Last year, I wrote about what it cost to drive my electric vehicle for five years. The biggest cost of owning an EV is the cost of depreciation – the loss of value in the car each year that you own it. Unfortunately, you can’t know the true costs of depreciation until you sell it. My post last year included Kelly Blue Book estimates for my depreciation costs, but those were just estimates. I finally sold my EV in June 2017. Here’s the total costs of ownership for my EV:
EV Operating Costs Are Low But Rising
One of the big benefits of EVs is that they are virtually maintenance free – no oil changes, no transmissions, no mufflers. Fewer parts in the motor means there are fewer things that can break. Over time, that saves you money in the form of lower maintenance costs.
Also, electricity is generally cheaper than gasoline. However, that advantage may be going away. Electric rates have continued to increase in most places, while gasoline prices have declined in recent years. In Southern California, where I drove my EV, it can cost the same to charge your EV as it does to fill up a gasoline tank – depending on how you do it. The cost advantage of operating an EV is not what it used to be.
EV Depreciation Sucks You Dry
While annual operating costs for EVs are generally lower than for gasoline cars, the cost of depreciation is where you get slammed. That’s because EV batteries degrade a bit each year. A gasoline engine that’s ten years old usually can be fixed with a bit of maintenance. But a ten year old lithium battery will have permanently lost a good chunk of its range. The only way to fix it at that point is to replace the battery, at a very high cost.
Selling My EV
I finally sold the car in June 2017 for only $2,500. It was just under 6 years old, and had about 45k miles on it. That was no fire sale either. The problem is that nobody wants to buy a used electric vehicle – especially not a 6-year old car! Battery degradation and the rapidly improving technology of new vehicles makes the old vehicles virtually worthless.
I initially paid $27,802 for the car, and I sold it for $2,500. That means I lost $25,302 to depreciation over 5 years and 9 months. That’s $4,400 per year! Ouch!
I think this is a trend we will see more and more in cars in general – as new technologies such as autonomous driving advance more quickly, older cars will lose their value more quickly as well. Today, you can get a Tesla Model S or Chevy Bolt with more than triple the driving range of a Nissan Leaf – for about the same price.
But there is no reason to think it ends here. Five years from now, the new models will probably be even better than they are today. It is a horrible investment to buy a new car when revolutionary new technologies are just around the corner which will render your car obsolete.
My EV Total Cost of Ownership
Now that I’ve sold my electric vehicle, I can calculate the total costs of ownership. In my previous post, I had calculated the electricity, maintenance, insurance, and the cost of the charger. I am not updating those figures, as they wouldn’t have changed much in my case.
My EV Total Cost of Ownership (Updated):
|Annual EV Total Cost of Ownership||$5,394|
|Depreciation of Charger||$119|
|Depreciation of Vehicle||$4,400|
As I reported previously, while the annual depreciation costs are high, the total costs of ownership of my EV compared favorably to similarly priced gasoline cars, such as a Toyota Corolla or a Honda Accord. But, that was my experience only. Depending on your use case, the gasoline cars can actually be cheaper. In other words, your mileage may vary. EVs do not have a cost advantage for everyone.
Would I Do It Again?
Now that I’ve sold my EV, people ask me, “would you do it again?” In my case, the answer is.. No. As a frugal dude, I look back on my purchase as generally a poor financial decision… mostly because buying any new car is a poor financial decision.
The car itself was a great commuter car. It was a true pleasure to drive… But I don’t think I’ll buy any new car again, EV or not – especially considering how quickly I believe new technologies will advance. And I don’t think I’m interested in buying a used electric vehicle either, considering the battery degradation.
Many people think Electric Vehicles will play a big role in the future of transportation. That may be so. EVs have their own benefits, such as a quieter ride, faster acceleration, and the convenience of not needing to stop at the gas station. But, from my experience, the cost of ownership is not necessarily an advantage. Until the battery degradation issues are solved, and there is a better market for used vehicles, the costs of EV depreciation will continue to be very high.