I need to replace my car this year. I’m trying to decide if I should buy an electric vehicle or not. What would you do?
Dear Car Choice,
This is a timely question as a great deal of policy is attempting to move us towards electric vehicles with the assumption that it is “clean energy” and good for the environment. Let’s get some context first; then, I will give you my recommendation.
The Push for Electric-Powered Cars
Tesla, the leading manufacturer of electric vehicles, is now worth about as much as that of the nine largest car companies in the world, combined! Obviously, investors believe this is the wave of the future. This is not an endorsement of the stock, by the way.
Electric vs. Gasoline-Powered Cars
It is important to research and understand the costs of time and money before making any purchase. “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” (Luke 14:28 ESV)
One of my friends bought a new, high-end Tesla and loves it. He calls it the “iPhone of cars” because of its ease of functionality and its superior performance compared to all other electric vehicles. Of course, he spent $75,000 for it, which is far more than I would ever want to pay for transportation. By the way, Apple is looking to enter the market if they can find a willing partner to create “autonomous (self-driving) cars.”
Nerdwallet proposes several questions to think about before purchasing an electric vehicle.
Can you afford one? How far do you need to drive on a single charge? Where will you charge it? What will you use it for? Do you enjoy performance?
In addition, I’ve gathered some pros and cons to consider.
- Overall lower fueling costs
- Lower maintenance costs: fewer/simpler parts, and fluid changes/tune-ups are not required
- Fun to drive due to instant power
- Convenience of charging at home
- No particulates or smog-causing tailpipe emissions
- Lower carbon emissions over lifetime than gasoline-powered vehicles
- Possible tax credit
- Cost for purchasing the vehicle
- Cost for insurance
- Access to charging stations
- Time to charge
- Cost of electricity
- Limited driving range
Some Facts To Consider
Most electric cars are able to go more than 200 miles when fully charged, but that is still much less than gasoline powered cars. Tesla’s Long-Range models can go over 300 miles, but the cost is significant for the longer-lasting power supply. Plug-in hybrids have a combined gasoline and electric range of 400 to 550 miles. However, air conditioning, heat, and hills can reduce that number.
Charge times vary. Currently, the cheapest and most convenient option is to do it overnight at home. Fast chargers are spreading throughout the country, but they still take longer than refueling at a gas station. Plus, the cost will fluctuate with the cost of electricity. To drive across the country, you have to map out your stops in advance by locating the charging stations and including downtime for charging, which is much longer than refueling gasoline.
Hybrid vehicles have experienced significant depreciation. Be sure to research depreciation of an electric vehicle. Some early models have not done well in the after market.
At What Cost?
Base prices range from $30,000 for the Hyundai Ioniq and Nissan Leaf to six figures for some Tesla and Porsche models. Home charging units cost under $1,000, with rebates available in some states. Some question whether or not our power grid has the capacity to keep millions of cars charged each night.
In addition, there is another cost to consider. Battery manufacturing is water-intensive and pollutes air, soil, and water. Lithium and cobalt are needed to make rechargeable batteries. With increased production of electric vehicles, there will be negative ecological and human issues to consider.
In January, The Guardian reported that 60% of cobalt comes from the DRC (Democratic Republic of the Congo) where men, women, and children are miners. Unregulated mines and contaminated discharge is life threatening. The Lithium Triangle of South America (Chile, Argentina, and Bolivia) has experienced groundwater depletion and the spread of deserts. In Tibet, a leak from a lithium mine poisoned a local river. According to the UN, an electric car boom will result in devastating ecological side effects.
To Buy or Not to Buy?
In spite of the potential of electric cars, I plan to drive my good, used gasoline-powered cars as long as I can, while observing what happens within the auto industry. I expect the cost to purchase battery-operated cars to come down and the overall performance to improve, with more and more technological advances in the near term.
Speaking of gasoline-powered cars, I recommend that you buy a used car, paying cash for one that will hold its value. The world will sell you lots of reasons to buy a new car, but, remember, a car is simply a way to get from point A to point B. Driving an older, reliable car can be an excellent financial decision in addition to keeping you humble.
Hope that helps!
Chuck Bentley is CEO of Crown Financial Ministries, a global Christian ministry, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Seven Gray Swans: Trends that Threaten Our Financial Future. Be sure to follow Crown on Facebook.