The Economics of Going Electric: Is Buying an EV Worth It?
October 18th 2022
Article by Daniel Beaulieu, published September 2, 2022, by AutoTrader.
The past two years of uncertainty, supply chain issues, volatile gas prices, and increased awareness of the climate crisis has created a perfect storm that resulted in unprecedented demand for electric vehicles (EVs).
People looking to buy an EV have been faced with long waitlists, dealer markups, and dealers requiring large deposits. The market is fraught with perils for would-be EV drivers, with inflation ready to strike after consumers make impulsive buys. Before you panic and place a deposit on a shiny new EV, here are some important questions to ask yourself to ensure an EV makes sense for you.
Is the EV lifestyle right for you?
EVs tease your budget with the promise of subsidies, reduced maintenance, and a permanent divorce with the gas pumps. But beyond their squeaky green image, do expensive EVs make financial sense from a consumer’s perspective? Before doing the math, consider first if you’re ready for the EV lifestyle by asking yourself these questions.
Where do you park?
No matter where you live in Canada, Old Man Winter comes to visit every year, and it’s no secret that EVs don’t fare as well in the cold as internal combustion engine (ICE) vehicles, which just shrug off the cold. EVs would rather be snowbirds than snowbound because their batteries need to be tended to when temps dive below freezing. Left alone on a cold winter’s night, an EV will use its own resources to heat up its battery, which is why most manufacturers recommend that your EV stays tethered overnight to a charging station. And never, ever leave the car outside unplugged with less than a 20 per cent charge.
My own plug-in hybrid (PHEV) refuses to start below -26°C, even if plugged in, and certain manufacturers require owners to put the car in heated storage if sustained temperatures of -24°C or lower are expected while the car just sits for hours.
To put things bluntly, if you don’t own a private parking space and a Level 2 home charger, better put your electric dreams to rest.
Condo or house?
Public charging is nice, but it’s not cheap and not always practical because you can’t typically keep a car hooked up overnight.
At home charging is a necessity, not a luxury, and a friend learned this the hard way. After driving his new Volvo XC40 Recharge to a ski outing, my friend discovered that the car’s included 120V charger wasn’t powerful enough to charge the car on a cold night. He had to postpone his return to town, waiting for the Volvo – now stuffed in a heated storage unit – to charge. This is a frequent mistake by EV newbies: 120V charging won’t cut it below zero because the power is being sucked up by the battery’s heating systems, leaving no power left to actually recharge. Even in warm weather, an EV’s included 120V charger is painfully slow.
A Level 2 (240V) home charger is an essential part of EV ownership, and as with parking, city dwellers may be at a disadvantage here. Our same Volvo friend lives in a posh new condo tower in Montreal with no charging provisions in the underground parking stalls. Building codes were updated in 2018 in Ontario and Quebec to pre-wire new builds for home chargers, but the costs of retrofitting existing apartment or condo buildings can be prohibitive to the point of creating a no-go situation for your EV dreams. Before committing to an EV, check with your building and a certified electrical contractor to see if installing a charger is even possible.
The single-family dwelling with off-street parking, ideally with a heated garage, remains the perfect scenario for EV adoption, but have your situation assessed by a professional before committing. These costs can be anywhere from a few hundred to thousands of dollars, potentially putting a serious dent in your anticipated fuel savings.
Downtown dweller or countryside traveller?
EVs are a perfect fit for city commuters, with all braking being recycled into range through their regen systems, unlike ICE cars that can’t recoup any energy. The instant heat of EVs also makes for a cozy winter city or suburban commute, especially with cabin pre-conditioning through the home charger. Although winter commuting will shave 25 per cent off an EV’s range on average, it’s a moot point as the home charger will be there at the end of the day, so range anxiety shouldn’t be a concern.
