If you’ve been waiting for electric vehicles with longer range, faster charging and lower prices before you buy, you may have missed the opportunity, as the total cost of electric vehicle ownership exceeds all of these compared to conventional cars, and electric cars will soon be the only logical option to buy a car.
The concept of total cost of ownership is not unique to electric vehicles; It applies to anything you buy that has long-term durability and running or acquisition costs.
Whether it’s electric or gas-powered, the total cost of ownership of a vehicle depends primarily on factors including, the price paid for the vehicle, including manufacturer discounts, financing costs for purchase or lease, vehicle depreciation over time, and registration and licensing fees.
It also includes government tax incentives or credits, insurance premiums, maintenance costs, repair bills, and fuel or energy costs.
Most car buyers think of the first and last item above and tend to ignore the items in the middle. But Boston Consulting Group believes that total cost of car ownership will be a major catalyst for its sales by 2023, reducing conventional car sales to less than half of new car sales globally by 2030.
To put it logically, there is a long history of technologies that take off once consumers realize that they are affordable, good enough, and not perfect. And electric cars seem to be on the threshold of that moment, especially if more consumers take a realistic view of how much they need an electric car.
This does not mean, however, that electric vehicles are cheaper in every respect. They tend to be more expensive in terms of the official car price, insurance premiums and repair costs, for reasons generally associated with newness and relative lack of size.
But electric cars are notorious for being less costly in terms of energy and maintenance costs – they lack many of the maintenance-requiring systems over conventional cars – and through government financial incentives that can lower their true selling price, even though electric cars are the most popular. Tesla and General Motors no longer qualify for large federal tax credits in the United States because of their success in the market, but many countries still set tax incentives and lower licensing fees for this class of cars.
Consumer Reports recently compared popular plug-in vehicles to their conventional counterparts, estimating that owners of full-battery hybrids and plug-in hybrids incur only half the costs of repairing and maintaining conventional cars and that those who drive pure electric cars enjoy 60% savings in energy costs.
Experts advise buying a used electric car, which will reduce the total cost of the car, and it will still enjoy the rest of the reduced costs on operation, maintenance and energy.