesla Model X (Photo: Autoblog)

This year Tesla’s Model X will begin doing the same to the luxury SUV market. Tesla’s first quarter deliveries this year are up about 50% over Q1 2015 with 2,400 of those 14,820 vehicles being their new Model X. Competitors trying to sell ICE SUVs have already been stung with the next 14 months of Model X production, about 50,000 cars, already sold.

With so many used Tesla BEVs available in four years, what will the value of all of these used ICEs be?

Between Tesla with their Model 3 and other manufacturers trying to avoid the fate of those above we’ll likely see a bevy of competitive BEVs enter the market over the next few years in many industry segments. Pricing will also become much more competitive. The Chevy Bolt and Nissan Leaf have enjoyed a ‘BEV Premium’ but that won’t last against the Model 3 so expect prices on those and similar new entrants to be more affordable.

It’s gonna be a fun ride. I don’t think I’d want to be trying to sell an ICE in a few years though.


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37 Responses to Econ 101: Why I’ll Never Buy A Gas Car Again

  1. Tim April 6, 2016 at 10:37 am #

    Shouldn’t this comparison be for more similar types of vehicles? A Forester is rather different from a Volt, namely in that it has 4WD.

    • Tim April 6, 2016 at 10:40 am #

      My mistake; it’s AWD and not 4WD.

    • Walker Angell
      Walker Angell April 6, 2016 at 11:15 am #

      Does the car used for comparison matter? How? What car would you recommend?

  2. James Warden
    James Warden April 6, 2016 at 10:51 am #

    I’ll echo Tim’s comment about an inappropriate comparison. But even setting that aside, the electric vehicle market is going to have severe supply constraints for quite some time because there aren’t enough new cars on the road now.

    From Wikipedia (https://en.wikipedia.org/wiki/Plug-in_electric_vehicles_in_the_United_States):

    “The fleet of plug-in electric vehicles in the United States is the largest in the world, with about 410,000 highway legal plug-in electric cars sold in the country since 2008 through December 2015.”

    By comparison, there were 38.3 MILLION used car sales in 2015 alone, with 11.4 million used vehicles just at franchised dealers. So the electric vehicle supply is going to be inadequate until production really ramps up. As your chart shows, that will probably help BEVs’ value hold up well. But there will still be plenty of demand for ICE vehicles in 2020 simply because there won’t be any other option for the vast majority of people.

    • Walker Angell
      Walker Angell April 6, 2016 at 11:07 am #

      Possibly. How long with the manufacturers let Tesla eat their lunch? Will they sit around and let the Model 3 do to them what the Model S has?

      Might this be similar to the xition from CRT’s to flat screens where sales of CRT’s began tanking before enough flats were available as people waiting to make purchases?

      • mplsjaromir April 7, 2016 at 8:54 am #

        You overstate the importance of the Large Luxury Car market. It is a small and shrinking. For example large cars sales for BMW amount to 5% of its total US sales, 2% for Lexus. Cars in general are becoming less important to US auto customers, crossovers are king.

        No one is getting their lunch eaten. Tesla isn’t profitable unless one uses boutique accounting practices. Tesla’s volume amount to rounding errors for other manufactures. Ford sells 70K F-150s a month. Tesla is excellent at ginning up clicks but are far from being a major player in the car business.

        Electric cars have a bright future, but ICE will be around for a very long time.

        • Walker Angell
          Walker Angell April 7, 2016 at 11:08 am #

          How important is a canary in a coal mine? Nobody cares about the canary but they do care about what the canary tells them.

          I don’t disagree about the importance or size of the Large Luxury Car market though the numbers I’ve seen show it to have actually grown from the low years of 2009 – 2012 and over the past 10 years it appears to have been fairly flat as a percentage of the entire market. What’s important is that a pure electric car has, in a very short time, taken 25% of the market and is on track for about 30% this year. In the chart above the indication is that the other manufacturers all lost sales to Tesla not to crossovers as the total volume for the segment remained constant. If they’d lost sales to crossovers then the segment should have shrunk.

          Reality is likely a bit more nuanced though. They likely did loose some customers to crossovers but these losses were covered by people purchasing a Model S who otherwise would not have purchased a car in this segment. Anecdotally from reading forums there are certainly a lot of people who purchased a Model S instead of a Lamborghini or Ferrari as well as some who would otherwise have purchased a less expensive car but stretched to get a Model S.