This picture is reversed on the open road. Highway travel is the sweet spot for ICE cars, with their engines effortlessly humming at near-idle speed with minimal gas use. Electric cars, however, aren’t as efficient on the highway because there are so few opportunities to recoup braking energy. Long drives require careful planning of charging stops, adding time to your trip, especially in winter. And there’s no guarantee the coveted fast charger will be available once you get there. To add insult to injury, fast charging is battery junk food – the more you use it, the more you tax your battery’s life expectancy. PHEVs, of course, offer the best of both worlds – electric commutes and worry-free gas travels.
What Should I Budget For?
Subsidies
EVs are expensive, but since they collectively reduce our reliance on fossil fuels, our governments see a benefit to giving consumers a hand when it comes time to take the EV plunge. The federal government offers up to $5,000 towards an EV purchase after taxes, while Quebec is the provincial champion with its generous $7,000 EV incentive. But do the math and you’ll see that most of that money goes towards erasing taxes, doing little to lower the retail price of EVs. The full list of eligible vehicles can be found here.
And as with all subsidies, the consumer generally has to finance the full purchase amount before filling out the forms to get the subsidy, but some dealerships will handle this step for you. Regional or municipal programs may also exist to lower your cost of entry to the EV world, either through purchase rebates or home charger incentives, so it pays to do your homework.
Charging
Electricity ain’t free, but it’s pennies to the toonie when compared to today’s gas prices. Quebec is again fertile ground for EV adoption, putting its clean and cheap hydroelectricity against some of the most taxed gas in the land. We recently filled up the family minivan for $150, a sum that will yield about 400 km of range. We extracted that same range figure out of a Polestar 2 after feeding it $6.50 worth of electricity through our home charger. As for the fully electric 536-hp BMW i4 M50 whose images grace this article, it cost us 2 cents a kilometre to rip up pavement with it, compared with 23 cents per km for the similarly swift gas-powered BMW M240i.
Public charging throws a wrench into your savings. Price structures are complex and vary from one charger to the other. In Eastern Canada, Hydro-Quebec’s Le Circuit Electrique operates a vast network where 100 kW+ fast charges are billed at a significant $35.79 per hour. Others have a never-ending matrix of tariffs according to power output, charging rate, and even time spent plugged in.
Designed for quick top-offs, fast chargers slow down when batteries reach 80 per cent to protect their cells, and hourly rates jump up at this point to discourage hogging the facilities.
Locally, the more compact (and slower) Level 2 chargers are usually $1 per hour, but as with all public charging, you have to be ready with multiple apps or RFID cards, all of which have to be linked to your credit card or bank account.
Speaking of banks, public charging operators also want you to stay in the family, typically charging $1.25 for a transaction initiated with a partner’s membership card. Petro-Canada is the first to have the brilliantly simple idea of operating EV chargers like the fuel pumps they replace – tap your credit card and you’re good to go.
The high costs of public charging puts home chargers in an even better light. In Quebec, a year’s worth of charging at home is no more expensive than having hot water. However, move to California and you might as well run your Tesla on gas because utility costs are incredibly high in the Sunshine State. Some states and provinces – Saskatchewan, to name it – also bill EV drivers for yearly “road network fees.”
Maintenance
There’s a myth out there that EVs are zero maintenance, which just isn’t true. Sure, EVs don’t require oil changes, but they still have cooling systems, suspensions, tires, and brakes. While regenerative braking might cause less typical wear and tear on the friction brakes, if they’re seldom used, they will rust faster, which is also problematic.
I “invested” $1,300 in a complete replacement of my brakes after only four years and 24,000 km in my PHEV. An acquaintance did the same in a two-year-old fully electric Chevrolet Bolt, albeit with more than double the mileage.
EVs require yearly brake services to avoid costly replacements, and those services are much more costly than the classic oil change. These along with other issues brought the colleagues at Car and Driver magazine to the conclusion that EV maintenance is just as costly as ICE vehicles in the long run. Thus, no savings on that front. Myth: busted.
