How Much Does It Really Cost to Own a High-Tech Electric Vehicle? |
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It is hard not to fall in love with the thought of owning the sleek whisper-quiet electric car flashing by on a sunny afternoon when you first see it. It is too tempting with the promise of cutting-edge technology, zero tail-pipe emissions, and the rush of driving the machine that reminds the present of the future. However, the question that hangs over all possible EV owners is one question: What is the actual cost of owning a high-tech electric car over its lifetime?
It is easy to be enticed by the headline price tag or the high environmental arguments. However, the real price goes way beyond the price of one purchase. It is a complex web made of financing, operating costs, maintenance, resale value and even the money payback. And it is time to draw the curtain aside and delve into the whole narrative, in order to make up your mind about whether your EV dream is a good investment in your life or not.
It is easy to be enticed by the headline price tag or the high environmental arguments. However, the real price goes way beyond the price of one purchase. It is a complex web made of financing, operating costs, maintenance, resale value and even the money payback. And it is time to draw the curtain aside and delve into the whole narrative, in order to make up your mind about whether your EV dream is a good investment in your life or not.
1. The First Big Step: Start up Costs and Financing.
As soon as you sit at the dealership, and look at the sticker price, your mind is already pitting the numbers. An EV with high tech may have a price of 35,000 dollars up to a high-end car of over 100,000 dollars. That is just the tip of the iceberg. You will have to take into consideration taxation, destination charges, packages, and the expense of the charging equipment you place at home.
After deciding on the price of purchase, what lies ahead is either to make the purchase outright or take a loan. A loan is the preferable solution to most people. A large number of EV purchasers will go to a car loan calculator to see how monthly payments will be calculated, how extending the term can reduce your payment but total interest, and how a bigger deposit will decrease the size of your loan. This is a tool that allows you to view the way in which varied situations unfold throughout the life of the loan- a vital component of knowing what your real cost will be.
It is best to shop around for the best interest rate even before you have made up your mind about a loan. The better knowledge you have the greater bargaining power you will have. It is important to remember that even a difference in annual percentage rate (APR) that seems insignificant can eat hundreds of dollars in five years.
After deciding on the price of purchase, what lies ahead is either to make the purchase outright or take a loan. A loan is the preferable solution to most people. A large number of EV purchasers will go to a car loan calculator to see how monthly payments will be calculated, how extending the term can reduce your payment but total interest, and how a bigger deposit will decrease the size of your loan. This is a tool that allows you to view the way in which varied situations unfold throughout the life of the loan- a vital component of knowing what your real cost will be.
It is best to shop around for the best interest rate even before you have made up your mind about a loan. The better knowledge you have the greater bargaining power you will have. It is important to remember that even a difference in annual percentage rate (APR) that seems insignificant can eat hundreds of dollars in five years.
2. The Underground Burden of Interest: The Compounding of the Rates.
After you have financing in place, then it is time to read the fine print. The cost that is lurking behind every payment is interest. Even a few percentage points of increase in APR can imply thousands of additional dollars paid throughout the loan. It is prudent to use a loan interest calculator to have a clear image.
It is a calculator that lets you enter your APR, loan amount and the term to determine just how much interest payment you will make, an eye-opener that can make you reconsider whether to shorten the loan term or add a few more dollars into a down-payment.
There are also EV purchasers who also lease. Although leases can be cheaper in terms of monthly payments, they are limited with mileage, wear and tear charges and in most cases will be more expensive than purchasing the car at the expiry of the lease period. Again, when entering the numbers in the loan and lease calculator, you will see which of the two is better to go through according to your style and budget.
It is a calculator that lets you enter your APR, loan amount and the term to determine just how much interest payment you will make, an eye-opener that can make you reconsider whether to shorten the loan term or add a few more dollars into a down-payment.
There are also EV purchasers who also lease. Although leases can be cheaper in terms of monthly payments, they are limited with mileage, wear and tear charges and in most cases will be more expensive than purchasing the car at the expiry of the lease period. Again, when entering the numbers in the loan and lease calculator, you will see which of the two is better to go through according to your style and budget.
