Published on December 6th, 2012 | by Zach13
Is An Electric Car Worth It?
UPDATED COMPARISONS HERE — better assumptions (especially the price of a Ford Focus most comparable to the Ford Focus Electric) — but doesn’t include the intro sections below.
Is an electric car worth it? Probably a common question these days. First of all, it’s worth noting that there are many, many factors to consider when determining whether or not an electric car is worth it to you. For example, some of the issues we won’t even address in the calculations below are: 1) the price of global warming and climate change, which is going to be exorbitant, and could even lead to the demise of the human species (I think that’s rather priceless); 2) the price of protecting foreign oil resources (which costs us human lives and trillions upon trillions of dollars in military expenses); 3) the price of air pollution from gasoline-powered cars (which, beyond making our lives worse — hard to quantify — also costs the US trillions upon trillions of dollars).
Setting all of that aside, though, and looking at the matter purely from a short-sighted, narrow-minded perspective, let’s calculate the cost of driving a couple of comparable vehicles (one electric, one not).
Ford Focus Electric vs Ford Focus S
Due to their clear similarities, I thought I’d compare the Ford Focus Electric and the Ford Focus S. Now, there are three variables in the calculations below that can change considerably from person to person — 1) miles per year, 2) price of gasoline per gallon, and 3) price of electricity per kWh. Even looking at the price of electricity per kWh, that can change dramatically depending on the time of day in some regions, or depending on the total amount of electricity you use in a month.
With all this said, for you to actually calculate the difference in costs between these two cars (or any other two cars), you’d need to use your own numbers (at least the best that you can project them). For my baseline comparison here, I’m using the nationwide average for each of these. The average miles per year is currently 13,476 (though, it’s 15,098 for the average person 20–34 years of age, 15,291 for 35–54 year-olds, 11,972 for 55–64 year-olds, and 7,646 for 65 year-olds and up). The average price of electricity per kWh is 12¢ (though, the average ranges from 7.5¢ in Idaho to 36¢ in Hawaii). And for the ever fluctuating price of gas, I’ve started with $3.50, which seems to be about the average for 2012 so far (given that the price of gas is expected to go up considerably in the coming years, I’m going to show more reasonable projections following this first one).
Based on those first assumptions, here’s what we get (after a $7,500 federal tax rebate):
So, you’d get your money back and start saving money in year 13. (Again, notably, that’s aside from any time or health benefits you gain from not standing at gas stations pumping gas, and from not having your car put pollutants into your driveway, yard, and garage.)
Now, if we change some assumptions up, we get huge differences, of course. With a change to 20,000 miles per year, you see savings starting in year 9:
Keeping avg annual miles at 13,476, but changing the price of electricity to 6¢ per kWh (what one Volt driver who we know gets), savings start to accrue in year 10:
With the average price of gasoline changed to $4.50 for this period of time, the savings again start to kick in during year 9 (change to $5, it would be year 8):
With all three changes above, your savings start to kick in just after year 5 (or, with gas changed to $5, sometime after year 4), and you save about $15,000 by year 10 (or about $20,000 based on the $5/gallon projection):
Now, clearly, I don’t know what your own assumptions would be — even you don’t know what the price of gas and price of electricity will be, nor how many miles you’ll drive. I also don’t know how much importance you give to health, national security, clean air, and the current climate. So, to determine if an electric car is “worth it,” you have to go ahead figure all those things out, or give it your best bet. (If you want to shoot me some numbers, I’d be happy to put them into my spreadsheet for you and shoot back another table… or I could simply share my spreadsheet with you.)
Also worth emphasizing again this is just a comparison between two similar cars. There are many other electric vehicles (and gasoline-powered vehicles) on the market that you could look at more closely (I’m sure you weren’t aware of that). For example, the new Honda Accord Plug-In Hybrid could be compared with a standard Honda Accord. Of, if it fits your lifestyle, you could compare an electric scooter with a car!
Another factor we haven’t considered is that, according to an auto insurance agency in Louisville, KY, drivers of hybrid and electric cars can receive discounts on auto insurance with some insurance companies. Be sure to look into your options there.
One last thing to think about, also, is the value of a car after a number of years. Perhaps you only intend to keep the car for 3-5 years. In the scenarios above, you wouldn’t regain your personal financial investment in that time. However, you’d surely sell the car. Would it be worth more or less if it were an electric car? My bet is that it would be worth more.
Why? First of all, an electric motor is much simpler than a gasoline-powered car’s comparable parts. It’s likely to last much longer. On the other hand, the batteries will need replaced at some point, and they aren’t cheap. When they need to be replaced and how much that will cost really depends on the vehicle and the evolution of batteries in the coming years. With modern electric cars just hitting the roads in recent years, we don’t really know what the norm is yet. Another thing to consider is the price of gas — as the price of gas goes up, gasoline-powered cars are going to look less attractive, and their resale value will decrease. And, of course, you’ve got to consider the cost of a new vehicle of the same model and type vs your used vehicle — if the new electric car is much more expensive than the new gasoline-powered car, one would assume the used model would also sell for more.
All in all, I’m not sure which type of vehicle would have a higher resale value, but I’d lean towards it being the electric car. Perhaps some of our gearheads could chime in with their thoughts on this.