Battery
Statistics for 2020 show that the average Canadian car has been on the road for 9.71 years, a metric that’s shown a steady rise over the years as vehicles become more expensive and reliable. An ICE car is usually scrapped when a combination of rust and mechanical needs puts the cost of repairs beyond what the vehicle is worth. It’s worthy to consider this info in light of the typical eight-year warranty of EV batteries. The little 8.8-kWh battery of my PHEV has lost a bit of capacity over five years, and its replacement cost is a cool $12,000. Nissan Leafs are amongst the oldest EVs on the road and many owners now report that their useful range has dropped below 75 km. According to a National Post study, Nissan dealers can’t agree on pricing an out-of-warranty battery replacement on a Leaf, but such a repair would cost anywhere from $8,000 to a vertigo-inducing $30,000 plus labour. Presented with a US$22,000 battery replacement on his 2013 Tesla Model S, Finnish EV driver Tuomas Katainen instead opted to blow up his car with TNT (do not try this at home).
Yes, batteries are improving over time, but in a pattern similar to personal electronic devices, the rate of attrition with EVs exceeds that of the tried-and-true technology, with disastrous economic and environmental results. And with the current world economics, battery costs are on the rise again, adding to the risk of committing to a long-term relationship with an EV.
Tires
Early Tesla Model S customers soon realized that their cars flew through tires. High curb weight and prodigious initial torque are the culprits here (an electric F-150 is heavier than a comparable gas truck by 1,600 pounds). Frequent tire rotations are a must to prolong tire life, yet many EVs – including the front-wheel-drive Polestar 2 – use staggered wheel setups, making them impossible.
EV tire life is a hot topic in the rubber industry, the consensus being that a 20 per cent life span reduction over tires on gas cars is to be expected. Replacements must also closely align with load indexes, limiting a consumer’s options, especially when it comes the time to pick snow tires. Not helping the cause, OEM tires can hide some surprises, like the Michelins delivered on new Model 3s, whose treads are shallower than aftermarket units, as specified by Tesla.
Do EVs Make Financial Sense?
Pre-pandemic, the average Canadian drove 15,200 km annually. Insurance and maintenance costs being too variable, we made a few “return on the money” comparisons based solely on retail costs, energy costs, and subsidies as of this writing for Quebec.
The minimalist commuter will take more than six years to break even if choosing a Chevrolet Bolt EV instead of a gas-powered Kia Rio. For an apples-to-apples comparison, five years and a half split the difference between the gas-powered and EV Hyundai Konas. Nothing further illustrates this paradox than when early adopters full of good intentions paid six-figures for a Model S, a sum they would never have spent on an ICE car. Such a move in 2022 will require 99 years of ownership to out-value a Toyota Prius, the original green car. This extreme case illustrates the fact that many would-be EV buyers need to look at luxury products to satisfy their wants, while more affordable options with more features exist on the fuel-burner side.
As usual, the well-off are better off because premium offerings are more competitive with each other. The splendid and quick BMW i4 M50 offers the performance of an M3 for the price of an M340i, making the math much simpler. And with gas way above $2 per litre, Jeep lovers will find solace with a Wrangler 4xe PHEV, which is cheaper than a comparable ICE unit thanks to the subsidies, especially if they plug it in often. After 300 km in a Rubicon PHEV, we added just five litres of fuel.
Final Thoughts
Of course, ownership scenarios vary and every customer needs math tailored to their own situation. Ron Durocher from Harrow, Ont., made the best of the market by buying a used Prius Prime in Quebec, where the car was depreciated by the subsidies in its original market. As a commuter, he charges the car overnight at home at reduced utility rates, and for free at work during the day. He’s already saved thousands in fuel!
After averaging a fuel economy 2.1 L/100 km over 31,000 km with my own PHEV, I was ready to progress to buying a full EV … until I did the math. With so little use of my personal car, and despite the high price of gas, it was impossible for me to justify spending the extra $25,000 for an EV over a comparable gas car.
Don’t get me wrong: EV driving is a pleasure that’s hard to leave behind. The instant torque, the silent running, the physical and mental split with gas pumps – all of this favours adopting an EV. But the high costs – monetary or environmental – aren’t insignificant. Polestar is the first manufacturer to release the full environmental impact of one of its EVs, the Polestar 2. That car will need to cover 110,000 km to become cleaner than its platform-mate, the gas-fed Volvo XC40.
