We drive electric and have for several years now. We encourage our friends to do so as well. However, some have balked, arguing that electric vehicles are too expensive. The question is, are they more expensive?
The simple answer is yes. The more nuanced answer is “sort of.” Like most things in life—or in buying a car—“it all depends” on a host of factors.
First off, most buyers look only at the initial cost or the “transaction cost” as Kelley Blue Book calls it. And this is what people mean when they say EVs are more costly than conventional vehicles. Few consider the overall cost of ownership, which includes the cost of operating and maintaining a car less any subsidies. There, the story typically favors the EV. But first, what do cars cost.
Up-front or Transaction Costs
Kelley Blue Book tracks transaction costs and publishes the average price monthly by manufacturer and by class of vehicle. (See Average New-Vehicle Prices Up 1.3% Year-Over-Year in November 2020, Down 1.2% from Last Month, According to Kelley Blue Book.)
For November 2020, the average transaction cost in the USA was $39,000. That’s the average across all manufacturers and all vehicle classes. The number is much higher than I expected and makes what we paid for our Chevy Bolt even more attractive–more on that shortly.
Kelley reports the transaction costs for 23 different vehicle classes. Most EVs today are sedans or compacts. So I’ve cut Kelley’s list in half for my cost comparison. I’ve included pickup trucks, SUVs, and “entry-level luxury” cars because a lot of Americans buy them over the more sedate sedans. I’ve excluded high-end luxury cars at ~$95,000 and full-size SUVs at ~$68,000 for simplicity, though we do see a lot of full-size SUVs here in California.
Kelley’s data confirms what many suspect, EVs are more expensive than the average car sold in the country: $44,000 vs $39,000. Unfortunately, that number doesn’t tell the whole story. Tesla dominates the American EV market by a wide margin. And Kelley’s average EV cost is about what you would pay to buy Tesla’s Model 3. The cost of the Tesla Model 3 is comparable with an entry-level luxury car, such as a BMW’ 3 series. Teslas are still about 10k less than full-size pickups, which are very popular in this part of the state, but a good 4k more than full-size cars.
However, the Tesla Model 3 is not the only EV sold in the states. Chevy’s Bolt is comparable to the Model 3 in range if not in caché.
EPA classifies the Bolt as “small station wagon”, says Wikipedia, while GM calls it a crossover, more specifically a CUV for crossover utility vehicle. The Bolt is smaller than the Model 3 and not as technologically advanced. Still, the Bolt is an EV with a comparable range. We’re now on our second one.
You can buy a Bolt in California for a fraction of the cost of a Tesla Model 3. We bought a Bolt for $26,300 and our friends bought one for $3,000 less than that. (For why, see Buying or Leasing a 2020 Chevy Bolt EV–What I learned.) This puts our Bolt in the category of Subcompact SUV/Crossover. It’s $4,300 more costly than a compact car and nearly $8,000 more costly than a subcompact.
Of course, the transaction price doesn’t include sales taxes and registration costs. They add another 10% to the cost of a vehicle in California. Consequently, if you buy a more expensive car you pay proportionally more taxes. Taxes are double on a $40,000 car versus those of a $20,000 vehicle or $4,000 to $2,000. If you buy a Tesla Model 3 over a Bolt you’ll need to pony up an extra 2k in taxes for the more expensive EV.
Total Cost of Ownership Favors EVs
EVs currently may cost more to buy, but they are much cheaper to maintain and fuel than conventional vehicles. Moreover, many—though not all—jurisdictions offer incentives or subsidies to buy an EV.
The difference between up-front or initial cost and overall cost has become so significant that the online magazine CleanTechnica runs a regular feature on total cost of ownership. Similarly, Pacific Gas & Electric Co provides an online estimator that calculates total cost of ownership.
Here in California, PG&E estimates that a Tesla Model 3 costs $3,500 less to own over a three-year period than a Toyota Camry when the subsidies we qualify for are included. (We don’t qualify for all the subsidies available.) And this is despite the fact that the Model 3 costs $13,500 more upfront than the Camry!
We don’t own a Tesla. We drive a Chevy Bolt. In our case PG&E estimates that for someone in our position, the cost of owning and operating a Bolt for three years costs nearly $2,000 less than a Toyota Prius hybrid, the type of car we owned before we went electric. Much of the benefit is due to the $6,500 in subsidies that a family in our position qualifies for.
We didn’t do quite that well. The subsidies we qualified for cut the initial cost of our Bolt to $22,500. We’re driving a long-range EV for the average cost of a compact car. Our friends qualified for $5,800 in subsidies for their $23,300 Bolt. As a result, they’re driving a long-range EV for about $18,000, not counting any savings on fuel or maintenance. They own an EV for the average cost of a subcompact car.
In short, yes, EVs are more costly to buy than conventional cars in their size class. However, the total cost of owning and operating an EV are often much less, especially in states–such as California–where there are subsidies for buying an EV.
- Buying or Leasing a 2020 Chevy Bolt EV–What I learned
- Huge year-end discounts and rebates drive the cost of new EVs below $20K
- Average New-Vehicle Prices Up 1.3% Year-Over-Year in November 2020, Down 1.2% from Last Month, According to Kelley Blue Book
- Why We Drive Electric: Lower Cost to Operate
- What does it Cost per Mile to Drive an Electric Vehicle?