What Is The True Cost Of An EV Ownership?

What is the true cost of an EV ownership?

An electric vehicle is a long-term commitment and investment, so weigh the true costs of EVs before making the big buy is important. When it costs up to $100 to fill a gas tank but only small amounts to charge an electric vehicle, buying an EV may appear to be simple. However, the true cost of an EV ownership can be tricky, and you need to be familiar with a wide range of unexpected variables before comparing it to a gas car. In this post, we will look at the true costs of EVs, including upfront cost and other key elements that contribute to both savings and expenses.

Upfront Cost vs. Long-Term Savings: What Is The True Cost Of An EV Ownership?

Buying or leasing an electric vehicle may appear to be more expensive than buying or leasing a gas-powered vehicle at first glance. Many shoppers buy an EV to save both the environment and money, which is an excellent goal that pays off in both the way of fuel savings and environmental benefits. 

Gas-powered vehicles may appear to be a better value at first, but the long-term fuel and maintenance costs quickly add up. While EVs are typically more expensive to buy or lease, charging them costs less than gas for a comparable gas-powered vehicle. While these are the most significant differences between gas-powered vehicles and EVs, the more you learn about the true cost of an EV ownership, the more sense it makes. Now, let’s look at the key factors that influence the true costs of EVs.

Buying an EV

Our journey begins with the critical factor of the initial purchase price, which is a key indicator of the true cost of an EV ownership. For this comparison, we’ll look at one of the most popular EV models, the Tesla Model 3, and its gasoline rival, the base model BMW 330i, a powerful luxury sport sedan. The following numbers show the MSRP starting price in Canada for our comparison:

Tesla Model 3: $54,990

BMW 330i: $44,795

This initial snapshot highlights the discernible premium associated with electric vehicles, which influences the financial feasibility of transitioning to EVs. However, with the EV industry rapidly growing, the price gap is narrowing as manufacturers develop more economical models and improve battery technology. 

Depreciation

Depreciation is the “other price” of any automobile you buy, and it is an important element when considering the true cost of an EV ownership. Depreciation significantly impacts true costs of EVs. The higher initial cost of any cars can result in steeper depreciation rates.

Luxury vehicles, such as the BMW 330i in our previous example, typically depreciate at a higher rate than other vehicle classes. On average, BMW 3 series is expected to depreciate at a rate of around 38.5% of its initial value within the first three years. In comparison,  the Tesla Model 3 keeps around 90% of its value and depreciates less slowly than any other electric vehicle. The Tesla Model 3’s value depreciated roughly 10% after three years, which is an extraordinarily low depreciation rate.

Cost to charge

Energy efficiency is an important part of cost analysis. We evaluate energy consumption efficiency by referring to the EPA’s criteria on kilowatt-hours used per 100 km or miles. 

We will use the Tesla Model 3 as our example again, it is an electric vehicle with energy usage is measured in kilowatt-hours (kWh) per 100 km. The Model 3’s energy usage might vary depending on driving conditions and speed. Assume the Tesla Model 3 has an average energy usage of 15 kWh per 100 km. 

The average annual mileage in Canada is around 15,200 km, according to Natural Resources Canada’s Office of Energy Resources. 

Annual Energy Consumption = (15,200 km / 100 km) * 15 kWh = 2,280 kWh

Electricity Cost (The average electricity cost in Canada $0.15 per kWh) = 2,280 kWh * $0.15/kWh = $342

Based on the average annual driving estimates, the estimated gas consumption for an average Canadian driver is $2,500 per year comparatively.

Cost of installing EV Charger

The cost of installing a home charger for an electric vehicle is another key consideration when weighing the true cost of EV ownership. Although installing an EV charger requires an initial payment, charging your electric vehicle at home may save you more money in the long run.

The type of EV charger you choose is one of the main factors that can affect the cost of installation. Currently, there are three main types of EV chargers: Level 1, Level 2, and Level 3.

Level 1 chargers are the slowest and least expensive of the three. They use a standard 120-volt outlet and can take up to 20 hours to fully charge an EV. These chargers are typically included with the purchase of an EV and are suitable for those who have access to a power outlet near their parking space.

Level 2 chargers are the most common type of EV home charger in Canada. They use a 240-volt outlet and can fully charge an EV in 4–8 hours. These chargers require professional installation and can cost anywhere from $500 to $2,000, depending on the features and complexity of the installation.

Level 3 chargers, also known as DC fast chargers, are the fastest and most expensive type of EV home charger. They use 480-volt direct current and can charge an EV up to 80% in 30 minutes. These chargers require special equipment and installation and can cost anywhere from $10,000 to $40,000.

Maintenance Costs

One of the advantages of owning an electric vehicle is that its mechanics are simplified, resulting in less wear and tear on parts. The maintenance factor gives EVs an obvious advantage over their fuel counterparts. We’ll look at the possible savings on maintenance and repairs, highlighting the financial advantages for EV owners.

Electric vehicles, such as the Tesla Model 3 in our example, often feature fewer moving parts and simpler mechanical systems than gasoline vehicles. This can result in lowered maintenance expenses over time. Tire rotations, brake fluid replacements, and cabin air filter changes are examples of typical Model 3 maintenance tasks. The absence of oil changes and fewer wear-and-tear components can help minimize maintenance costs. EVs’ low maintenance requirements make them cost-effective long-term investments.

Battery Life and Replacement Costs

The lifespan of EV batteries is a critical aspect to consider for understanding the true cost of an EV. The necessary replacement of the battery pack is a significant form of depreciation that is unique to electric vehicles. Unlike the latest conventional car, where engine replacement is highly unlikely, an EV’s battery pack will most likely need to be replaced when the vehicle ages and gives limited range.

Depending on the EV you drive, replacing the battery pack may be free if your car is still under warranty. Depending on the make and type of the vehicle, battery replacement costs vary greatly between EV models, a reasonable estimate would be around $15,000 to $20,000. 

However, this cost remains unclear because few EVs have been on the road long enough to severely deteriorate their battery packs, nor has there been enough time for a vibrant, competitive battery-replacement industry to emerge. It’s also difficult to forecast which owner of an EV will bear the cost of battery replacement, and while this cost should be taken into account in depreciation

Government Incentives

Government policies and regulations significantly impact the true costs of EVs. EV owners in Canada can save money on electric vehicles thanks to provincial and federal incentives. These EV incentives aim to make affordable EVs more available to the general public by lowering the overall cost of EV ownership.

The Canadian government-funded Incentives for Zero-Emission Vehicles (iZEV) Program provides up to $5,000 in incentives when you purchase or lease an eligible car. As a result, government incentives may significantly reduce the initial cost of purchasing an electric vehicle. 

Additional EV rebates are also available across the country, depending on the province and territory. These provincial incentives may further reduce the cost of buying a new or used EV and cover the cost of establishing home charging infrastructure, making the process of owning an EV more reasonable. 

Taking into account all of the variables in our analysis above, we discover interesting insights about the true costs of EVs. In the long run, EVs provide cost-effective solutions for people who want reliability and affordability. While the initial costs are higher than for conventional vehicles, the long-term ownership costs make electric vehicles an appealing option. With benefits ranging from long-term savings to environmental impact, embracing electric vehicles contributes to a sustainable and cost-effective future!

More from Carnex Blog:

Best Electric Vehicles of 2023 and 2024 in Canada

Future EVs: 11 New EVs and Hybrids Coming in 2024

Will Buying an Electric Vehicle Save You Money?

As always, Carnex can provide you with detailed information about buying and selling EV in Canada.

Carnex is the top online EV expert in Canada for buying and selling used EV in Canada.

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