Original article can be found here.
The past two years of uncertainty, supply chain issues, volatile gas prices, and increased awareness of the climate crisis has created a perfect storm that resulted in unprecedented demand for electric vehicles (EVs).
People looking to buy an EV have been faced with long waitlists, dealer markups, and dealers requiring large deposits. The market is fraught with perils for would-be EV drivers, with inflation ready to strike after consumers make impulsive buys. Before you panic and place a deposit on a shiny new EV, here are some important questions to ask yourself to ensure an EV makes sense for you.
Is the EV lifestyle right for you?
EVs tease your budget with the promise of subsidies, reduced maintenance, and a permanent divorce with the gas pumps. But beyond their squeaky green image, do expensive EVs make financial sense from a consumer’s perspective? Before doing the math, consider first if you’re ready for the EV lifestyle by asking yourself these questions.
Where do you park?
No matter where you live in Canada, Old Man Winter comes to visit every year, and it’s no secret that EVs don’t fare as well in the cold as internal combustion engine (ICE) vehicles, which just shrug off the cold. EVs would rather be snowbirds than snowbound because their batteries need to be tended to when temps dive below freezing. Left alone on a cold winter’s night, an EV will use its own resources to heat up its battery, which is why most manufacturers recommend that your EV stays tethered overnight to a charging station. And never, ever leave the car outside unplugged with less than a 20 per cent charge.
My own plug-in hybrid (PHEV) refuses to start below -26°C, even if plugged in, and certain manufacturers require owners to put the car in heated storage if sustained temperatures of -24°C or lower are expected while the car just sits for hours.
To put things bluntly, if you don’t own a private parking space and a Level 2 home charger, better put your electric dreams to rest.
Condo or house?
Public charging is nice, but it’s not cheap and not always practical because you can’t typically keep a car hooked up overnight.
At home charging is a necessity, not a luxury, and a friend learned this the hard way. After driving his new Volvo XC40 Recharge to a ski outing, my friend discovered that the car’s included 120V charger wasn’t powerful enough to charge the car on a cold night. He had to postpone his return to town, waiting for the Volvo – now stuffed in a heated storage unit – to charge. This is a frequent mistake by EV newbies: 120V charging won’t cut it below zero because the power is being sucked up by the battery’s heating systems, leaving no power left to actually recharge. Even in warm weather, an EV’s included 120V charger is painfully slow.
A Level 2 (240V) home charger is an essential part of EV ownership, and as with parking, city dwellers may be at a disadvantage here. Our same Volvo friend lives in a posh new condo tower in Montreal with no charging provisions in the underground parking stalls. Building codes were updated in 2018 in Ontario and Quebec to pre-wire new builds for home chargers, but the costs of retrofitting existing apartment or condo buildings can be prohibitive to the point of creating a no-go situation for your EV dreams. Before committing to an EV, check with your building and a certified electrical contractor to see if installing a charger is even possible.
The single-family dwelling with off-street parking, ideally with a heated garage, remains the perfect scenario for EV adoption, but have your situation assessed by a professional before committing. These costs can be anywhere from a few hundred to thousands of dollars, potentially putting a serious dent in your anticipated fuel savings.
Downtown dweller or countryside traveller?
EVs are a perfect fit for city commuters, with all braking being recycled into range through their regen systems, unlike ICE cars that can’t recoup any energy. The instant heat of EVs also makes for a cozy winter city or suburban commute, especially with cabin pre-conditioning through the home charger. Although winter commuting will shave 25 per cent off an EV’s range on average, it’s a moot point as the home charger will be there at the end of the day, so range anxiety shouldn’t be a concern.
This picture is reversed on the open road. Highway travel is the sweet spot for ICE cars, with their engines effortlessly humming at near-idle speed with minimal gas use. Electric cars, however, aren’t as efficient on the highway because there are so few opportunities to recoup braking energy. Long drives require careful planning of charging stops, adding time to your trip, especially in winter. And there’s no guarantee the coveted fast charger will be available once you get there. To add insult to injury, fast charging is battery junk food – the more you use it, the more you tax your battery’s life expectancy. PHEVs, of course, offer the best of both worlds – electric commutes and worry-free gas travels.