          Today Tesla is indeed a rounding error to the bigger manufacturers. However, in 2020 they’re expected to account for about 2% of U.S. sales. Still small, but growing. If current trends continue (doubtful?) they would account for 12% of U.S. sales in 2025. I think they’ll be able to maintain 50% to 60% growth through 2020 but not after. No auto manufacturer is ignoring what they’ve done and all are concerned about what Tesla will continue to do if they’re not stopped.

          Tesla is a start-up and a start-up in an extremely capital and R&D intensive industry. Other auto industry participants can show profitability because they’ve had decades to amortize capital equipment. IIRC it took Amazon 20 years to become profitable. This is not unusual. Tesla’s investors are not too concerned and booking in excess of 300,000 reservations for the Model 3 didn’t hurt.

          • James Warden
            James Warden April 7, 2016 at 9:13 pm #

            I don’t think anyone is really disagreeing that this could be the canary in the coal mine. They’re just disagreeing with your timelines. The Tesla 3 doesn’t even go into production until 2017. Delivery of this (admittedly massive) preorder won’t start until late 2017 — with acceptance really ramping up in 2018. So you’re already a scant two years away from the 2020 start of your story before the Tesla milestone even starts to be felt on the ground. That’s not much time for the two major assumptions you have embedded here — that 1) Gas will be noticeably harder to find just four years from now and 2) only “chumps” will “buy an old gas engine car in 2025.”

            When Bloomberg took a look at it, they estimated that 35 percent of new vehicle purchases would be EV by 2040. Note that was in the context of a story about how ill-prepared the oil industry is for the coming oil glut caused by EVs, and their predictions for adoption were orders of magnitude higher than the petroleum industry. So we’re not talking shills of Exxon or OPEC here. They actually forecast an oil glut as early as 2023.

            http://www.bloomberg.com/features/2016-ev-oil-crisis/

            I’d also add that an oil glut would drive gas prices down and minimize some of the cost advantages of an EV.

            Admittedly, Bloomberg did a global analysis. U.S. rates would likely be quicker. But a wholesale change by 2025 is an extremely tall order.

            Personally, I’d be extremely interested to see you trace back your hypotheses to see what would have to be happen for them to come true.
            — At what point do ICE resale markets start to fall apart? Is it when 35 percent of new car sales are EV? When 35 percent of all cars on the road are EV? Something else?
            — When will drivers actually have problems buying gas? I’d guess it’d be somewhere north of 50 percent EV adoption in urban areas.
            — What growth rates would you have to have to hit those milestones by 2025? What about by 2040?

            Not being sarcastic here. I think it could really be an intriguing column.

            • Walker Angell
              Walker Angell April 8, 2016 at 9:21 am #

              The big question is how many Ella’s will there be in 2020? How many people looking for a two to four year old car in 2020 will view things through the same lens as Ella and either have a very strong preference for a PEV or will choose to wait until a suitable PEV is available? Who are only willing to buy an ICE if it’s discounted enough to make up for how much more its operating costs will be?

            • Walker Angell
              Walker Angell April 8, 2016 at 9:52 am #

              The Bloomberg article is talking about three growth rates. The most conservative, 30%, is the Bloomberg News Energy Forum (BNEF) conservative estimate and is half the 60% growth rate seen over the past three years. The author, Tom Randall, believes it will be greater and predicts continued 60% growth for a few years but then tapering off as he believes that rate is not sustainable for more than about 8 years.

              These are indeed global estimates. The U.S. is actually a laggard. We are well behind the curve of the OECD and countries like Sweden, Netherlands, and China who have much higher adoption rates of PEV’s. The question is if our growth rate will continue to lag, match the global 60% rate and so remain behind by the same amount, or will we grow faster and catch up to other developed nations?

            • Walker Angell
              Walker Angell April 8, 2016 at 10:14 am #

              Great questions. What are your (and others) thoughts on these?

              — At what point do ICE resale markets start to fall apart? Is it when 35 percent of new car sales are EV? When 35 percent of all cars on the road are EV? Something else?

              I think for the Large Luxury segment within the next year or two. People who purchase used LL are their own brand of value oriented. A Model S or X is very appealing in its own right but the operating costs begin to figure in for these folks who are looking for a LL car at a $35k price point. It is some of the folks purchasing new LL cars today who I think will feel like chumps when it comes time to sell and find the depreciation much greater than it has been in the past (some, like my neighbor, are doing so with full knowledge that their car will likely loose it’s value faster than in previous times but they want the specific car that they want, not a Model S).

