The True Cost of Electric Vehicles

With Gov. Newsom signing an executive order banning all new production of fossil fueled cars by 2035, we should know what the true cost of going all electric is and what it will mean to residents of California, and possibly nationwide.

Purchasing an electric vehicle (EV) is more expensive than that of a gasoline powered vehicle.

On average, an EV will cost $40,000. This initial “sticker shock” is lessened when you compare the operation costs of an EV versus a gas-powered one, which is approximately 60% less than a gasoline powered vehicle. (University of Michigan’s Transportation Research Institute)

Tax Credits.

Focusing on Federal credits only, once an auto manufacturer produces 200,000 EV’s, tax credits will be phased out. As of September 2020, most EV manufactures were phased out this credit. The remaining tax credits available after December 2020 are for the purchase of fuel cell electric vehicles (FCEVs), zero emission motorcycles (ZEMs) and EV charging equipment. (www.irs.gov)

Charging Stations.

A Level 1 charging station requires 12 hours to fully charge an EV, a Level 2 charging station can charge in 4. Most households opt for a Level 2 Charing station, which will cost approximately $1,950 to install; inclusive of materials, labor and averaged permits/fees. Variations should be expected based on each city/town/state.

Charging Cost

An EV with a 70-mile range should cost about $2.64, based on averaged electricity rates.(US Department of Energy, Alternative Fuels Data Center)

Insurance

Insuring your EV will cost approximately 20% more than a gasoline powered vehicle. On average, insurance for an electric vehicle will cost over $1,337 annually. This is primarily due to the cost of the battery, specialized parts and servicing. (www.bankrate.com/insurance/car/electric-car-insurance), (www.thesimpledollar.com/insurance/auto/insurance-for-electric-vehicles)

Fees (Taxes)

It should also be noted that there are several studies being performed by the Los Angeles Metro Transit authority to encourage households to use public transit as well as recoup lost profits from the on set of Covid. Two programs recently discussed were “Congestion Pricing” and a vehicle ownership “fee”.

“Congestion Pricing” would be a tax for driving in areas of Los Angeles that are deemed to have too many vehicles. The study would implement a toll in an area, corridor or charge a “fee” based on how many miles a motorist will drive. These “fees” could then fund free transit and potentially be used to fund major projects.

The vehicle ownership “fee” was only recently mentioned; therefore, no study has been initiated. This program would charge every vehicle owner in the County of Los Angeles a “fee”. “Fees” would be waived for low income households.

To Summarize:

Purchase $40,000 (avg)

Tax Credits $0

Charging Station $1950 (avg)

Charging $79.20 (Rounded up to $2.64/day charge for 30 days)

Insurance $4,500

TOTAL $46,529.20

This is not a comprehensive list of all costs to consider when going electric, but it does offer a reasonable overview.

The initial out of pocket cost will be nearly impossible for the average middle-class household to pay, let alone the fact that most households require two vehicles. Furthermore, the proposed “fees” appear to be overreaching and will further harm the disappearing middle class, as they are the ones who have suffered the most economically during this financial crisis.

If we want to encourage the average household to purchase an EV in the next decade, we need to eliminate “fees” that do not directly benefit the general population and offer lower cost vehicles and reasonable auto insurance. Equally important, tax credits and incentives need to be implemented, not penalties, otherwise we will remain with our old habits out of comfort and economic expense.