What Should I Budget For?
Subsidies
EVs are expensive, but since they collectively reduce our reliance on fossil fuels, our governments see a benefit to giving consumers a hand when it comes time to take the EV plunge. The federal government offers up to $5,000 towards an EV purchase after taxes, while Quebec is the provincial champion with its generous $7,000 EV incentive. But do the math and you’ll see that most of that money goes towards erasing taxes, doing little to lower the retail price of EVs. The full list of eligible vehicles can be found here.
And as with all subsidies, the consumer generally has to finance the full purchase amount before filling out the forms to get the subsidy, but some dealerships will handle this step for you. Regional or municipal programs may also exist to lower your cost of entry to the EV world, either through purchase rebates or home charger incentives, so it pays to do your homework.
Charging
Electricity ain’t free, but it’s pennies to the toonie when compared to today’s gas prices. Quebec is again fertile ground for EV adoption, putting its clean and cheap hydroelectricity against some of the most taxed gas in the land. We recently filled up the family minivan for $150, a sum that will yield about 400 km of range. We extracted that same range figure out of a Polestar 2 after feeding it $6.50 worth of electricity through our home charger. As for the fully electric 536-hp BMW i4 M50 whose images grace this article, it cost us 2 cents a kilometre to rip up pavement with it, compared with 23 cents per km for the similarly swift gas-powered BMW M240i.
Public charging throws a wrench into your savings. Price structures are complex and vary from one charger to the other. In Eastern Canada, Hydro-Quebec’s Le Circuit Electrique operates a vast network where 100 kW+ fast charges are billed at a significant $35.79 per hour. Others have a never-ending matrix of tariffs according to power output, charging rate, and even time spent plugged in.
Designed for quick top-offs, fast chargers slow down when batteries reach 80 per cent to protect their cells, and hourly rates jump up at this point to discourage hogging the facilities.
Locally, the more compact (and slower) Level 2 chargers are usually $1 per hour, but as with all public charging, you have to be ready with multiple apps or RFID cards, all of which have to be linked to your credit card or bank account.
Speaking of banks, public charging operators also want you to stay in the family, typically charging $1.25 for a transaction initiated with a partner’s membership card. Petro-Canada is the first to have the brilliantly simple idea of operating EV chargers like the fuel pumps they replace – tap your credit card and you’re good to go.
The high costs of public charging puts home chargers in an even better light. In Quebec, a year’s worth of charging at home is no more expensive than having hot water. However, move to California and you might as well run your Tesla on gas because utility costs are incredibly high in the Sunshine State. Some states and provinces – Saskatchewan, to name it – also bill EV drivers for yearly “road network fees.”
Maintenance
There’s a myth out there that EVs are zero maintenance, which just isn’t true. Sure, EVs don’t require oil changes, but they still have cooling systems, suspensions, tires, and brakes. While regenerative braking might cause less typical wear and tear on the friction brakes, if they’re seldom used, they will rust faster, which is also problematic.
I “invested” $1,300 in a complete replacement of my brakes after only four years and 24,000 km in my PHEV. An acquaintance did the same in a two-year-old fully electric Chevrolet Bolt, albeit with more than double the mileage.
EVs require yearly brake services to avoid costly replacements, and those services are much more costly than the classic oil change. These along with other issues brought the colleagues at Car and Driver magazine to the conclusion that EV maintenance is just as costly as ICE vehicles in the long run. Thus, no savings on that front. Myth: busted.