              I think all passenger car segments will begin to feel it by 2020. ICE vehicles will be viewed more and more as old technology and people will be much more aware of operating cost differences. I think by this point some people will begin choosing to hold off on purchases until something with a plug is available.

              — When will drivers actually have problems buying gas? I’d guess it’d be somewhere north of 50 percent EV adoption in urban areas.

              Depends on what you consider a problem. I think we’ll begin to see noticeable gas station closures within the next two years. Many are already struggling and it won’t take much to put them under. Instead of the gas station down the street you may need to drive an extra couple of miles out of the way by 2020. A few years later that one will close and you’ll have to drive three miles out of the way.

              — What growth rates would you have to have to hit those milestones by 2025? What about by 2040?

              Chart to come.

      • Nathanael April 25, 2016 at 10:36 pm #

        You are correct. Sales of ICE cars will begin tanking in advance as people delay their purchase to wait for the upcoming electric car.

        We know because it’s *already happening*. I put off getting a new car for about 3 years longer than I really should have — incurring ultra-high maintenance costs — in order to wait for my Tesla Model S. Hundreds of thousands of people are doing the same thing waiting for the Model 3 — some are leasing Bolts or Leafs while they wait, but that puts further pressure on the market.

  3. cobo Rodreges April 6, 2016 at 11:02 am #

    I’ve been in a quandary my self about if I should get an electric car next. The numbers work out except the wild card known as “repair costs”

    I usually buy used old & heavily depreciated cars that are still in decent shape.
    My best guess is that the repair costs & frequency for an electric / plugin hybrid would be similar to an older bmw or saab or higher. Which are much more expensive (but more fun to drive, to me at least) than an older gm / toyota / mazda car.

    With my old saab the annual repair bill was about equal to 3/4ths of my fuel costs.

    With my current pontiac which has more frequent but less expensive repairs the annual repair bill is about equal to 1/2 of fuel costs.

    What would it be with a Volt? The pool of capable mechanics is smaller, and if you need to bring it to a dealership any savings could disappear instantly.

    • Walker Angell
      Walker Angell April 6, 2016 at 11:42 am #

      That will all be interesting to see. My guess is that most PHEV’s, especially those with a series design (vs parallel), will require somewhat less maintenance than an ICE as the engine will not run nearly as often.

      BEV’s like the Leaf, Bolt, and Tesla’s are expected to require significantly less drivetrain maintenance over their life. One concern though is that out of warranty this could be quite expensive as rather than individual component type repair they might require replacement of the motor. To counter this Tesla have an 8 year unlimited mile warranty and have been quite vocal that the motors are now designed to last over 1 million miles. If so we’ll see a lot of motor reused in multiple cars over the motors lifetime.

      I’d guess that over time if motor replacement becomes a thing that we’ll see a 3rd party motor rebuilding industry crop up. I don’t think I’d count on this being necessary though.

    • Nathanael April 25, 2016 at 10:40 pm #

      What you want is a used pure-BEV with a solid repair record.
      …unfortunately there aren’t any out there yet.

      Leafs have a bad record for battery degredation.

      The Tesla Model S will qualify (now that the “early off the production line” bugs have been worked out) but they aren’t *old* enough yet to be seriously depreciated. Frankly, I’d keep an eye on the market in 2021, when the early Model Ses will be out of the extended warranty period.

      If you were a do-it-yourselfer, I’d say do an electric conversion. Lots of people have had great success with that.

  4. Monte Castleman
    Monte Castleman April 6, 2016 at 11:05 am #

    I’d also question the comparison. The alternative to a Volt would be a compact car like a Chevy Cruze. A Forester has substantially more space and capabilities.

    As for batteries “lasting the life of the car”. What is “the life?”. It’s different for someone that leases a car and trades it in at 36,000 miles, and someone like me who buys a car at 150,000 miles and drives it until the body falls apart at 250,000 miles. Will a battery last 250,000 miles?

    • Walker Angell
      Walker Angell April 6, 2016 at 11:29 am #

      Yeah, car life is kind of nebulous. The Model S batteries loose about 2-4% of their capacity every 50,000 miles and for most people are expected to still have 75% of their capacity after 250,000 miles. This varies on how they are used though. Someone who averages 50 miles per day and mostly charges to 70% of capacity at home overnight will see almost no loss. The same person charging to 90% every night will likely see about 5% per 100k miles.

