If you are looking to buy a vehicle new, an electric car might be the right choice. There are both good and bad news about electric vehicles (EVs) depending on your needs and finances.
EV Prices Are Surging
Buying an electric car or SUV in 2022 will cost you more than similar-sized gas-burning vehicles. Over the past ten years, reports Quartz, the average cost of an EV rose more than 80 percent. EV prices have also risen rapidly in the near term. Business Insider reports that costs for EVs have risen 22 percent over the last year.
Tesla and Ford have increased their prices over the last few months. Rivian, GM, GM, Lucid, and GM all did so. In June, GM tacked $6,250 onto the price of certain Hummer EV pickup truck models. The trucks now range from $85,000 to $105,000.
In part the more expensive are to an increase in luxury models to replace less affordable EVs.
An important factor is the increasing cost of raw materials. Prices for lithium, cobalt, and nickel–key components in EV batteries–have doubled since the pandemic began and have been further impacted by Russia’s invasion of Ukraine, a major source of materials for EV batteries.
In April, Elon Musk said during Tesla’s quarterly conference call that the company is trying to anticipate and stay ahead of rising materials costs. Some suppliers were asking for increases of up to 30 percent for parts, he said.
Despite Higher Prices, “Robust” Demand
Jim Farley, CEO of Ford Motor Company said during an April earnings conference that “The demand right now for EVs at Ford is extraordinarily strong.” We believe we can price them.” New EVs are racking up tens and thousands of reservations with wait lists that span years. This is a clear sign of strong demand.
Relief in Sight?
Despite the high cost of E Vs at present, there may be relief.
Low-end electric vehicles have seen a drop in prices this year, says Consumer Reports, with Chevrolet, Hyundai, and Nissan lowering prices on models like the Hyundai Kona and the Nissan Leaf. This may have been done to encourage non-luxury electric cars.
Some price drops coincide with the end of federal tax credits for carmakers like GM, which subsequently reduced the price of its Chevrolet Bolt by $5,900. GM also lowered the price of its larger electric vehicle, the Bolt EUV, by $6,300.
In addition, Chevrolet announced that it will partially reimburse certain buyers who purchased 2020-23 Bolt EVs and EUVs before the latest discount. Buyers may qualify to get up to $6,000 back, in an unusual case of retroactive discounting.
Some vehicle buyers still qualify for the federal tax credit of up to $7,500.
Other rebates might also be available from your state, auto dealers and even your electric company. Illinois, for instance, will give a rebate of $4,000 for EV purchases made between July 1, 2022 through June 30, 2026. On the Department of Energy website, you can find a listing of state rebates.
Overall Prices May Fall
Overall EV prices could fall over the next few years, according to some predictions. In May, Goldman Sachs forecast that the prices of battery metals could plummet over the next two-years. This would lead to a glut in materials and drive EV prices lower.
And in recent comments, Ford CEO Farley said he believes the price of some EVs will drop below $25,000 in the near future. Production costs will be reduced by using new, more efficient manufacturing methods in the coming years. Lower prices will result for customers. Farley stated that he thinks the possibility of producing EVs cheaper will result in huge price wars.
So, Should You Buy an EV?
When you purchase an electric vehicle, you need to think about more than just the cost of driving it off the lot.
You need to consider how often you’ll use your car, and what distance you can go with a single charge. The farthest an EV can go today is about 520 miles on one charge–and that is for the Lucid Air Dream Edition R, retailing at up to $170,000. The maximum range of lower-priced EVs is generally around 100 miles, according to EVBox.
You should also consider the price of a home-charging system.
These systems can be purchased at three levels. Carvana reports that Level 1 operates on a 120-volt current, and it will charge your EV at a rate of 5 miles per hour. It will cost between $1,300 to $2,300 to buy and install.
Level 2 is a 240-volt system that will charge your EV at a rate of 60 miles per hour, costing between $1,700 and $2,700.
A Level 3 charging system will charge much faster–about 249 miles per hour (around 80 percent of a full charge), but it will also be much more expensive. A level 3 system operates on a 480-volt system, which may demand a rewiring of your house–costing between $20,000 to $50,000 for parts and possibly more than $50,000 to install.
Some cars like Teslas have their own charging system.
Maintenance and Repair
Electric cars have the advantage of having fewer moving parts, and requiring less maintenance. However, repair costs may be more expensive than those of gas-powered cars. Nonetheless, reduced maintenance means that EVs still come out ahead in terms of overall maintenance an repair costs, according to cnet.
The cost of maintenance and repair for a hybrid is only slightly less expensive than that of a gas-powered car- a difference of about 1 cent per mile, according to an April 2021 Department of Energy report. (pdf)
An electric car is cheaper to fuel than a gas-powered car, although electric rates vary across the country and depending on the time of day. Fuelling costs also vary depending on the type of charger you use. Kelley Blue Book says that if you travel about 1,183 miles per month, you will use about 394 kilowatt/hours–which will cost about $55 per month. Typically, California prices are more expensive: averaging 25 cents a kilowatt-hour (compared to the national average of about 14 cents per kilowatt-hour), you will pay about $98 per month.
Many people are unaware of hidden costs that come with EVs.
When it comes to fueling, fees added by commercial fueling stations can double or even triple the cost of charging, according to a study from Anderson Economic Group.
EV owners are subject to higher insurance premiums due to the high cost of repairs and replacement in case of an accident.
Some states also charge extra registration fees to electric vehicle owners in order to make up the tax they pay at the pump.
If you think you will save huge money on your vehicle’s life, then you may be disappointed to discover that there are only modest savings. The Wall Street Journal reported in March that “Over 15 years, EV owners will see savings in the $6,000 to $10,000 range, which accounts for purchase price, federal tax credits (when applicable), financing, fuel, and maintenance. The calculation doesn’t include insurance.”
If you are considering buying an electric vehicle (EV) to reduce its environmental impact, it is worth looking at the cost associated with mining metals such as nickel, cobalt, and lithium. There may also be human costs. China could soon be the largest supplier of batteries and other materials needed for EV production. A Wall Street Journal editorial recently stated that “the technologies that underpin these commitments to climate-change” depend on Chinese child and forced labor .”
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