3. Day to day operating expenses: Fuel, Charging and Insurance.
Among the strongest strengths of an electric car is the sharp contrast in the daily fuel expenses. Electricity is a flat rate unlike gasoline or diesel that can be different depending on the location and time of the day. A large number of EV owners buy a home charging device, commonly referred to as Level 2 charger, which can significantly shorten the charging time. Such a charger can cost between 800 and 1200 and labor and the exercise costs less than the cost of gas.
The charge of electricity will be compensated by driving an EV using the advantage of the generation of the regenerative braking that will retrieve the energy that would be dissipated. Practically, most drivers can save hundreds of dollars because of electricity bills. Nonetheless, in case you are a heavy commuter or travel a lot across state boundaries, you should look at the prices of the public charging stations that can vary between 0.15 and 0.30 per kilowatt-hour.
Another variable is insurance. The cost of insuring EVs is generally higher due to their higher replacement cost and special repair needs. Certain insurance companies provide EV owners with discounts; others do not. Their shopping around is worth it since one should explicitly request EV coverage.
The charge of electricity will be compensated by driving an EV using the advantage of the generation of the regenerative braking that will retrieve the energy that would be dissipated. Practically, most drivers can save hundreds of dollars because of electricity bills. Nonetheless, in case you are a heavy commuter or travel a lot across state boundaries, you should look at the prices of the public charging stations that can vary between 0.15 and 0.30 per kilowatt-hour.
Another variable is insurance. The cost of insuring EVs is generally higher due to their higher replacement cost and special repair needs. Certain insurance companies provide EV owners with discounts; others do not. Their shopping around is worth it since one should explicitly request EV coverage.
4. Maintenance and the Myth of No -Maintenance Cars.
The myth that electric cars do not need any maintenance is not entirely valid. They do not require an oil change or replacing the spark-plugs but EVs also require regular maintenance. Regenerative braking helps brake pads to wear out at a slower pace, however brakes pads require changes at some point. The maintenance checklist includes tires, battery checks and the battery pack cooling system.
A major parameter in the cost in the long-term is the battery life. Majority of the manufacturers give 10 year or 100,000 mile warranty on the battery and in most cases, they can be replaced at only a small fraction of the initial cost. Nevertheless, the battery replacement may cost you several thousand dollars of your overall cost in as short a period as 15 to 20 years.
A major parameter in the cost in the long-term is the battery life. Majority of the manufacturers give 10 year or 100,000 mile warranty on the battery and in most cases, they can be replaced at only a small fraction of the initial cost. Nevertheless, the battery replacement may cost you several thousand dollars of your overall cost in as short a period as 15 to 20 years.
5. The EVs Resale Value: How EVs Retain Their Value.
One of the most common complaints that EV fans make is resale value. In the past, EVs were more susceptible to depreciation than gasoline vehicles because of the rapid technological changes and low demand of used EVs. Nonetheless, recent statistics indicate that most models are currently retaining their value better than ever provided that you maintain the battery life and keep the car in superb shape.
In ownership budgeting, look at the resale value in five, ten or fifteen years. The EV is a better investment since higher initial costs and operating expenses can be compensated by a high resale value.
In ownership budgeting, look at the resale value in five, ten or fifteen years. The EV is a better investment since higher initial costs and operating expenses can be compensated by a high resale value.
The Big Picture: Computing Total Cost of Ownership.
All the separate components such as financing, interest, operating costs, maintenance and resale must be incorporated into a holistic picture of the cost-of-ownership. What most folks would find most convincing is to compute the ROM on the amount of money you spend on an EV, not just the monthly payments and compare it to a gasoline counterpart.
To achieve this, an investment return calculator is needed. Enter your total expenditure (cost of purchase, installations, repairs etc.), annual savings of reduced fuel costs and tax credits or incentives that you get. With a selectable horizon, the calculator will project the net return, and inform you whether the EV is a worthwhile investment or you may get a higher return elsewhere.
To achieve this, an investment return calculator is needed. Enter your total expenditure (cost of purchase, installations, repairs etc.), annual savings of reduced fuel costs and tax credits or incentives that you get. With a selectable horizon, the calculator will project the net return, and inform you whether the EV is a worthwhile investment or you may get a higher return elsewhere.