      Someone who travels extensively and does a lot of fast DC supercharging (400a @ 400v) and frequently charges to 100% of capacity may see much greater loss and have only 60% of capacity after 250,000 miles.

      There are several companies gearing up to reuse these batteries for storage systems such as for people who have solar arrays to provide power at night and for capacity smoothing for utility companies. There is a reasonable chance that the motors might be reusable as well, some without any work and some with new windings.

  5. Matt Steele
    Matt Steele April 6, 2016 at 11:24 am #

    This seems largely irrelevant for people who a) don’t drive much and b) find the idea of buying a new car as a ridiculous expense.

    I take a “mustachian” view of our “clown-like car habits,” but not to the extreme of Mr. Money Mustache himself. That said, we drive well under 10,000 miles a year, roughly half of which is non-routine driving (the occasional trip to the suburbs) or longer trips. And the idea of spending more than maybe $10,000 on a car to be notwise, and the idea of financing a $30,000+ car to be ridiculously financially disastrous.

    Let’s say I use 400 gallons of fuel a year (yikes, that sounds like so much!) at 25 MPG. At $2/gallon, that’s $800. $3/gal makes it $1200, $4/gal would be $1600. I just can’t imagine an electric car saving me $800-1600 a year, considering how much more expensive an electric car would be.

    • Walker Angell
      Walker Angell April 6, 2016 at 11:34 am #

      Agree. I think you’ll be one of the folks who’ll benefit from the significantly reduced value of ICE cars. 🙂

      My son was in the same boat as you. They eventually determined that carshare was a better option so sold their car and use carshare when needed.

      • Matt Steele
        Matt Steele April 6, 2016 at 11:55 am #

        I wonder how Mr. Money Mustache would re-rank his “Top 10 Cars” four years later, given the change in the industry. Would an EV make it? When he wrote this in 2012, most of the cars he was recommending were 3 to 6 years old.

        http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

        • Walker Angell
          Walker Angell April 6, 2016 at 12:10 pm #

          I’d think he’d recommend people hang on to what they have for a couple of years if possible and then take advantage of the expected low prices of used ICE cars in the coming years.

          I haven’t read much of his stuff, what does he say about skipping car ownership completely and riding a bike or using transit instead?

  6. Matt McCuen April 6, 2016 at 4:11 pm #

    I think it’s good to evaluate the costs/benefits of the different types of, but I fear that you haven’t fully researched these numbers. I’ll echo the comments that the Volt-Forester comparison is incorrect. You should compare the Volt to a compact sedan (Civic, Cruze, Focus, etc.), or the Forester to a C/D-segment plug-in SUV (C-max Energi, Outlander PHEV). I don’t have a chance to run the numbers now, but I’d suspect that the value proposition of the Volt decreases considerably when it’s compared to a 40mpg Cruze that costs half of what the Volt costs when new.

    Additionally, where did you source your chart of depreciation? Today, electric and plug-in hybrids have worse depreciation than their ICE-only equivalents. If you look at this WSJ article, you’ll see that in the period 2012-2015, a Volt lost 69% of its value when a Cruze lost 54%. Even worse, the Nissan Leaf lost 72% of its value when the equivalent Versa only lost 50%.

    Don’t get me wrong, I love EVs and really love the Volt. But your numbers don’t add up.

    • Matt McCuen April 6, 2016 at 4:14 pm #

      Sorry, forgot to include the WSJ link: http://www.wsj.com/articles/resale-prices-tumble-on-electric-cars-1424977378

    • Walker Angell
      Walker Angell April 7, 2016 at 7:53 am #

      Great points. My WSJ subscription is on another device that I don’t have with me so I wasn’t able to read it yet but I will later today. But, without reading it…

      Most BEV’s available in the U.S. including the C-max Energi are compliance cars and only exist as a technicality so that the manufacturers can continue to sell in the 10 ZEV states. For the most part little effort was given to any design element, including the drivetrain, and the cars largely show it. The exceptions are the Leaf, i3, and Tesla’s and even here the Leaf and i3 were originally labeled as experimental. Both have proven to be quite good cars though.

