Summary
– The Tesla Model S was introduced 12 years ago as the first popular mass-market electric vehicle, costing between $57,400 and $87,400 in 2012.
– EVs have become more affordable over time due to cost-cutting by automakers and federal tax credits, but they are still significantly more expensive than traditional vehicles.
– Experts recommend adhering to the 10% rule when buying a car, meaning you should not spend more than 10% of your income on all car-related expenses.
– Long-term savings from owning an EV can offset the upfront cost, with potential savings of up to $18,440 over 10 years, due to EVs being more efficient and cheaper to fill than gas-powered vehicles.
– Additional costs to consider when owning an EV include charging fees for home and public charging stations, maintenance and repair costs, and potentially higher insurance premiums.
Article
The introduction of mass market electric vehicles (EVs) in the early 2010s has brought new options to car buyers, but they come with a price tag. While the cost of EVs has decreased over the years due to cost cutting and federal tax credits, they are still significantly more expensive than traditional internal combustion engine-powered vehicles (ICEs). To determine if buying an EV is a smart choice, consider using a percentage of income budget limit to factor in the total cost of ownership over time.
Experts suggest the 10% rule, where you should not spend more than 10% of your income on a car, including all associated costs. For example, buying a new EV at the average price of $55,242 would require a median income of $552,420. With the average household income in the US sitting at $74,580, most new and used EVs are out of reach for the average American. Monthly car payments for EVs can soar above $1,000, requiring a minimum income of $120,000 to afford.
Despite the high upfront cost of EVs, long-term savings can be substantial. On average, EVs are 2.6 to 4.8 times more efficient at traveling a mile compared to ICE vehicles, resulting in significant savings on fuel costs over time. While initial expenses for chargers can add up, the lifetime savings from owning an EV can help offset these costs. Owners could potentially save up to $18,440 over 10 years by switching to an EV.
Charging fees for EVs can vary depending on your charging setup, with home chargers costing between $300 and $600 for Level 1 charging cables. Public charging stations can be more expensive, with fees ranging from $10 to $30 per charge on average. Maintenance and repair costs for EVs are generally lower than ICE vehicles, with regular maintenance being less expensive due to fewer required services. However, unexpected repairs on EVs can be costly compared to traditional vehicles.
Insurance premiums for EVs may be higher due to the increased cost of the vehicles and potential repair expenses. As EVs become more mainstream, insurance premiums should stabilize. Overall, the decision to purchase an electric vehicle should be based on your income, ability to afford associated costs, and long-term savings potential. EVs offer environmental benefits and cost savings in the long run, but they may not be financially viable for everyone.
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