Battery
Statistics for 2020 show that the average Canadian car has been on the road for 9.71 years, a metric that’s shown a steady rise over the years as vehicles become more expensive and reliable. An ICE car is usually scrapped when a combination of rust and mechanical needs puts the cost of repairs beyond what the vehicle is worth. It’s worthy to consider this info in light of the typical eight-year warranty of EV batteries. The little 8.8-kWh battery of my PHEV has lost a bit of capacity over five years, and its replacement cost is a cool $12,000. Nissan Leafs are amongst the oldest EVs on the road and many owners now report that their useful range has dropped below 75 km. According to a National Post study, Nissan dealers can’t agree on pricing an out-of-warranty battery replacement on a Leaf, but such a repair would cost anywhere from $8,000 to a vertigo-inducing $30,000 plus labour. Presented with a US$22,000 battery replacement on his 2013 Tesla Model S, Finnish EV driver Tuomas Katainen instead opted to blow up his car with TNT (do not try this at home).
Yes, batteries are improving over time, but in a pattern similar to personal electronic devices, the rate of attrition with EVs exceeds that of the tried-and-true technology, with disastrous economic and environmental results. And with the current world economics, battery costs are on the rise again, adding to the risk of committing to a long-term relationship with an EV.
Tires
Early Tesla Model S customers soon realized that their cars flew through tires. High curb weight and prodigious initial torque are the culprits here (an electric F-150 is heavier than a comparable gas truck by 1,600 pounds). Frequent tire rotations are a must to prolong tire life, yet many EVs – including the front-wheel-drive Polestar 2 – use staggered wheel setups, making them impossible.
EV tire life is a hot topic in the rubber industry, the consensus being that a 20 per cent life span reduction over tires on gas cars is to be expected. Replacements must also closely align with load indexes, limiting a consumer’s options, especially when it comes the time to pick snow tires. Not helping the cause, OEM tires can hide some surprises, like the Michelins delivered on new Model 3s, whose treads are shallower than aftermarket units, as specified by Tesla.
Do EVs Make Financial Sense?
Pre-pandemic, the average Canadian drove 15,200 km annually. Insurance and maintenance costs being too variable, we made a few “return on the money” comparisons based solely on retail costs, energy costs, and subsidies as of this writing for Quebec.
The minimalist commuter will take more than six years to break even if choosing a Chevrolet Bolt EV instead of a gas-powered Kia Rio. For an apples-to-apples comparison, five years and a half split the difference between the gas-powered and EV Hyundai Konas. Nothing further illustrates this paradox than when early adopters full of good intentions paid six-figures for a Model S, a sum they would never have spent on an ICE car. Such a move in 2022 will require 99 years of ownership to out-value a Toyota Prius, the original green car. This extreme case illustrates the fact that many would-be EV buyers need to look at luxury products to satisfy their wants, while more affordable options with more features exist on the fuel-burner side.
As usual, the well-off are better off because premium offerings are more competitive with each other. The splendid and quick BMW i4 M50 offers the performance of an M3 for the price of an M340i, making the math much simpler. And with gas way above $2 per litre, Jeep lovers will find solace with a Wrangler 4xe PHEV, which is cheaper than a comparable ICE unit thanks to the subsidies, especially if they plug it in often. After 300 km in a Rubicon PHEV, we added just five litres of fuel.
Final Thoughts
Of course, ownership scenarios vary and every customer needs math tailored to their own situation. Ron Durocher from Harrow, Ont., made the best of the market by buying a used Prius Prime in Quebec, where the car was depreciated by the subsidies in its original market. As a commuter, he charges the car overnight at home at reduced utility rates, and for free at work during the day. He’s already saved thousands in fuel!
After averaging a fuel economy 2.1 L/100 km over 31,000 km with my own PHEV, I was ready to progress to buying a full EV … until I did the math. With so little use of my personal car, and despite the high price of gas, it was impossible for me to justify spending the extra $25,000 for an EV over a comparable gas car.
Don’t get me wrong: EV driving is a pleasure that’s hard to leave behind. The instant torque, the silent running, the physical and mental split with gas pumps – all of this favours adopting an EV. But the high costs – monetary or environmental – aren’t insignificant. Polestar is the first manufacturer to release the full environmental impact of one of its EVs, the Polestar 2. That car will need to cover 110,000 km to become cleaner than its platform-mate, the gas-fed Volvo XC40.
Original article can be found here.
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