      The Leaf and i3 have both had quite high depreciation while the Tesla’s have had exceptionally low depreciation (recently the Model S was noted to have the lowest depreciation of any used car in the UK). I think this is largely due to public perception, and somewhat warranted IMO, of battery life. There were numerous articles stating that the batteries would only last 4 years before needing to be replaced at huge expense or that they’d loose 20% of their capacity every year. That will certainly give someone pause before plonking down a few grand.

      When that article was written over a year ago we were just beginning to see good battery life statistics. What we’ve learned since then is that the batteries will have a quite long life and many will even get reused after the car itself falls apart. There are also continuous improvements in battery management systems that are improving battery life even more.

      Used BEV’s, just like new ones, have had a hill to climb with public perception. I think we’re nearing the peak though as could be seen with the long lines to reserve a Model 3. Increasingly more people are becoming aware of and knowledgable about BEV’s. More and more people are becoming increasingly comfortable with the idea of a car that doesn’t use any gas. People are also becoming knowledgable about how to check the battery capacity on a used BEV and determine how good it is.

  7. Eric April 7, 2016 at 9:33 am #

    Is the general premise here that the secondary market for ICE’s will collapse? At the most optimistic, that pretty big claim is impossible to prove. Calling this post “econ 101” is a very “internet” thing to do.

    • Walker Angell
      Walker Angell April 7, 2016 at 10:28 am #

      Agree on all points. Adding Econ 101 was the only thing I could think of to convey that this was about money and not greenness.

    • Nathanael April 25, 2016 at 10:44 pm #

      The secondary market for ICEs will have a price collapse. (Not a volume collapse, but a price collapse.)

      I’ve been studying this for a few years, and Walker Angell has got this just about right, as far as I can tell. ICE cars have become an “inferior good”, which are chosen only for their cheapness, because ICEs are uniformly considered lower quality than EVs.

      This understanding has not penetrated the majority of the population yet, but it has penetrated the luxury market and the rest of the market won’t be far behind.

  8. Andy April 7, 2016 at 10:00 am #

    If memory serves wasn’t the reason the Volt was $30k new was due to a government subsidy? If I am correct it would benefit the argument to use the actual sticker cost of the Volt.

    My other question would be for longer trips; how do you refuel your car? I drive a hybrid now and would love an all electric car but until there is a solution for me to quickly recharge my batteries, consistent with stopping in for a gas fill, iin my opinion it is a hard sell at this point in time.

    Lastly electric rates are not stagnate and will go up. There are variables shown in the cost of gasoline but nothing on increased electric rates over the time span.

    • Walker Angell
      Walker Angell April 7, 2016 at 11:30 am #

      Yes, the Volt was originally about $39k less the $7,500 tax credit = $31,500. Today it’s $35k less $7,500. I’d guess that next year it will be closer to $32k less $7,500. The tax credit was intended to spur development of alternative fuel vehicles which would in their earlier years be more expensive than traditional ICE. The tax credit helps to bridge the gap and make PEV’s and other AFV’s more affordable. It should properly be included in depreciation because that is what was paid for the car, not the higher sticker price.

      The credits are limited to 200,000 units per manufacturer and will begin to phase out. I don’t believe they will be necessary after about 2020 anyway as BEV’s will likely have reached price/value parity with people choosing a BEV at manufacturers sticker based on the benefits of the BEV itself.

    • Walker Angell
      Walker Angell April 7, 2016 at 11:42 am #

      I should have included electric rate changes. My bad. Two thoughts though. For gas I showed 4 years @ $2 per gallon which would keep it flat so the same as electric being flat. For the $3 per gallon comparison we can also increase electric rates by 30% (very unlikely) which will make the Volt $3,904 less expensive to operate than the Forrester.

      Gas is a much larger share of operating cost so changes in gas prices have a much greater impact.

      • Nathanael April 25, 2016 at 10:51 pm #

        Electric rates are *remarkably* location dependent. In the long run, however, I think they’re capped by the cost of rooftop solar power, which is roughly 14 cents per kwh even in locations with really bad sunlight. If the electric rates go over that level, there is massive defection from the grid.

    • Walker Angell
      Walker Angell April 7, 2016 at 11:53 am #

      Charging is an issue. Tesla owners have the supercharger network that allows for long distance trips. These trips are more difficult for others though I expect this will change fairly quickly.

      A single person who buys a Leaf or other BEV might need to rent an ICE for longer trips. It’s different for a family with two cars as one can be an EV and the other ICE. They use the ICE for longer trips. I know a few of each of these examples. For someone who travels a lot a BEV might be a poor option at this time.

