Should you buy an electric car?

People ask me if they should buy an electric car. Quite often they are concerned that the electric car won’t have enough range to suit their needs.
What is funny is that if the limited range is a problem – they really really need an EV.
Why is that?
The more you drive, the more you need an EV, because EV miles are so much less expensive than gasoline miles.

This chart shows how many years it takes to save $7500 comparing an EV to a 30mpg gas car.
The EV is assumed to get 3 miles per kWh, and kWh cost 11 cents ( national average ) and that increases at 4% per year ( average of last 10 years ).
The gasoline car gets 30mpg and gasoline starts at $3.73 ( national average ) and increases at 8.5% per year ( average of last 10 years ).

A Nissan Leaf is about $25000 after incentives. There are many comparable cars at around $17500 and get 30mpg.
This shows that if you don’t drive enough, less than 7000 miles per year, it will take over 7.7 years to recoup $7500 purely on gasoline savings.
However if you drive slightly above average: 15000 miles per year it takes less than 4.4 years to recoup $7500.
And if you drive a lot: 20000 miles per year, you can recoup that money in less than 3.5 years.
After 3.5 years you are ahead, after a total of 7 years you have saved $7500.
Can a Nissan Leaf carry you 20000 miles per year? Yes it can, thats an average of 55 miles per day.
If your driving is highly variable and you have some days over 100 miles it might be less convenient, but if you can manage it, you will save a lot of money.

If you’re looking for a slightly more upscale EV:
This chart shows how many years it takes to save $15000 comparing an EV to a 20mpg gas car.
The EV is assumed to get 3 miles per kWh, and kWh cost 11 cents ( national average ) and that increases at 4% per year ( average of last 10 years ).
The gasoline car gets 20mpg and premium gasoline starts at $4.00 ( national average ) and increases at 8.5% per year ( average of last 10 years ).

A Tesla Model S with 160 mile range is $50000 after incentives. Coming up with comparables is not obvious. You can find cars with similar utility for $35k, but to find them with similar acceleration they actually cost more and only get 20mpg and use premium gas. Suppose a hypothetical sedan exists that has similar performance, costs $35k and gets 20mpg.
If you drive a lot: 20000 miles per year, again it takes about 3.8 years to save $15000.
If you drive a ridiculous amount: 30000 miles per year it takes about 2.7 years to save that $15000
30000 miles per year is 82 miles per day. If you can make that work with a 160 mile range car, you can save a LOT of money.

Conclusion?
The more you drive the more you need an EV.
If you don’t drive enough you won’t be able to recoup the costs on gasoline alone.

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4 responses to “Should you buy an electric car?

  1. This is similar to payback for solar water heating systems; the more hot water your household uses, the shorter your time to recoup the investment. Just wondering, did you take the sales tax waiver into account?

    Thanks for the nice analysis!

    • Sales tax waiver is only in certain states. Here in NY, I’m going to have to pay the full sales tax. I think that’s why the blogger didn’t include the sales tax waiver.

  2. There is something which should be made clear. If you drive very long individual trips, but do so very infrequently, then an EV is precisely wrong for you. (For instance, your “touring car”, taken out only for the summer vacation hundreds of miles away.)

    If you drive lots and lots and lots and lots of relatively short (<120 mile) trips, you are the ideal electric car adopter and should get one as soon as possible! (For instance, someone who commutes to work by car.)

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