11 Hidden Costs of Owning an Electric Car
If you think the electric car revolution means cost-free driving, think again. EVs come with a financial sting in their tail.
The dawn of the electric car revolution is here, and enthusiastic drivers anticipate being able to shed their dependence on costly and unpredictable gas prices. The chance to run cars on electricity, powered by home solar panels in some cases, almost seems too good to be true. So what’s the catch?
While electric cars may bring significant cost-cutting and eco-friendly breakthroughs in the long term, the teething period could also carry a few extra expenses. If your garage is already being prepped for a new electric car, here are the hidden costs of owning an electric car you should know.
1. Higher Purchase Price
Generally speaking, electric cars are more expensive than their gas-powered counterparts at dealerships. According to Kelley Blue Book, expect to pay about $10,000 more for an electric vehicle on average. In some cases, though, that price difference can be more substantial. Among other reasons, this is because sellers can charge a premium for the “prestige” of owning a new electric vehicle (EV) since electric cars are produced in lower qualities than other vehicle types.
Another factor contributing to electric cars’ higher price is the cost of rare earth minerals (lithium, cobalt, manganese, nickel, and graphite) used to manufacture EV batteries, most of which come from outside of the United States. Cobalt is perhaps less essential to EV batteries than the other minerals, and the U.S. government aims to eliminate cobalt from electric car batteries by 2030. Some car manufacturers are embracing cobalt-free batteries, which could eventually bring down the cost of electric vehicles. Until electric vehicles become more popular, expect a little sticker shock when comparing their prices to traditional vehicles.
2. Registration Fees
Gas taxes, applied at the pump in some states when filling up a gas-powered vehicle, are used to help pay for road repairs. As electric vehicles don’t use gas, states apply an additional registration fee of around $50 to $200 to EVs. Currently, Georgia has some of the highest EV fees, but check this full list of states and electric car registration fees for more info.
3. Insurance Premiums
Most car insurance companies charge higher rates for electric cars because they’re more expensive to repair and replace, and fewer repair shops have EV-trained staff. Because of this, expect to pay 5 to 20 percent more for electric car insurance than you would for a gas-powered car.
4. Road Charging
While there’s no doubt that the cost to charge an electric car is cheaper than paying for gas, your actual savings will be considerably lower if you charge on the road as opposed to at home. Public charging facilities differ markedly in pricing, with some demanding payment for minutes spent charging and others going by the kWh of electricity used. While DC fast chargers can add 100 miles of range in 10 minutes, they are also the most expensive public charging option. However, convenience and the time spent charging a vehicle are factors to consider, too.
5. Home Charging
Although it’s the cheapest charging method by far, charging an electric car at home also has its drawbacks. It’s probably cheaper to charge an EV with a Level 1 charger using a standard 120-volt outlet, but this option isn’t practical if you drive your car daily since this type of charging can take 24 to 36 hours (or longer in cold climates). This means daily commuters need to have a more expensive Level 2 electric car charger professionally installed for convenient overnight charging.
Electric car charger costs are typically around $2500 for both the charger and installation, and EV chargers have a lifespan of about ten years. If your home needs an electrical upgrade to accommodate a Level 2 charger, expect to pay more still.
6. Battery Replacement
Unlike a standard car battery, an electric vehicle battery is not cheap. They’re good for 100,000 miles but come with a hefty price tag of $10,000 to $20,000, so expect to reinvest some of your gas savings into purchasing a new battery down the line. EV battery technology is anticipated to improve over the next few years—and their prices will likely come down—but if you intend to rack up the miles, it’s worth factoring in how you’ll pay for a new battery.
Some conditions can cause faster electric car battery degradation. For example, using super-fast DC charging degrades battery life. Manufacturer Kia notes that fast charging causes 10 percent in battery life degradation over a period of eight years.
Most people know that the moment you drive a new car off the lot, it loses value. That loss is amplified when it comes to electric cars. The reasons for EV depreciation are manifold:
- New electric cars come with a $7,500 tax credit (which comes with certain restrictions). Once that tax credit is voided, a car’s value can plummet by as much as 60 percent when a three-year lease expires, for example.
- EVs lose up to 20 percent of their maximum range after five years.
- Electric car technology is still new and evolving fast. Like the latest smartphone versus a three-year-old model, newer EV models will be far more attractive to shoppers than older ones, especially as battery technology improves.
8. Range Loss
“Range” and “loss” are not two words people with reservations about buying electric cars generally want to see together, but it’s a reality of battery-powered travel. As stated above, EV batteries degrade over time, so as your car ages, expect a fully charged battery to take you a shorter distance than it once did.
Additionally, cold weather affects EV battery performance. A AAA study quantified temperature-related EV range loss to be as much as 12 percent at 20 degrees Fahrenheit compared to 75 degrees Fahrenheit.
9. Repair Bills
With fewer mechanics trained to service electric cars and fewer parts available, electric car maintenance costs are likely to be considerably higher than the upkeep costs of most gas-powered cars.
A recent analysis of insurance claims by CCC Intelligent Solutions Inc. revealed that owners of luxury-brand mid-size electric SUVs could expect to pay more than 50 percent more for repairs than they would for gas vehicles. However, those costs are expected to come down over time.
10. Charging Time
For many people who rely on their cars to get to and from work, time spent charging is less time spent working. When time is money, and overnight charging doesn’t suffice, spending minutes or hours juicing up your vehicle can put a big dent in productivity.
Just as with buying a new construction home, a new EV comes with optional add-ons. Tesla boasts about its self-driving option, which costs an additional $15,000 circa 2022, and the company’s acceleration boost feature costs around $2,000. These extras add up, and unlocking a full package of Tesla electric car add-ons can cost more than $20,000.
When new technology first hits the market, prices tend to be high before settling down. (Remember $5,000 plasma TVs?) Electric cars are better for the environment than fossil fuel-powered vehicles and will eventually be good for your wallet, too, so early adopters may find the hidden costs of owning an EV to be worth it in the end.
Additionally, if we all end up driving them at some point, buying an electric vehicle may be less of a question of “if” but “when.” For homeowners who can have a Level 2 charger installed in the garage, making the jump sooner rather than later could make sense. However, access to affordable EV charging stations will be a determining factor for residents of major cities. At any rate, it’s important to consider the true cost of owning an electric car before making a purchase or signing a lease.
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