    • Nathanael April 25, 2016 at 10:44 pm #

      “My other question would be for longer trips; how do you refuel your car?”

      Tesla Supercharger. Next question?

  9. GlowBoy April 7, 2016 at 3:28 pm #

    I’d have to agree with above comments that the more comparable vehicle would be a C-class car (Cruze, Elantra, Mazda3, Civic, etc.) rather than an SUV. That makes the math for a BEV or PHEV a bit more difficult.

    And frankly, being the cheapskate base-car buyer that I am, I’ve never been able to make any kind of eco-car pencil out favorably to a quality economy car, at least when bought new. Didn’t matter if it was a VW TDI, a Prius, or a Leaf: the fuel (and in the case of the Prius, maintenance) savings weren’t enough to offset the vastly higher payments. Even a discounted Prius, Cruze Diesel or Golf TDI (which could all be had at around $22k at one point) was 40-50% more expensive than the economy car I would otherwise buy. The only car that came close was the base Honda Insight (an underrated vehicle that I like, unlike most car reviewers), which could be had new for $19k or so. All this was true when I drove an “average” number of miles, but is even more true now that I drive less.

    I should clarify that I’ve always assumed a fuel cost of $5/gallon in my calculations, and even then the 50mpg car can’t compete with the cheaper 35mpg car. Obviously a BEV getting 90-100 mpgE promises much greater energy savings, but these vehicles are even more expensive. I’d have to drive a lot more than I do to make them work out, even the ones that were most financially attractive to me in Oregon – the Mitsubishi i-MiEV and the Chevy Spark EV.

    And actually, after moving to Minneapolis we’ve adopted a lower-car lifestyle with me working from home, so the whole family shares one car. So all of these commuter car options are off the table anyway, and would represent a big increase in costs from where we are now. If we had to buy a second car, right now I’d go for a used Honda Insight. They haven’t held their value well, I think partly because people are scared off by all the problems Civic Hybrids have had, but seem limited to that vehicle and don’t seem to affect the Insight.

    • Walker Angell
      Walker Angell April 8, 2016 at 9:38 am #

      Good points. I think you are in the same place as @Matt Steele and @Al and my son (he and his wife no longer even have one car, they bike or transit everywhere). You don’t drive much and won’t benefit from the operating cost differences as much. You’re value focused and don’t place as much value in a ‘nice car’ as you do in other things. You’ve got better things to spend your money on. All good stuff.

      The major operating cost savings aren’t seen in standard hybrids and only minimally in PHEV’s with small batteries like the current plug-in Prius. The first big chunk of savings comes when you can do a good bit of your driving (60%? 80%?) on electricity purchased from an electric utility (e.g., via a plug). This is the savings that Ella was looking at above. The second big chunk comes with a BEV that eliminates the maintenance expense of the gas engine.

  10. Al April 7, 2016 at 9:35 pm #

    If you’re actually interested in cost you could just save $20k up front by buying a 8 year old car with 100k miles on it. That’s not even counting the amazing savings you get at the DMV ($35 tags) and substantially cheaper insurance prices. Chances are if you’re buying a new car you’re financing a big chunk of it, so big savings there, too (even if you’re not financing, there’s an opportunity cost to your cash). At 15,000 miles per year you can drive it for 5 years and sell for around half the purchase price and then consider an electric when the market is more mature. Non routine maintenance repairs are highly unlikely to cost more than 10% of your upfront savings.

    This is all of course, if you’re interested in saving money. Most of the cost of ownership of a car is depreciation. New car buying is more a question of how to waste the least than how to save money.

    • Nathanael April 25, 2016 at 10:56 pm #

      Insurance is actually much higher on older cars, at least in upstate NY where I live. Most of the cost is liability & casualty, so new cars with more safety features get a discount.

      And if you’re buying an 8 year old ICE car with 100k miles on it, it’s probably completely shot and you’ll have to replace everything. So factor in the cost of a new engine, transmission, and body… non-routine maintenance is likely to cost more than the car, unless you really know what you’re doing as a car buyer and understand what you need to inspect.

      The ideal situation is generally to buy a used car (thus it’s already suffered most of the early depreciation) which is relatively new. From one of those goofballs who buys a new car every year and flips it, or from a car which just came off a lease.