Electric vehicles are probably the vehicle of the future, but they are not the vehicle of the present. Let’s look at the numbers.
An EV uses about six cents of electricity to go a mile. That’s if you charge it at home with inexpensive residential electricity rates. It’s more if you use a charging station, and it’s more if it’s a large vehicle like a Rivian. And by the way, be prepared to leave it plugged in for several hours to get it charged.
Gasoline-powered cars use about thirteen cents of gasoline to go a mile, assuming gas is something over $3/gallon and you get something like 25 mpg.
So, the difference between the EV fueling cost and the gasoline fueling cost, on a per mile basis, will be 13 cents minus 6 cents = 7 cents. And so, the per-mile fuel cost of an EV is about half that of a gas-powered car.
So far, so good.
But the price of an EV is typically about $10,000 more than the same model in a gas car. It’s more like $15-20k for luxury brands like Porsche, but for our hypothetical let’s be generous to the EVs and use the $10,000 figure.
The number of miles required to recoup the $10,000 difference in purchase price is 10,000 dollars divided by 0.07 dollars per mile, which equals 142,000 miles.
That $10,000 premium you pay for an EV will buy a lot of gas.
That’s bad enough, but it gets worse. Assume it takes about ten years to drive those 142,000 miles. That means there’s a cost-of-money factor to consider. Your $10,000 differential in purchase price was paid up-front, while your recoupment of it takes ten years.
To make the recoupment calculation fair, you have to compare apples to apples. The question becomes, what’s the present-day value of $10,000 paid over ten years?
If you assume interest rates of, say, four percent (though historically you do much better than that in the stock market), then the $10,000 recoupment over ten years has a present-day value of only about $8,200. To get that figure up to the $10,000 premium that was paid up-front for the EV, you have to go out almost 13 years.
(This cost-of-money point is also typically not considered when people tout the economics of home solar panels, which cost a lot up-front while the recoupment takes many years, but that’s a different column.)
And it gets even worse. Gas cars have better resale values than EVs. That’s partly because the most expensive component of EVs – their batteries – wear out. I don’t mean they discharge and need charging, though they of course do that, too, every day. I mean the rechargeable batteries wear out and have to be replaced.
But I said out the outset that EVs are the vehicles of the future. Why’s that?
It’s because they’re much simpler mechanically. They have no transmission, they have no emissions components, the drive train is simple, they don’t generate the dirt and grime of an internal combustion engine, maintenance is less, and, most of all, batteries will continue to improve by becoming less expensive, lighter in weight, and more durable. (All that said, there are no battery breakthroughs on the immediate horizon.)
But for now, electric vehicles make no economic sense. Don’t let that stop you from buying one to signal your virtue, but it won’t signal any financial sense.
the Aspen beat 
Because they are heavier, EVs wear out tires faster than IC vehicles. Tires wear by shedding small pieces of tire which becomes particulate matter in the air and pollution in water (the chemical nature of which can be deadly to salmon in fresh water). So EVs do generate dirt and grime. Just of a different nature than IC vehicles. Then there is the environmental damage created by the mining and refining of battery materials.
In the financial calculations, don’t forget to figure in replacing the battery in 10 years which may cost another ~$10,000. That is if that manufacturer is still making replacement batteries that fit your EV. Worldwide EV manufactures and battery makers (particularly in China) are going out of business frequently.
Interesting analysis, but it seems to me that you failed to include all expenses. With my gas powered car, I had to maintain it regularly for, say, $2,000 a year. Every 90,000 miles, I needed a super service which cost over $3,000 and involved replacing the fan belts and the fuel pump. Don’t forget the cost of replacing brakes. A Tesla requires that the owner replace the windshield washer fluid, rotate the tires periodically, and replace the tires as needed. There is no other maintenance. The Tesla uses regenerative braking which means that with the driver’s foot off the accelerator, the car will come to a complete stop without using brakes because the car is using its momentum to recharge its battery. I enjoy your column and I would be interested in seeing a more complete analysis of the actual costs involved. Thanks for a stimulating read.
Fair points. My numbers are only approximate. You’re right about some of the savings for EVs which I didn’t mention. On the other hand, I also didn’t include a big cost of EVs — replacing the batteries.
All Teslas have traditional hydraulic brake pedals and conventional brake discs, just like standard cars. However, they primarily use regenerative braking, which uses the electric motor to slow the car and recharge the battery when lifting off the accelerator. The brake pedal is still used for faster deceleration and emergency stops.
Most people believe improved batteries will solve some of the problems. Perhaps there is some truth to that, very few ask about what is required to recharge those improved batteries. For EVs to become the standard vehicle, they must recharge as simply and quickly as ICE vehicles.
Do the math on forcing 100 kWh of power into a battery in 6 to 10 minutes. For the 6 minute goal, that requires one MEGAWATT per hour power flow maintained for 6 minutes, not counting heat generated and looses in cabling and connections. The equipment required for that is not “Soccer Mom” friendly and not many small towns have the capacity for producing enough excess power to recharge 20 cars simultaneously.
Batteries may, or may not improve, but the physics of recharging present a different and seemingly unsolvable problem, that NO ONE IS TALKING ABOUT.
what price do you put on maintaining the ability to drive as you age? As someone who is over 80 I would say priceless. As someone who had reached the point of never driving out of my zip code to someone who cheerfully drives anywhere I need or want to with my Tesla FSD I know what I’m talking about. Not only am I saving money by not taking Uber and having multiple deliveries for many things while my car sits in the garage, I have taken my life back. It’s a wonderful thing!
Agreed. In some circumstances, the self-driving features of a car can be a wonderful thing.
But of course, the self-driving features of a Tesla are unrelated to the electric power for the car. Any car could be equipped with self-driving.